Wanted: One Glass Slipper

If the continuing story of Rate Case 2006-1 were a fairy tale, catalogers would be Cinderella and the Postal Regulatory Commission (PRC) would be the evil stepmother.

Asking for rate increases, restructuring postal categories and classes, basing prices more on shape and automation rather than primarily on weight — those don’t make the PRC, or the Postal Service as a whole, evil or unfair. But seemingly singling out one category of mailers for especially harsh treatment, that’s grim (or Grimm).

When the USPS introduced its rate case last year, it requested increases in Standard Mail that would have added 9%-12% to the average cataloger’s postal bill. Catalogers didn’t welcome the hikes, of course, but the rationale behind them seemed fair enough, as did the rationale behind the rate increases for First Class, Periodicals, and the other classes.

Then on Feb. 26, the evil stepmother took charge. The PRC released its recommendations on the rate case. At first glance they didn’t seem too onerous — but at first glance I’m sure Cinderella thought her stepmother was a pleasant-enough woman.

Once everyone had a chance to wade through the 700-page report, however, one had to conclude that the PRC had it in for mailers of Standard flats. It recommended doubling the increase of some rates within the category. At the same time, the PRC favored First Class, recommending that the price increase for a stamp actually be reduced.

The Board of Governors (BOG) played the passive, cowed father to the PRC’s stepmother. It “protested” the Standard Mail increases but approved them nonetheless. And the BOG even managed to wrangle a gift for its own favorite: Although all the other rates go into effect May 14, the implementation date for Periodicals was pushed back to July 15, because those mailers need the extra time to upgrade their software. But catalogers won’t?

Maybe not, as they’ll be too busy slashing circulation instead. Or eliminating it altogether. The marketers Multichannel Merchant’s writer Jim Tierney spoke to for his article on coping with the rate case (see page 14) now plan to put more muscle and money into other channels and media, something many catalogers weren’t focusing on when the expected increase was 12% rather than 25%. Which is good news for e-mail service providers, search engine marketing firms, and DRTV vendors. But not good news for the merchants themselves — nor, interestingly enough, for the Postal Service.

As consultant Coy Clement told another of our writers, Tim Parry, at the spring NEMOA conference two days after the BOG approved the rate case, “We know First Class mail volume has been going down every year, so if Standard Mail and Parcels go down, then the USPS’s fixed expenses are just going to require higher and higher increases to make up for that level of overhead. It will cause the USPS great problems if they let this go through.”

It may not have been the PRC’s intention to keep catalogers from going to the ball — or rather, from growing businesses. But companies that can’t find a fairy godmother in other channels could end up sitting by the cold cinders permanently. Hopefully, though, most will get to the ball one way or another, just as Cinderella did.

And if you recall, in the end of her fairy tale, no good became of the evil stepmother.

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