Will postal rate hike finally bring catalogers together?
Too often, families come together only at weddings and funerals. Is that what the catalog family is destined to do? Are we simply to share a final meal as we say goodbye to our industry?
The Postal Regulatory Commission, board of governors, the U.S. Postal Service and, ultimately, the be-knighted members of Congress have dealt the catalog world a potentially fatal blow with the horrendous postage increase for catalogs uncovered in the last few days, said to be anywhere from a crippling 20 to 40 percent increase.
The industry is up in arms, e-mails and faxes are flowing to the Congressional clowns, teeth are gnashing and there is a great wailing in the multichannel world. How could we have missed this? How could we have been so blindsided?
Perhaps the answer lies in our past 30 years of apathy. As an industry that makes an enormous contribution to the gross domestic product, we have never come together effectively to defend our turf. We have never groveled in the pockets of politicians like the pharmaceutical, airline or oil industries. We are "Direct Marketers," the good guys. It's never been important for us to make our individual voices heard in the whited sepulcher of Congress. Plus, we have never quite been willing to pony up a portion of our profits to buy ourselves a little future in the cloak rooms like the drug makers.
For 30 years, at least, we have absorbed postal increases without complaint. The lone voice in the wind - Gene Del Polito of the Association of Postal Commerce - had been telling us for decades what was coming, but we did not listen, nor did we support the cause. Well, the time of reckoning is here. The Grim Reaper has appeared.
Somewhere around 1998, we crossed the intersecting line of increasing costs and decreasing response. Cataloging experienced margin erosion. We went from a high-profits business to a less profitable business - still higher than most, but not one with the stellar profits of the past. Yet, we didn't complain.
We gutted it out and found new ways to cut costs and followed our time-honored mantra: Mail smarter. We got better at mailing. We invented co-mailing and other ways to save money. We mastered lists, databases, co-ops and models.
What we really did was abdicate our position as a viable and valuable industry, and we let the printers fight our postage battles. Valiant as they were, the USPS didn't want to hear from them; they wanted to hear from the ratepayers, from us. And we did not speak up. We just accepted the USPS as a 30-year silent partner and paid out more than our fair share.
Earlier, in the 1990s, the Clinton Administration was busy eliminating welfare. While the smoke and mirrors appeared to be successful, the reality was that welfare was simply transferred to a full employment program in the federal government. The USPS, IRS, Social Security Administration and a host of other agencies all swelled and absorbed a large number of the nation's unemployed. Now, 15 years later, it's time to fund the pensions of all those people, along with the legions of baby boomers who are calling it quits, and the pension funds are - surprise - unfunded. Postal reform demands funding of those pension benefits, and you are looking at an unending future of increased postage as far out as you can see.
Yet no one has successfully pointed out to the postal pundits on the USPS Board of Governors and the Postal Regulatory Commissions what is going to happen. A 20 to 40 percent postal increase will result in a cascade of advertising dollar shifts to the online channel. Catalogs, which represent 80 percent of our industry revenues, will dry up like old newsprint. And what will that mean? About 75 percent of the USPS revenues come from catalogs and Standard Mail - advertising. What happens to the USPS when that revenue stream goes into free fall? What happens to the catalog industry, indeed, the multichannel industry, when catalogs go into free fall?
Make no mistake about it: The catalog still drives 70 to 80 percent of the online orders. The catalog is still the most powerful engine of new customer acquisition. The catalog remains the best economic medium for prospecting and customer retention. Without the catalog, the multichannel retail industry is in trouble.
Why are we in this predicament? Simple. As an industry, we don't own a single politician. Not a senator, not a representative. As an industry, we have no status as a special interest. Left-handed bowlers have more clout in Congress than we do. We have abdicated our powerbase for so long that we simply don't matter. Yet, we are an enormous cog in the economic machine. We employ thousands upon thousands, if not millions, of people. And when you extend our influence to the printing, paper, design, software, telephony, online, e-mail and other industries we fund, the economic scale is breathtaking.
This is a crossroad. This isn't just "another little postage increase." This isn't just another 1 or 2 percent we have to absorb. This is the one that brings us to our knees. What will we do about it? Will we finally come together and standup as a family? Will we finally tell our story forcefully? Unrelentingly? Effectively? Will we spend the money necessary for our survival?
You have only hours to be heard. Read the associated DM News' articles and e-mail or fax every agency involved today. Only you can determine your future.