Drop Shipping Saves Direct Mailers Time, Money

Do you need your mail to arrive faster, more predictably and at a lower cost? Would you like to eliminate as many U. S. Postal Service processing stages as possible? An efficient and cost-effective drop ship program may be the solution you're looking for. Since the cost of drop shipping frequently is less than the accompanying postal savings, it's like your direct mailer pays you to handle your mail.

If this sounds too good to be true, rest assured that many large volume mailers are achieving great results right now. With the new postal rates, drop shipping is even more attractive.

What is drop shipping? The USPS offers significant discounts in exchange for delivering mail directly to destination postal facilities. Long ago, the USPS decided to embrace the concept of work sharing, which means that postal customers can achieve discounts for reducing USPS processing time. Companies that presort, use automation-compatible imaging (bar coding) and transport mail as close to the final destination as possible will receive the largest postal discounts.

Most direct mailing companies prepare the mail as best as they can and deliver it to a local — origin — USPS facility. Mailing companies that take advantage of drop ship discounts will bypass their origin post office, section center facility and bulk mail center by delivering mail directly to destination SCFs and BMCs throughout the country, saving a lot of postage costs.

Postal discounts. As of January, postal discounts for drop shipping increased $3 per thousand pieces, lessening the pain of the overall postal increase. For mail delivered directly to destination BMCs, the postal discount is now $16/M, and to SCFs, it's $21/M. Mailing companies that offer both commingling and drop ship services save direct mailers even more.

In the nonprofit world, low mailing costs are very important. On a percentage basis, drop ship programs benefit nonprofit organizations more than for-profit companies. Although for-profit mail qualifying for five-digit postal rates delivered directly to destination SCFs achieves a healthy 13.1 percent discount, nonprofit mailings get a whopping 22.5 percent.

To maximize postal savings, direct mailing companies need to run full tractor-trailer loads of mail, and this often requires combining drop shipped mail from several mail runs. Mailing companies without a critical mass of direct mail volume are forced to either run less-than-truckload trailers, or have them leave too infrequently — neither of which is good for customers. If too many LTL trailers are used, freight costs will exceed postal discounts and the only winners will be trucking companies.

There's more to drop shipping than cost savings. Less USPS handling means mail gets to its destination faster and more predictably. Bypassing the local post office, local SCF, local BMC and destination BMCs means there is less chance for mail to be delayed. On average, drop shipping will save between three and 72 hours per bypassed USPS postal facility. If four facilities are bypassed, up to 11 days of processing time variance will be eliminated.

Drop shipping allows direct mailers to segment certain portions of the country, which means they have better control of in-home dates. For example, if you want a homogeneous drop date for your mailing, drop shipping allows you to schedule all mail so it arrives at destination SCFs and BMCs throughout the country at or near the same time. Although no one can control when destination USPS facilities actually process the mail, less postal handling means that the range of home delivery dates will be narrowed.

On the other hand, if you are concerned about overloading your response-center capacity, you may want to stagger your in-home dates. Drop shipping allows control of when mail is delivered to destination postal facilities so response centers aren't flooded by an avalanche of simultaneous responses.

Drop shipping also offers better test-marketing control and tracking ability. Since truck manifests clearly show mail routes, determining when a piece of mail is delivered to destination postal facilities is easy and accurate. Drop shipping allows mail to become modular so all trays and pallets are fully traceable: Each piece of mail belongs to a tray; each tray belongs to a pallet; and each pallet belongs to a truck. This level of tracing isn't possible without drop shipping.

Outsourcing direct mailing services. When outsourcing drop ship services, ask your direct mailer to perform a data file analysis to determine how much your job will benefit. Some projects just aren't a good fit for drop shipping and an up-front analysis can prevent a lot of wasted effort.

Your mailing company should process your data to achieve maximum drop shipping and postal savings. Large companies that send out regularly scheduled trucks throughout the country can overlay the transportation schedules of work already inhouse over the data of a proposed job and accurately calculate drop ship savings. Once production on a job has begun, staging it in a drop ship order that matches jobs already inhouse will maximize postal discounts for customers. For example, if your mailing has only 10,000 pieces going to Boston, piggybacking it onto another truck with the same destination may prevent LTL shipments for several companies.

Mailing companies pay you to process your mail. Often, mailing processing costs are far less than the accompanying postal savings. This means direct mail companies essentially pay their customers to process mail.

Drop shipping programs are not for everyone. Some companies insist that their mail must enter the USPS postal stream on a particular day, regardless of impact on in-home delivery dates. Those who need the security of a postal receipt showing that mail was delivered to a postal facility on a particular day shouldn't use drop ship services. However, for the fastest delivery, most production control and maximum postal savings, drop a few hints to your direct mailing partner about drop shipping your next large mailing job.

Ken Boone is president of Direct Marketing Associates Inc., Baltimore, a full service and high volume direct mailing house. His e-mail address is [email protected]

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