dma international day postal liberalization here and abroad kate muth association for postal...

On a scale of 1 to 5, where 5 is most concerned and 1 is least, please rate each issue. (Rated 5 or 4)

Do I buy postage or another medium?

Sheet1

Book price 100

Book cost 20

Cost per piece ppp = 4.00

UAA %3%10%20%40%

Mail quantity100,000

Nixies3,00010,00020,00040,000

Net delivered97,00090,00080,00060,000

Orders, response rate=8%7,7607,2006,4004,800

Promotion cost per order 52 56 63 83

Fulfillment 15.00 67 71 78 98

Add book cost 87 91 98 118

Profit 13 9 3- 18

ROI16%10%3%-15%

Sheet2

Sheet3

Sheet1

HYPOTHTICAL MAILER TO 16 COUNTRIES - COA COSTS

6%Match Charges in USD

AddressMinTotalGrand TotalPer Piece

quantityChargeCharges# of matches

Austria5000$524.40$563.73300$663.00$1,226.73$0.25

Australia5000$392.00$392.00300$212.00$604.00$0.12

Belgium5000$1,179.90$1,179.903000.0$1,179.90$0.24

Canada**5000$450.00$472.503000.0$472.50$0.09

Czech Republic5000$458.85$655.50300$234.00$889.50$0.18

Denmark5000$310.36$310.36300$36.00$346.36$0.07

France5000$1,311.00$1,311.00300$300.00$1,611.00$0.32

Germany5000$655.50$655.50300$624.00$1,279.50$0.26

Netherlands5000$2,294.25$2,294.25300$916.00$3,210.25$0.64

Norway5000$886.75$886.75300$99.00$985.75$0.20

Poland5000$712.74$750.07300$61.00$811.07$0.16

Slovak Republic5000$458.85$960.00300$234.00$1,194.00$0.24

Sweden5000$487.71$487.71300$66.00$553.71$0.11

Switzerland5000$287.28$328.323000.0$328.32$0.07

UK5000$679.00$712.95300$407.00$1,119.95$0.22

US**5000$350.00$367.503000.0$367.50$0.07

Total80000$12,328.054500$3,852.00$16,180.05$0.20

1Delivery point and address verification are frequently additional charges

2Some Posts charge for file conversion.

3Some Posts charge for run time.

Sheet2

Sheet3

How to Discourage COA Use

Thanks to Duoshare, Inc.,www.duoshare.com

So mail matters. It works. And its growing in sophistication and usefulness. But now I turn to an equally critical issue, which involves mission critical data within your control: accurate delivery points and accurate addresses, and your willingness to share those with me. Not lists of buyers, but a database that tells me a customer or prospect has given me a valid address, and which tells me when they move away, and where they went. Look how our merchants rank their biggest headaches today. Bad addresses tops the list. It is a perennial problem for marketers and merchants, both. The Posts can help with that. In fact, as I hope I will show you- you have to help us if you want us to use you.

This chart shows why we need certain postal services and data. We have to make media investment decisions every day. Do I use Internet, e-mail, search engine marketing, television, Catalogs, telephone, point-of-sale? Now let me walk you through the calculation so you can see the impact of incorrect addresses on my profitabilitySo, if the cost per order is too high, I dont make money. So I wont do it. In this example, as UAA approaches 20%, the promotion is not worth mailing. And a 20% nixie rate is not unusual. What do I do with my Euros 400,000 budget? In the US, probably telephone or DRTV, depending on the product. In Japan mobile marketing.

Ive provided all the data on these countries as to how much it would cost to run 5,000 records to be sure the letters would be forwarded if necessary. And the variations of the cost are astounding. Some countries charge even when they find a bad address! The more people move, the more it costs the mailer. Here we use 6% as a possible bad address rate, which is not at all unusual. In fact, a consumer market in a developed country would expect his file to degrade at least 15% per year. In this example, and these are real figures, the cost per piece for addres correction varies from 7 cents in the US to 64 cents in the Netherlands. 64 cents-as much as postage! Let me show you this another way.

Base means the basic charge to run your file through the system, and in some cases there is a minimum fee and an additional requiredfee for delivery point validation. The yellow bit is the extra amount charged you when a bad address is found and replaced. Now, 6% error in a consumer file is not unusual. This is outrageously expensive. And finally, many of the Posts charge the consumer for the privilege of having their mail forwarded to them, which of course means many dont use the service and more undeliverable mail is created. More environmental waste.

Even small mailers say regional merchants with 2 or 3 stores and mailings of 10 to 15 thousand, will use a list processing company to prepare their mail for the USPS in order to minimize costs. Quickly, the process that Duoshare does for their clients, at very low rates, results in postage discounts for the mailer, which are shared with Duoshare, and mail that is presorted, arranged, and organized for efficient delivery by the Post with a minimum of handling, along with verification of postage that will be deducted from the mailers account.

DMA International Day

Do I buy postage or another medium?

Sheet1

Book price 100

Book cost 20

Cost per piece ppp = 4.00

UAA %3%10%20%40%

Mail quantity100,000

Nixies3,00010,00020,00040,000

Net delivered97,00090,00080,00060,000

Orders, response rate=8%7,7607,2006,4004,800

Promotion cost per order 52 56 63 83

Fulfillment 15.00 67 71 78 98

Add book cost 87 91 98 118

Profit 13 9 3- 18

ROI16%10%3%-15%

Sheet2

Sheet3



Sheet1

HYPOTHTICAL MAILER TO 16 COUNTRIES - COA COSTS

6%Match Charges in USD

AddressMinTotalGrand TotalPer Piece

quantityChargeCharges# of matches

Austria5000$524.40$563.73300$663.00$1,226.73$0.25

Australia5000$392.00$392.00300$212.00$604.00$0.12

Belgium5000$1,179.90$1,179.903000.0$1,179.90$0.24

Canada**5000$450.00$472.503000.0$472.50$0.09

Czech Republic5000$458.85$655.50300$234.00$889.50$0.18

Denmark5000$310.36$310.36300$36.00$346.36$0.07

France5000$1,311.00$1,311.00300$300.00$1,611.00$0.32

Germany5000$655.50$655.50300$624.00$1,279.50$0.26

Netherlands5000$2,294.25$2,294.25300$916.00$3,210.25$0.64

Norway5000$886.75$886.75300$99.00$985.75$0.20

Poland5000$712.74$750.07300$61.00$811.07$0.16

Slovak Republic5000$458.85$960.00300$234.00$1,194.00$0.24

Sweden5000$487.71$487.71300$66.00$553.71$0.11

Switzerland5000$287.28$328.323000.0$328.32$0.07

UK5000$679.00$712.95300$407.00$1,119.95$0.22

US**5000$350.00$367.503000.0$367.50$0.07

Total80000$12,328.054500$3,852.00$16,180.05$0.20

1Delivery point and address verification are frequently additional charges

2Some Posts charge for file conversion.

3Some Posts charge for run time.

Sheet2

Sheet3



The United States letter monopoly is among the least liberal in the world because it is not subject to price or weight limitations. The U.S., however, allows worksharing, which has grown steadily and substantially over time. As a result, much of the value chain is now in the hands of mailers and third-party consolidators, and, due to worksharing, the U.S. has the most liberalized postal market in the industrialized world. Because even total liberalization of the monopoly may not be effective in creating postal competition (e.g., Sweden and New Zealand), worksharing may be a more effective way to introduce competition into a postal market. THE IMPACT OF USING WORKSHARING TO LIBERALIZE A POSTAL MARKET; Robert H. Cohen, William W. Ferguson, John D. Waller and Spyros S. XenakisMailers Want Worksharing


A Brief History of Worksharing in the U.S.


WORKSHARING Where USPS Is LiberalizedWorksharing saved USPS $14 Billion in 2004Saved economy $11 Billion in 2004USPS workforce reduction due to worksharing workforce would have had to increase 22% (additional 187,000 work years) Stimulates mail volume Since introduction of worksharing discounts for advertising mail in 1978, ad mail has grown 240% Source: The Impact of Using Worksharing to Liberalize a Postal Market; Cohen, Ferguson, Waller, Xenakis


POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT (PAEA)Does new law set USPS on path to commercialization?New law sets up market-dominant and competitive categories.Modern system of regulation for market-dominant products tied to inflationary price cap. (Rules still to be written.)USPS free to set rates for competitive products as long as rate cover appropriate share of institutional costs. (Rules still to be written.)


PAEA International Highlights of New LawCustoms law applied equally to competitive products. (June 20 is date for this to be done.)Dept. of State must adopt competitively neutral policy towards UPU. (Immediate action.)PRC has greater authority in international postal policy.PRC has authority to review international mail rates.Not clear exactly what PRCs authority is. Rules still to be written.


On Competitive Side: Appears to set USPS on a path to commercialization.Freedom around pricingCustomized agreements allowedShort lead time on announcing rate increasesQuicker response to competitors actionsMarket-Dominant Side: Jury is still out. Too many rules still to be written.

The Verdict


OpportunitiesGetting the full range of services from USPSFor example, Customer X could get customized international agreement, customized prices on Priority Mail and a negotiated service agreement on market-dominant products, such as volume discounts on incremental volume growth.


Whats Needed to CompeteTracking and tracing of competitive productsGuaranteed deliveryOn-time performance of Priority Mail in high-90%


Most Important NeedCulture Change: USPS, PRC and IndustryIt is time to think of USPS as a corporate commercial activity and not a federal government program. If it remains a federal program, like highways or Amtrak or homeland security funds, every member of Congress feels it is his/her job to get a fair share for his/her constituents -- regardless of what is good for the country. We need to get USPS as far into the commercial realm as feasible, and as far out of the political realm as possible.(Disclaimer: This is Kates opinion and is not necessarily the view of the association.)


Kate [email protected]

Questions?

A footnote from the PQ 1 1996 RPW Report says " Beginning Quarter 1 FY 1996 International Surface Airlift (ISAL) data includes pieces. Although ISAL pieces are included in the totals, ISAL pieces have been excluded from the percent change calculations for total international mail and total all mail volume in order to provide a same period last year comparison."So mail matters. It works. And its growing in sophistication and usefulness. But now I turn to an equally critical issue, which involves mission critical data within your control: accurate delivery points and accurate addresses, and your willingness to share those with me. Not lists of buyers, but a database that tells me a customer or prospect has given me a valid address, and which tells me when they move away, and where they went. Look how our merchants rank their biggest headaches today. Bad addresses tops the list. It is a perennial problem for marketers and merchants, both. The Posts can help with that. In fact, as I hope I will show you- you have to help us if you want us to use you.


Ive provided all the data on these countries as to how much it would cost to run 5,000 records to be sure the letters would be forwarded if necessary. And the variations of the cost are astounding. Some countries charge even when they find a bad address! The more people move, the more it costs the mailer. Here we use 6% as a possible bad address rate, which is not at all unusual. In fact, a consumer market in a developed country would expect his file to degrade at least 15% per year. In this example, and these are real figures, the cost per piece for address correction varies from 7 cents in the US to 64 cents in the Netherlands. 64 cents-as much as postage! Let me show you this another way.

Base means the basic charge to run your file through the system, and in some cases there is a minimum fee and an additional requiredfee for delivery point validation. The yellow bit is the extra amount charged you when a bad address is found and replaced. Now, 6% error in a consumer file is not unusual. This is outrageously expensive. And finally, many of the Posts charge the consumer for the privilege of having their mail forwarded to them, which of course means many dont use the service and more undeliverable mail is created. More environmental waste.

Worksharing can be defined as an unbundling of the postal value chain that allows mailers to select the activities they want to buy from the Postal Service with the understanding that the USPS always performs the delivery function. If the Postal Service had to perform all the worksharing functions performed by the private sector, mail processing labor costs would have increased from $14.7 billion to $22.7 billion in 1999. The savings is even greater in 2004. This translates into a workforce increase of 187 thousand, which would have taken USPS from 907,000 to 1.1 million employee work years. Worksharing has improved USPS efficiencies.

dma international day postal liberalization here and abroad kate muth association for postal...

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