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It is official: shape-based postage has arrived. For consumers, the new postage rates mean a trip to the post office to stock up on 2-cent stamps. For many businesses, it means a hefty bite out of bottom lines.
Hardest hit will be companies that ship lightweight parcels—now the most expensive postage classification. Under the old, weight-based system, a six-ounce package cost $1.59 to mail. Shape-based pricing bumps the rate up to $1.98, an increase of 24.5 percent. Large envelopes, which classify as flats, also face hefty hikes, up to 54 percent.
These dramatic increases have created a stir among organizations like the Direct Marketing Association (DMA). The global trade association has lobbied unsuccessfully for an implementation delay.
"We were extremely disappointed that, while the [USPS Board of] Governors expressed concern for customers who would have difficulty in converting their mailings to more cost-effective shapes, they did not act upon nonprofit mailers' requests to allow additional time to test alternatives," said DMA President and CEO John A. Greco Jr., in an email to members March 21.
The U.S. Postal Service heralds shape-based postage as a move toward a more efficient system that minimizes costs. For instance, letters that weigh less than three ounces—but more than one ounce—cost less to mail today than under the old system. The key is efficient packaging.
"Whenever possible, businesses should reconfigure their mail to fit in a smaller mail piece," according to Marvin Makofsky, president of Conformer Expansion Products. "Fold letters and statements to fit in #10 or 6x9.5" envelopes. Instead of shipping small items like note pads or brochures in boxes, use mailers that classify as flats."
Such opportunities require end users and fulfillment houses to literally think out of the box, coming up with creative ways to improve efficiency.
"It's all about efficiency and processing," explains Christine J. Erna, executive vice president, Fulfillment Plus Mailing Solutions Inc. "It's savings all around—not only in postage, but also in service costs. I can process a job faster by inserting it into an expansion envelope rather than assembling a box and taping it, putting the contents in, taping it again, and putting a label on it. Efficiency wise, it's a lot less costly… getting it into the mail stream."
Next Steps
Abstract warnings about postage increases will soon crystallize on corporate balance sheets, spawning widespread sticker shock. The following steps can help realize the savings potential built into the new system:
- Analyze current usage. Audit the mailroom to determine typical volume.
- How many letters, flats, and parcels go out?
- How are mail pieces packaged?
- Can parcels be converted to flats, or flats to letters?
- Measure mail costs. The total cost of a piece extends beyond the postage. Organizations also need to consider costs associated with mail supplies and fulfillment. Because of the postage penalties associated with parcels, experts recommend splitting parcels into two flats where possible.
- Factor postage into design. Often, marketing departments create oversized or dimensional pieces to boost response rates. Such pieces also incur the highest postage rates. Companies need to test whether the higher response justifies increased postage.
- Push the envelope. The new system represents a radical change, and will continue to evolve. As the country adjusts to the new system, end users, manufacturers and fulfillment companies will need to work together. Only through widespread cooperation can the country move toward a more efficient mail system that actually works.
Bob Makofsky is general manager for Conformer Expansion Products. For additional information about the company and its automation-friendly expanding envelopes, visit www.conformerinc.com.
author: By Bob Makofsky