Pondering postal price hikes

Mar 01, 2000 10:30 PM  By

This month’s question

How will the proposed postal rate hike affect your catalog circulation and projections?

Not surprisingly, most of the small catalogers we spoke with greeted the topic of the proposed double-digit postal rate hike with resigned disgust. Nonetheless, some say that even if the rate increase is implemented early next year as expected, they won’t change their mailing plans. Others, however, will cut circulation, and some plan to cut catalog pages and trim size to try to offset the higher postal prices.

Tim Baker is general manager of Mail Order Medical Supply, a Valencia, CA-based cataloger that sells medical supplies to caregivers of house-bound patients. Annual catalog circulation, 2 million; annual catalog sales, less than $5 million.

To compensate for increased expenses resulting from the postal rate hike, we are considering reducing the size of our catalog by a quarter-inch, going from 84 pages to 72 pages, and decreasing the paper weight from 38 lb. to 34 lb. We will continue to maintain our catalog circulation and may even increase it, depending on the availability of prospects. Our sales have grown 50% a year since the catalog debuted five years ago, probably because of the emergence of a strong market for this sort of product. The use of statistical modeling for prospecting has also helped us by delivering a highly targeted audience.

John Oak is president of Cats, Cats & More Cats, a Monroe, NY-based cataloger of feline-related gifts and accessories for cat owners and lovers. Annual catalog circulation, 4.7 million; annual catalog sales, $5 million.

In the last 12 months, we have already lowered postage costs by reducing the trim size of the catalog a quarter-inch and decreasing our paper weight from 40 lb. to 38 lb. With this proposed postal increase, we may yet again make some revisions to our catalog.

We plan to spend more time analyzing distribution, size, timing of mailings, and response rates. We’ve already saved money this year by mailing the catalog a few weeks later than last year. By dropping later than most other catalogers, we were able to secure better paper and printing prices.

Past postal increases have also in part contributed to the expansion of our Website, which we launched in 1995. Last year we took in about 7% of our total sales on the Web and we hope to do better than that this year, while devoting more resources to improving our site.

Jarek Zaremba, with his wife, Ania, owns Polish Videos & Music, a Sarasota, FL-based catalog of giftware, videos, and music with a Polish focus. Annual catalog circulation, 300,000-350,000; annual catalog sales, less than $1 million.

We don’t plan to change the design or size of our physical catalog, but we’ll be looking at our mailing list more carefully, possibly paring the list down to include fewer names. We’re afraid that the rate hike will negatively affect our business in other ways, especially since customers have already expressed dissatisfaction with shipping costs. Often our shipping charges are greater than the cost of the item being sent, because of boxing and handling fees, so this new scenario of higher USPS parcel rates may provide even more challenges for us.

Diane O’Connor is president of Creative Irish Gifts, a Macedonia, OH-based catalog of gift items from Ireland and Scotland. Annual catalog circulation, 3 million; annual catalog/Web sales, $7.1 million.

We don’t plan on adjusting our circulation because of the proposed rate hike. One thing we might do is cut back on renting mailing lists from some of the more generic gifts catalogs so that we can focus on more lists from Irish publications.

Despite the postal increase, we plan to increase the number of pages and products in our catalog, adding up to eight pages with six to 10 products per page.

Our entire catalog is also on the ‘Net, giving us even more exposure to a number of audiences. Our sales have increased 56% over last year, with 20% of that attributable to our Website, shopirish.com, so I don’t see the increased postage rates affecting our business.

Brad Kalka is the catalog manager for Originals Casual Wear, a Drayton, ND-based marketer of casual apparel targeting 45- to 65-year-old women. Annual catalog circulation, 1 million; annual catalog sales, $1.8 million.

The postal rate increase will not affect our circulation nor the way we do business, as we plan to maintain our catalog’s size and circulation. In fact, our circulation for this last fiscal year – fall 1999 to fall 2000 – has increased two and a half times over the previous year’s.

By using a cooperative database, which compares our house list against its data to find more of our target customers, our response rate has increased to 3.5%-4%. So we’re not worried about the postal increase – but we would be if our response rate were lower and our circulation were higher.

Mike Shoup is the president of Antique Rose Emporium, a Brenham, TX-based cataloger specializing in heirloom rose bush varieties. Annual catalog circulation, about 150,000; annual catalog sales, $800,000.

The postal rate increase really won’t affect us that much. Prior to last year, our catalog was larger, and customers had to pay for it. But last year we went to a smaller trim size, from 8″ x 11″ to 5″ x 8″, and we cut our page count in half, from 100 pages to 50. Now that we no longer charge for our catalog, we’ve been attracting more interest and a larger audience. But we still sell a larger bound information guide/reference book, which also offers more rose varieties, so we’ve been able to make up some expenses.

Our sales increased 15% last year, which offset the cost of the changes we made. We’re hoping for another 15% increase this year to offset the postal rate increase. Also, since we’re tied to UPS, shipping costs for our products really won’t be affected.

Another way we’re offsetting catalog mailing costs is by developing our informational Website, which we launched in October. We hope to expand it to include an e-commerce function next year.