Postal Service Rate Increase

The USPS introduced new pricing on January 26, 2020. While the price of a Forever Stamp, letters, domestic postcards and some other consumer postal products have not increased, rates for Marketing Mail have gone up by 1.891%, with the average increase for the market dominant classes up 1.9%.

While consumers will not feel the pinch to their wallets this time, they will frequently see their costs increase substantially when they use standard mail services, DTC, ecommerce and direct mail companies—especially catalog-based marketers.

Catalog-based marketers feel this more acutely because they get hit with the increase twice—to mail their catalogs and to ship their products. The last time this type of increase was enacted was in 2007, and according to the ACMA, the catalog industry never completely recovered from that rate hike. In fact, they attribute that rate to accelerating the volume decline of catalogs, which now stands at more than a 40% decrease.

While other factors have come into play over the last 12 years (i.e., the explosion of Amazon and WalMart.com and the growth of ecommerce and specialty retailers), the ACMA, along with 16 other mailing industry organizations, sent a letter of protest to USPS Board Chairman Robert M. Duncan and the four other Governors stating their objections and concerns to the increase. These groups collectively account for over 90% of the funding of universal postal services in the U.S.

In their letter, they expressed concern for the industry, objected to balancing the USPS budget woes on the back of their industry, cited the decline in catalog volume and called for the following:

  1. Costs, service, revenues and the funding of the USO (universal service obligation) must all be addressed
  2. New postal products, services and solutions are critical to the health of the mailing industry, including the USPS
  3. Input needs to be included from all key stakeholders in the USPS’s 10-year plan
  4. The group proposed that the Board meet with the group to consider their shared future and prioritize the efforts that can create a sustainable path forward

With more and more pressure on costs to come in the future, not to mention those driven by the green movement, these mailing-based retailers are going to feel more and more of a squeeze on their bottom line as they attempt to not pass the costs onto consumers in the face of stiff competition. We will be keeping our eye on this situation and closely monitoring the communication between the industry and the USPS.

As experts in direct mail, DTC and ecommerce, Marketsmith can help retailers not only navigate this postal cost increase, but partner with you to develop strategies to reduce your costs while maximizing your return.