Drop-Ship To Combat Costs Of Postal Hike

Folio: The Magazine for Magazine Management, Nov, 2000

Worried about the cost effects that the rate increase proposed the U.S. Postal Service will have on your business? Publishers aren't alone; direct marketers are experiencing sleepless nights, too. One way to sleep better is to practice address "hygiene." That is, update your database and address files to eliminate as many of the outdated names as possible.

Another approach, according to Clarence Banks of Donnelley Logistics Services, is to focus on drop-shipping. Because drop-shipping trucks your magazines closer to their destinations before they enter the postal stream, it saves money by bypassing delivery points. While Bound Printed Matter rates are proposed to increase an average of 18.1 percent, three new destination discounts are being introduced to provide mailers with opportunities to reduce their postage costs. The Postal Service has proposed discounts for mail drop-shipped to a Bulk Mail Center (BMC), the first major sortation site in the Postal Service delivery channel; a Sectional Center Facility ( SCF); or a Destination Delivery Unit (DDU). For example, by drop-shipping periodicals to a Zone 5 (basic presort) SCF, publishers would save 9.4 percent, or $15.10 per hundredweight, over a Zone 1 mailing (calculated according to the proposed postal-rate increase). A Zone 5 DDU drop-ship would save 12.4 percent, or $18.10 per hundredweight However, Banks warns that recent fuel-price increases could mean higher transportation costs in the future. A possible solution is to bulk ship your titles with freight from other customers--it's cheaper, and larger consolidators will go deeper into the mail stream.