Summer Postal Rate Rollback May Make Big Mailers Big Winners.

Posted by truecreek on April 20, 2009 under More Dam News | Be the First to Comment

By Richard H. Levey

If a proposed test rollback of mail rates this summer goes through, listen for the sound of corks popping in Plano, TX. That’s because J.C Penney Co., which makes its headquarters there, was the biggest mailer during summer 2008, and stands to reap the largest benefit.

On Friday, word began circulating through the direct mail industry that The U.S. Postal Service was mulling temporary postage discounts for high-volume mailers that schedule drops between June 15 and Sept. 15. While the details of the program are still being worked out, discounts are expected to be between 20% and 30%.

This assumes that the highest-volume mailers haven’t negotiated separate, individual discounts with the U.S.P.S., or that those that have won’t be allowed to participate in the program. There has been no comment, official or unofficial, on either speculation at deadline.

istock_000004747819smallBut assume that the largest mailers pay the going rate. Penney mailed at least 119 million letters and catalogs in at least 23 separate campaigns, as far as could be ascertained from several editions of the U.S.P.S’s Postal Bulletin.

A positive decision by the Postal Service could give an effort-free extra bit of income to the $572 million the company earned during its most recent fiscal year, which ended Jan. 31.

Information within the Postal Bulletins can be a little dicey: Among the June 15-Sept. 15 mailings scheduled for 2008, a few mailings, such as a 2.65 million-piece drop identified only as “Summer Sale and Clearance Postcard”, was not included in Direct Newsline’s calculations And since the Bulletin only lists individual campaigns in excess of 1 million pieces, it’s very likely high-volume mailers with smaller-yet-regular drops were overlooked as well.

While the Postal Service’s fourth quarter doesn’t exactly correspond to the period being scrutinized (the quarter starts and ends 15 days later), for comparison’s sake the Service carried just over 23.7 billion Standard Mail pieces during the quarter, which generated $4.94 billion in revenue.

Should the program be implemented, discount levels will be based on mailers’ meeting individually calculated levels based on the volume of mail they sent out between June 15 and Sept. 15, 2008. Because of the manpower needed to calculate each level and discount, the sales may apply to only the 4,000 largest Standard Mail users, according to a Direct Marketing Association (DMA) statement speculating on the discount program.

If it does go through as currently on the table, mailers that have reduced their volume during the first two quarters of the Postal Service’s fiscal 2009 year may have the levels needed to quality for discounts reduced as well, according to the DMA. The Postal Service’s fiscal year began on Oct. 1, 2008.

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