Hall of Shame #5, S&H

How many times have you shopped online only to abandon your shopping cart when you see the shipping and handling charge?  I do it all the time.

When I talk to the packaging industry about changing packaging to improve postage rates, a common response I hear is, “That’s okay, the customer pays for it in shipping and handling?”  Wrong.  Here is why.

If I buy a small part like a data card for $45, I am charged $7.99 for shipping and handling.  Let’s do the math:
$0.30 for the box
$0.05 for the peanuts
$0.10 to print and apply the label
$5 for UPS shipping
Total packaging and postage is $5.45.
$7.99 – $5.45 = $2.54 profit.  Not bad.

Light box. What could it be?

Here is my data card, looking cozy on a bed of peanuts.

Now let’s make some smarter packaging choices.  Data cards are flat.  There is nothing to crush, and they are unlikely to be damaged.  If the data card were shipped in a flat paperboard mailer, the package would likely qualify as a first-class USPS flat.

Again, the math:
$0.25 for a paperboard mailer
no fill material
$0.10 to print and apply the label
$1.39 to mail a first-class flat by USPS
Total packaging and postage is $1.74
$7.99 – $1.74 = $6.25 profit.  Much better.

Better still, slash your shipping and handling, pass the savings on to your customers, and watch as your customers abandon shopping carts less frequently.

by Bob Makofsky bmakofsky@conformerinc.com

News from Postmaster General Jack Potter

Greetings from National Postal Customer Council Day, aka National PCC DAY. I attended this event in San Francisco while my colleagues Marv and Bob heard Jack Potter speak live to the NY chapter. My live televised version of this events happened to feature a close-up of Marv so I know he was paying close attention to the speech.

In past years, the Post Office has largely focused its priorities on operational issues — the roll-out of its Flat Sorting System (FSS) for example.  Conformer products have a lovely relationship with this automated processing equipment, but even so, I was excited this time when PMG Potter’s address made a distinct shift away from operations and to squarely address customer needs.  Doing business with the post office is not as easy as it could be for our customers, to paraphrase Mr. Potter, and that’s about to change.

We’ve spent enough time talking to the folks in Washington D.C. over the years to have already picked up on this sea change in attitude towards innovators like Conformer Inc. who have been working tirelessly to keep the U.S. Postal Service’s customers happy and “in the mail.”   We’ve been praised for our expertise in the USPS’s operational and pricing changes, and for our commitment to partnering with the post office to make sure that our new products are well tested and proven on USPS processing equipment and meet all requirements.  Conformer Inc. is reaping the rewards of playing by the rules and our work is being recognized as a very good thing for the U.S. Postal Service.  A happy USPS customer is a customer that stays “in the mail.”  And we all know that the USPS needs every customer it can get.

-Conformer General Sari McConnell at smcconnell@conformerinc.com

Jack Potter, Postmaster General

Girls Gone Wild, Hot For Conformer

I was up late last night watching an exciting stage of the Tour de France when a Girls Gone Wild infomercial came on.  Suddenly, I thought (as any man would), “Wow, these girls get great postage rates thanks to Conformer.”

Whether you love or hate their product, smart distribution companies are paying less to mail DVDs than others because they’re using the Conformer Media Mailer.  As I reported in our white paper a few weeks back, the Conformer Media Mailer ships DVDs as automated flats, reducing postage costs as much as 145%.  Girls Gone Wild is now realizing postage savings of roughly $0.43 per unit shipped, based on the current postal rate increase.

OFFER: To receive a free sample of the Conformer Media Mailer, send your contact information to support@conformerinc.com with the subject line: “Media mailer sample.”

by Bob Makofsky bmakofsky@conformerinc.com

Hall of Shame #2: Why creative folks should consult with postal folks

Last night I flipped through my mail to find an “Invitation” to a special event at a fancy shoe store on Madison Ave.  Okay, my wife received it, but I opened it…

Looks like a special invitation. I feel special now...

Error #1 – The fancy 6 x 8 linen envelope weighed in at 2.1 ounces. With a slightly lighter card stock, the mail piece would have weighed less than 2 ounces, and saving $0.17 in postage.

Rigid letter sized mail = USPS parcel. $0.78 postage premium. Oops.

Error #2 – The card stock was in fact so heavy, it made the envelope rigid.  The USPS requires that mail pieces be flexible.  If not, the mail piece is classified as a parcel, no matter the size or weight.  The USPS rate for parcels is $0.78 greater than that of flats.  That hurts.

$2.00 for postage! That makes an already pricey campaign that much more expensive.

Error #3 – To make maters worse, they simply put too much postage on the envelope!  If this mailing was in fact a parcel at 2.1 ounces, the postage should have been $1.56, not $2 as posted.  The USPS certainly appreciates the $0.44 charitable contribution.

All told, the mailing is quite catchy, but the postal errors add up fast.   With a slightly lighter weight card stock, this mailing should have been sent as a 2.0 ounce letter for $0.61.  A $1.39 savings.  That’s $1390 savings for every 1000 cards sent.

And here I thought companies were trying to stretch their marketing dollars to the limit.

by Bob Makofsky bmakofsky@conformerinc.com

White Paper: Infinity Resources Cuts DVD Postage 145%

Easing Postage Pressures

How to Get in Shape and Optimize Savings

Executive Summary

●      After the U.S. Postal Service (USPS) restructured rates in May 2007, Chicago fulfillment company Infinity Resources, Inc. saw its postage costs increase 166% for media mailed in jewel cases, Amaray cases and Digipaks.

●      The Conformer Media Mailer, the only known solution capable of mailing these items as automated flats, reduces postage costs as much as 145%.

●      Combined with the Tension AutoPack solution, the patented system allows businesses to realize greater savings through improved labor productivity.

●      Infinity adopted this joint solution and is realizing postage savings of $0.43 per unit shipped, based on the May 2009 postal rate increase.

●      The Tension-Conformer solution is a viable alternative for companies mailing 10,000 units or more per year.

Standard Mail Price Up 14% from 2008

New Standard Mail pricing implemented today, May 11th, 2009 show significant increases on flats, NFMs, and Parcels.  Hardest hit are customers shipping light weight packages like CDs, DVDs, and video games.

Under last years rates, shipping a 4 ounce DVD in a bubble mailer or corrugate box via standard mail would have cost $1.11.  Today that same parcel would cost $1.27.  The real shocker comes when you look back a few years.  That same package in 2006 cost $0.42.  Today’s rate is 205% higher.

There is hope however.  Conformer released the Conformer Media Mailer, capable of shipping CDs, DVDs, Blu-ray, videos, and other small light weight objects as flats.  Under new rates implemented today, a 4 ounce flat would cost $0.52, saving $0.75 per unit.  For further details, click here and here.

Rate Comparison 2006 2007 2008 2009 Standard Mail Parcel – 4 Ounces $ 0.42 $ 0.95 $ 1.11 $ 1.27 $ Increase from previous year na $ 0.53 $ 0.16 $ 0.16 % Increase from previous year na 128% 17% 14% % Increase VS. 2006 Rate na 128% 167% 205% NFM – 4 Ounces na $ 0.80 $ 0.90 $ 1.04 $ Increase from previous year na na $ 0.10 $ 0.14 % Increase from previous year na na 13% 15% % Increase VS. 2006 Rate na na na na Flat – 4 Ounces $ 0.35 $ 0.46 $ 0.47 $ 0.52 $ Increase from previous year na $ 0.11 $ 0.01 $ 0.05 % Increase from previous year na 32% 2% 10% % Increase VS. 2006 Rate na 32% 34% 48% The above table is an excerpt from a broad analysis of the rate increases.  For a full report, send me an email. by Bob Makofsky bmakofsky@conformerinc.com

Mail Volume Drops, USPS Price Increases 15%

I awoke this morning to a news report of the USPS increasing postage by $0.02 today.  The report went on to mention that USPS rates have increased across the board with an average increase no greater than the Consumer Price Index of 3 – 4%.  CNN reports that, “The increase will cost the typical family about $3 a year.” Sounds pretty harmless right?  Wrong.

Apparently CNN did not check with businesses dependent on standard mail.  For the third year on a row, businesses shipping flats, parcels and NFMs are being nailed by 10% – 15% rate increases.

The USPS justifies the rate increase stating that they need to make up for decreasing mail volume due to the economic slowdown.  Much like the USPS has been impacted by the slowdown, so have retail stores.  When I walk down Columbus Avenue, NYC, I see price reductions in every window.

Is it just me or does increasing prices during a business slowdown sound like a bad idea.

by Bob Makofsky bmakofsky@conformerinc.com

First Class Mail Holds Steady

My quick analysis below shows that the Postal Regulatory Commission has held steady to their word of increasing postage rates in line with the Consumer Price Index.  Rates for 2009, implemented today show a 3% increase over 2008.

Interesting to note the rate of change vs. 2006 rates.  Due to the implementation of shape based postage in 2007, parcel rates have jumped 56%.

More than ever before, increasing postal rates mean companies should take a close look at their packaging choices.   Designing packaging to downgrade from parcels to flats saves money.  Starting today, a 4 ounce parcel costs $1.73.  Reconfigured as a flat the rate is $1.39, saving  $0.34.

Rate Comparison	2006	2007	2008	2009
First Class Mail
Parcel – 4 Ounces	$ 1.11	$ 1.64	$ 1.68	$ 1.73
$ Increase from previous year	na	$ 0.53	$ 0.04	$ 0.05
% Increase from previous year	na	48%	2%	3%
% Increase VS. 2006 Rate	na	48%	51%	56%
Flat – 4 Ounces	$ 1.11	$ 1.31	$ 1.34	$ 1.39
$ Increase from previous year	na	$ 0.20	$ 0.03	$ 0.05
% Increase from previous year	na	18%	2%	4%
% Increase VS. 2006 Rate	na	18%	21%	25%

The above table is an excerpt from a broad analysis of the rate increases.  For a full report, send me an email.

by Bob Makofsky bmakofsky@conformerinc.com

Rate Increases Target Small Parcel Shippers

This past week, Patrick Barnard wrote an interesting piece in Multichannel Merchant about how small parcel shippers are taking the brunt of USPS price increases. The USPS introduced shaped based postage back in May of 2007. In May of 2008, the post office increased prices again with another dramatic increase for parcel shippers. Once again, the May 2009 price increases target companies mailing small, light weight packages. Standard mail parcels will increase roughly 16%. When will the rates stabilize for small parcel shippers? Good question.

Coming off a dismal first quarterly (Oct – Dec) earnings report where losses exceeded $380 million, should the USPS focus on maintaining revenue or maintaining mail volume, or is there a balance?

by Bob Makofsky

www.conformerinc.com