PRC approves USPS 'summer sale'
The Postal Regulatory Commission approved the US Postal Service's plans to hold a second “summer sale” this year, offering rebates to corporate mailers. Trade groups the American Catalog Mailers Association and the Direct Marketing Association praised the decision.
The initiative will provide a 30% rebate to eligible mailers on some services from July 1 to September 30. Eligible mailers will receive the rebate on standard mail letter and flats volume above a threshold of 5% more than its volume for the same period in 2009. The USPS is sending invitations to eligible customers.
The PRC cited the Postal Service's financial status in its approval letter, noting that the USPS could have insufficient cash to meet its obligations before the end of this year.
“Offering new discounts under these circumstances represents a risk. However, it is also an attempt by management to bolster flagging volumes while learning about market reactions to price adjustments,” the PRC noted in its decision. “The commission believes that the [Postal Accountability and Enhancement Act], which favors pricing flexibility, necessarily allows the Postal Service to offer new discounts even in troubled financial times.”
The PRC also explained that even if the strategy were to result in a loss for the USPS, it would be “unlikely to seriously worsen the financial situation of the Postal Service.”
The USPS expects the sale to generate between 3.3 million and 1.1 billion new mailpieces. Nearly half of the 960 customers enrolled in last year's sale increased their mail volumes, resulting in 1 billion incremental pieces during the sale period with a net revenue contribution of $24 million, according to the Postal Service.
A company must have mailed 350,000 or more standard mail letters and flats between July 1 and September 30, 2009 to be eligible. The USPS expects more than 3,500 customers to meet its requirements.
Hamilton Davison, president and executive director of the ACMA, said in a statement that the decision is a win for even catalog mailers who cannot participate in the sale.
“If you fall into this category, you should still be pleased with this outcome, because it's the beginning of better, farther-reaching mailing incentives to follow,” he said.
Jerry Cerasale, SVP of government affairs at the DMA, said his group is encouraging members to take part. He added that he'd like to see the sale take place for longer durations.
“Our hope is that in the future it will go for a longer period of time,” he said.