Merchants Prepare for Possible Postal Cuts
By Frank Washkuch, news editor, DMNews

Catalogers and multichannel retailers are beginning to plan their responses to the US Postal Service's possible move to a five-day home delivery schedule. Many companies are determining how to deliver time-sensitive offers to consumers, despite the possibility of having one less day per week to do so, according to industry experts.

"Meeting in-home dates is our biggest concern right now," said Joseph Schick, director of postal affairs, at printer and service provider Quad/Graphics. "If you have to maintain schedules, it means someone may have to utilize more equipment to get it done faster, and that could lead to moving someone or something to a different plant."

"From a general perspective, every time the Postal Service™ makes big changes, there are certain things that fall in our laps that cause us to incur costs and manage differently to meet customer requirements," he added.

Hamilton Davison, president and executive director of the American Catalog Mailers Association, said many of his constituents are only in the preliminary stages of planning for five-day delivery. Maintaining home delivery deadlines is a top priority for those planning ahead, he explained.

"The people that I talk to are paying attention to in-home dates. If you are a multichannel, integrated marketer, you probably have promotional campaigns spanning multiple media, and you want the catalog to arrive at the same time that other promotions are occurring," he said, adding that catalogers have reported delays in home delivery in the past year. "The five-day delivery schedule has the potential to put more pressure on in-home dates. If you miss a day, you're not just missing a day; you're possibly missing out until Monday."

Multichannel retailers and marketers have months to consider tactics to get offers and catalogs to consumers on time. The Postal Regulatory Commission (PRC), the body that oversees aspects of the Postal Service, has set a timeline for reviewing five-day delivery that could result in a decision by October. Even if the PRC gives its blessing to five-day delivery, the schedule change has many detractors in Congress, and the two major postal employee unions.

Jane Glazer, president and founder of QCI Direct, a multi-title catalog and e-commerce company, said she's taking a wait-and-see approach. She added that the service change could pose significant challenges for retailers' shipping operations, as well.

"The Postal Service^® delivered on Saturdays, and that was one of the advantages of using it. Now they might take away that advantage, and so I have to think twice about how I'm going to ship to my customers—if that's the case," she said. "In this day and age of everyone wanting to get things fast, everything is going to take longer."

The service reduction is part of the USPS' 10-year plan to restore financial stability at the agency, which ran a net loss of $3.8 billion last fiscal year. The USPS^® revised the delivery plan in February to keep post offices open on Saturdays, but to eliminate home delivery and some processing. The agency revised the plan after nearly 40 meetings with stakeholder groups, according to USPS officials. Ruth Goldway, the chairman of the PRC, has told members of Congress they should fix the postal service's retiree health benefit payment system, before implementing five-day delivery.

Jerry Cerasale, SVP of government affairs at the Direct Marketing Association, said merchants with time-sensitive sales offers would also have to adjust to a service reduction.

"Grocery and retail stores send our their fliers so consumers receive them on Saturdays, so people will look at the mail, go to the store, and go grocery shopping," he said. "They have to think about what the reaction will be if they are delivered on Friday, instead of Saturday, so they are starting to do some tests to see what is the reaction by the consumer."

---Source: DMNews May 17, 2010 (www.dmnews.com). Frank Washkuch is the news editor for DMNews. Reach him at Frank.Washkuch@dmnews.com.