Case Study: Consumer Reports
May 27, 2015
Consumer Reports began publication as a nonprofit with no advertising in 1936. It now publishes its flagship magazine plus three related newsletters: Shop Smart, On Health, and Money Adviser. Consumer Reports takes mailing very seriously as it spends over $30 million on postage annually, one third of which is for mailing its periodical publications.
Consumer Reports works with some of the industry’s best printers and mail service providers to stay on the leading edge of mailing efficiency and to respond to all of the pricing signals that the United States Postal Service (USPS) sends its way. Their publications have taken advantage of all data and technology advances that make financial sense to improve mailing efficiency and to meet USPS requirements. This includes the full alphabet soup of postal enhancements: drop shipping; co-binding with other publications; Flats Sequencing System (FSS) preparation; co-mailing with other periodicals and mixed classes of main runs and/or supplemental copies; variable trim binding; and co-mailing using thin pocket feeders.
What signal would you take from a supplier you have used for almost 80 years when it shocked you with cumulative three year price increases ranging from 11% to 24%? Price increases that range from two to almost five times higher than the rate of inflation at a time when the supplier is supposedly trying to solidify its customer base after a large recession. Consumer Reports and many nonprofit publishers who are customers of the Postal Service are wondering what signal it is sending.
And this case study is only one example of a widespread shock to the mailing community. By no means are the excessive postage pricing increases limited to Consumer Reports, to nonprofits, or to periodicals. Many other nonprofit publications have been hit with increases well above inflation. For-profit publications that are light-weight also have been hit with big increases. And many of the most efficient mailers of Standard Mail flats, nonprofit and for-profit, are now finding that they will have postage increases well above inflation.
A major reason that Standard flats mailers are experiencing large increases is that the USPS reneged on its longstanding promise to not punish carrier route (CR) mail when it began implementing FSS-specific rates. In some cases, the FSS premium over previous CR rates has been found to be in the area of 15 percent. One large nonprofit that mails booklets via Standard Mail has recently calculated piece rate increases north of 17 percent.
(c) 2015 Alliance of Nonprofit Mailers