Association for Postal Commerce
"Representing those who use or support the use of mail for Business Communication and Commerce"
"You will be able to enjoy only those postal rights you believe are worth defending."

IT'S TIME FOR ANOTHER POSTAL PRODUCT EPIPHANY

The following is a perspective by postal commentator Gene Del Polito. The views expressed are solely the author's.

Defining postal products sometimes poses a whale of a challenge. Pricing them can often be worse. Several years ago, the U.S. Postal Service (USPS) found itself in a devil of a mess by the way it was pricing the charge for the return of parcels that addressees said they did not want to accept. It was an issue that proved particularly thorny for those who market goods using the continuity club approach.

At the time, the USPS had on its books a single-piece Third-Class Mail rate that was used for such parcel returns. Typically, these parcels carried the endorsement for forwarding or return depending on whether the parcel was accepted at a deliverable location. The pricing of forwarding and return caused the Postal Service and mailers some grief, and, to do something that seemingly satisfied all the Postal Service decided it would collect the forwarding and return fee only when pieces were actually returned. To ensure sufficient compensation for those pieces that were forwarded, the Postal Service calculated the total fee at the rate of 2.73 times the single-piece rate of the parcel.

The soaring cost that mailers were expected to pay for this multiplier rate virtually brought some companies to the brink of bankruptcy. At PostCom's request, the USPS went back and examined the manner by which returned parcels were actually being handled. What it found was enlightening.

The single-piece rate would have been applicable if consumer-rejected parcels actually were being returned to the shipper in single pieces. What the Postal Service learned was that rather than handling these returned parcels as single pieces, they actually were aggregating them in bulk at some designated return facility where they would be returned in bulk in gurnies. It found that it was much more cost efficient to weigh the gurnies, adjust for the tare weight, and charge a simple flat rate for the shipment in bulk rather than to account for every single piece in the gurney. In other words, it found it more convenient and cost-effective to handle the returns as a bulk shipment rather than as single pieces.

With that epiphany, the Postal Service was able to justify a Third-Class parcel return rate that was a whale of a lot less (and more affordable) than was the case when it used the single-piece multiplier. As a result, those who shipped parcels under a pound avoided going bankrupt, and the Postal Service was able to win for itself a still profitable mail stream.

Now when you really think about it, there are parallels to this story and the manner in which the Postal Service handles Business Reply Mail. The prices the USPS currently charges for BRM are ridiculous. Many mailers have discontinued the use of BRM simply because it has become, for them, unaffordable. This translates into lesser BRM volumes and revenues at a time when the USPS could use every possible penny it could earn.

Well, most BRM is not returned to the mailer who sent it as single-piece mail. Most is returned in bulk, not unlike the situation that exists with Standard Mail returned parcels. BRM, however, is not priced as a bulk rate service. It still is priced in accordance with single piece First-Class Mail.

If, on the other hand, the USPS were to have another epiphany, it could see that by pricing BRM as a bulk mail service it could offer mailers a product that could be priced considerably lower than is the case today. By reducing the price of BRM, the Postal Service would be offering mailers a significant incentive to include a postage-paid BRM device in every mailing that required a response from the recipient. Doing so would virtually relieve the citizen mailer from having to pay even a cent to return a bill or to submit an order. Besides the benefits that could be made available to financial mailers, the benefit to mail marketers could be enormous.

First, a more attractively priced BRM product would eliminate an obstacle to gaining a profitable consumer response. What could be cheaper than submitting an order that required absolutely no postage payment for the consumer? And what business wouldn't be willing to pay a reasonable sum if it meant gaining a more profitable response?

There's another opportunity such mail would provide mail marketers as well. If customers or potential customers no longer wished to receive such mailings, an affordably priced BRM device could enable them to signal their mail preference, and allow the seller to make proper note and adjust future solicitations.

It seems to make good business sense. Now, all that's needed is the willingness to give it a go.