Catalog Mailers May See 5.9% to 6.1% Postal Rate Increase

Sep 26, 2013 3:31 PM  By

catalog-covers-300Catalog mailers may see, on average, a 5.9% exigent postal rate increase based on price changes the U.S. Postal Service has proposed to the Postal Regulatory Commission, according to a statement emailed to Multichannel Merchant by the American Catalog Mailers Association.

Hamilton Davison, president and director of the ACMA, said various mailers will see slight variations in the amount imposed. The 5.9% incorporates an annual Consumer Price Index increase of 1.6% plus an additional exigent increase of 4.3% over the rate of inflation.

Davison added, they are told to expect standard flats will be subjected to an overall 6.1% increase.

“Sadly some mailers may advocate that the PRC applies the increase differently, hitting some groups much harder than others,” said Davison in the statement.  “We hope this situation does not devolve into the ‘class warfare’ between different mailing interest that characterized rate battles prior to 2007.

According to Davison, an increase of nearly 6% will do real damage to an industry still struggling to adjust to the exorbitant 2007 rate hike where many companies are struggling mightily, mail volumes are depressed, and the availability of quality names to mail is diminished.

According to Jim Coogan, president of catalog consultancy Catalog Marketing Economics, told Multichannel Merchant in a phone interview that catalog mailers will be impacted because as postage cost goes up, circulation goes down.

“So raising the rates on the standard mail will result, according to (USPS’s) data, losses in volume,” said Coogan.

Coogan said in the first quarter of 2014 across the board, catalogers will cut their circulation.  He said it used to be that catalogers used to mail everything above break-even, that was the standard business model for catalog circulation.

“Now catalog circulation, which is expensive, is competing with every form of web marketing from search, to digital ads and email,” said Coogan.  “Every time prices go up, catalogers are looking at every other form of marketing and just shifting focus and investment dollars on all the different profitable opportunities on the website.”

Tim Schipper, owner of wholesale flower bulb merchant Colorblends, said the proposed postal increase will cause him to look at other ways to prospect. For example, Schipper said he may cut back on catalog circulation in lieu of digital prospecting methods such as pay-per-click ads.

“As prospecting costs through mail become more expensive, it just forces us from using the mail for looking for new customers into other ways in finding new customers,” Schipper said.

The Governors of the Postal Service voted Sept. 24 to see price increases above the typical annual increases with changes in the Consumer Price Index. If approved by the PRC, changes would go into effect on Jan. 26.