Postal Woes: Get Ready For Delivery Cutbacks

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Wait a minute, Mr. Postman: The U.S. Postal Service's recent announcement suggesting dramatic service cutbacks -- including eliminating Saturday delivery -- has some marketers scrambling. And for the troubled post office brand, it's one more ding in its seriously dented "neither snow nor rain" armor.

Although the postal services woes are well-known, as electronic communications continue to eat its lunch, its news was still depressing. It says it is facing a cumulative $238 billion shortfall in the next decade, with mail volume projected to fall from 177 billion in 2009 to 150 billion in 2020 -- a 37% decline in first class mail alone. In addition to potentially restructuring retiree benefits, rethinking post-office locations, creating a more flexible workforce, and of course, raising rates, the big news is that it is even closer to eliminating Saturday delivery -- an idea it has been kicking around for some time.



"Direct marketers need the postal service, at least for the foreseeable future," Jerry Cerasale, SVP/government affairs of the Direct Marketing Association, tells Marketing Daily. He estimates that DMA members account for between 70 and 80% of the mail. At this point, he says, "the DMA membership is not of one voice. No one is jumping for joy about reduced delivery, but there are many of our members who will be able to adjust."

Still, he says, many marketers currently rely on Saturdays, a day when people are more likely to be at home and in a shopping frame of mind. "And Saturday is also important for parcel shippers."

"Some marketers will also have to work out schedules to avoid being caught in the Friday or Monday mail, so they don't get lost in the clutter," Jay Henderson, director of product marketing for Unica, an interactive marketing and analystics firm based in Waltham, Mass., tells Marketing Daily.

But more troubling than these short-term adjustments are what it may mean for the long-term future of the mail. The DMA is alarmed about the potential of another postal increase as a result of the crisis. "That will affect direct marketers, and depress mail volume, and continue that downward spiral," says Cerasale.

There is also the possibility that outside companies can find a way to make money from postal cutbacks, just as companies like Federal Express, United Parcel Service and Mailboxes Etc. already have. One example, he says: While The Wall Street Journal is delivered by mail in more remote areas, it uses private couriers in urban regions. "We may see more of that," he says.

"This may accelerate the decline of direct mail," Henderson says, "as companies continue to find alternative ways to sell products. But I don't think it will be the death of direct mail. It is still a valuable channel, especially as people's email-boxes continue to get cluttered -- it still provides an opportunity to stand out."

And can the post office, already seen by many as slow, inefficient and staffed with people who are sometimes unfriendly and occasionally homicidal, survive this? You bet, says Robert Passikoff, president of Brand Keys.

"The brand doesn't do very well to begin with," he says, noting that it falls below both Federal Express and UPS in Brand Keys' customer loyalty measurements. "But ... no one is running around in a panic because they don't get mail on Sundays. And some of us remember when mail was delivered twice a day -- we got over it. It ain't great, but it isn't life threatening."

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