Summer Postal Rate Rollback May Make Big Mailers Big Winners

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.

But 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 Penney boasted by far the highest volume, based on last year’s totals, it won’t be the only beneficiary. Costco did a single – at least as far as could be identified – 14-million piece “Thank You For Being A Great Member” standard letter mailing in early July. And Life Line Screening, a service that offers a variety of diagnostic medical tests, sent out at least seven mailings of 2 million standard letter packages apiece, for another minimum of 14 million total.

Seventh Avenue sent out more than 12.4 million of its general merchandise and gift catalogs in four separate mailings throughout the late spring and summer – and that’s before factoring in partner brands Ginny’s (4.7 million catalogs); Midnight Velvet (just over 4.5 million catalogs and flats); Monroe and Main (1.4 million catalogs); Country Door (2.7 million); and The Swiss Colony (an even 1 million). That’s nearly 27 million pieces, assuming no smaller mailings, for all of these mailers, which are owned by parent company The Swiss Colony Inc. Swiss Colony also acquired the Montgomery Ward in August 2008.

Prevention magazine sent out five standard flat mailings, for a total of nearly 11.7 pieces. And telecom firm Vonage narrowly missed the 10 million mark, at least as far as mailings tracked by the Postal Bulletin: Its six campaigns totaled 9.1 million pieces.

The top mailers for the late spring/late summer 2008 period also included Nordstrom, which sent out a total of nearly 6.2 million copies of its July and August catalogs and 4 million standard letters from Sally Beauty Supply, a beauty supplies marketer.

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 their levels needed to quality for discounts reduced as well, according to the DMA. The Postal Service’s fiscal year began on Oct. 1, 2008.