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Green light for extension of USPS direct mail service for SMEs

Monday, September 10th, 2012

Regulators have given the green light for the US Postal Service to make its simplified direct mail service for small businesses a permanent addition to its portfolio.

Every Door Direct Mail has been trialled since early last year, allowing SMEs to run saturation mail advertising campaigns in their local areas without requiring lists of individual addresses.

The trial has already seen 32,000 businesses register for the service, and generated around $50m in revenues.

USPS filed to make the service permanent – thereby removing any revenue restrictions imposed for experimental products – back in July.

On Friday, the Postal Regulatory Commission approved the request.

Going forward, Every Door Direct Mail (Retail) will have a daily 5,000-piece limit on mailings and a minimum of 200 pieces per mailer per zip code, with mailings of flats under 3.3 ounces in weight dropped off at local post offices.

Postage rates are being increased compared to the trial service, up from 14.2 cents to 16 cents per piece.

A bulk volume version of Every Door Direct Mail allows larger mailing batches to be dropped off at USPS business mail entry units, keeping the 14.2-cent rate.

For small businesses, the retail version of EDDM aims to simplify the process of setting up a mail marketing campaign, with online tools to help the selection of delivery routes and link mailers to resources, including details for local printing firms in their areas.

SMEs are not required to hold business mail permits, but are required to register for the service, and must provide enough mailpieces to allow deliveries to reach every single residential address in a delivery route selected for a campaign.

Last month the Direct Marketing Association launched a new tool for householders if they want to opt out of receiving direct mail via the EDDM service.

Volumes

EDDM is an important part of the struggling Postal Service’s efforts to increase marketing mail volumes as Internet alternatives eat into transactional mail volumes and USPS profits.

The latest mail volume figures for USPS, for July 2012, show that the month saw Standard Mail volumes down 3.4% compared to the same month in 2011, to 6.25bn pieces, with Standard Mail revenue for the month down 4.9% to $1.29bn. Much of Standard Mail comprises advertising mail.

In the year up to the end of July 2012, USPS has seen Standard Mail volumes down 5.4% compared to the same period in 2011, to 66.4bn pieces, with Standard Mail revenues down 5.7% year-on-year over the seven months, to $13.9bn.

The rate decline of Standard Mail at USPS so far in 2012 is worse than that for its First Class Mail service, which in previous years had been suffering the brunt of electronic substitution. First Class Mail has seen its volumes down 4.9% and revenues down 4.4% in the first seven months of 2012.

Overall operating revenues at USPS during the first seven months of 2012 have declined only 0.7% year-on-year, however, boosted by a 56.3% in the Postal Service’s competitive parcels and express service volumes, which have generated nearly 22% higher revenues than this time last year, although to some extent these competitive figures have been exaggerated by market-dominant services being moved into the competitive portfolio.

Reform

Meanwhile, any hopes of Congress stepping in to help ease the crisis within USPS finances has come down to whether the House of Representatives can debate and pass a postal reform bill over the next eight days, before the House is suspended ahead of November’s elections.

The Senate passed its version of postal reform proposals back in April, but the House was unable to follow suit before the August recess, and is not expected to be able to pass postal reforms this month.

Even if distracted Congressmen are in a mood to pass legislation this month, during the eight days of House activity postal reforms will have to compete for attention with bills to keep the federal government operating beyond 30th September, a farm bill important for the drought-affected Midwest, and a significant energy bill, as well as hopes to extend tax cuts introduced by the Bush Administration.

USPS is currently on track to default on a second retirement healthcare $5.5bn payment to the federal government at the end of this month, having already defaulted on a similar payment, for the first time in its history, last month.

Source: Post&Parcel/PRC

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