on Feb 18th, 2013 in Pricing & Rates | 6 comments
 

After more than 20 years of service, the venerable POSTNet barcode on envelopes for automating and sorting mail retired on January 28. The Postal Service now requires that mailings have at least Basic-Service Intelligent Mail barcodes (IMb) to qualify for automation discounts. Mailers will need to switch to Full-Service IMb by January 2014 to receive maximum discounts at that time. Even though the Postal Service provided a lengthy lead time and a good deal of education on the discontinuance of the POSTNet barcode, the IMb requirement undoubtedly caught some smaller mailers by surprise. At the start of the New Year, less than half of commercial mail contained an IMb, suggesting a sizable number of mailers still needed to make the switch. While large commercial mailers were early adopters of IMb, many mid-sized and smaller mailers were hesitant to make the commitment and investment. Basic-Service IMb is not as big a step as the move to Full-Service IMb but it also yields fewer benefits. Full-Service Intelligent Mail will allow mailers to receive richer data about their mailings, but requires them to invest in hardware and software changes. The Postal Service wants to give mailers an incentive to make the conversion. It has proposed a one-time credit ranging from $2,000 to $5,000 to customers that make the conversion to Full-Service IMb. The credit would be based on the number of pieces the customer sends in a year. In an October Federal Register notice, the Postal Service laid out its proposal and further details are expected in a final rule. Is an incentive necessary to get mailers to invest in Full-Service IMb? If you are a mailer, do you plan to take advantage of the incentive?

Comments

Has the final rule been issued yet? Does anyone know what the costs to mailers are for basic and full?

The Postal Service is still going forward with a due date of Jan. 2014 for mailers to receive automation discounts for full-service IMb conversion. As far as the cost to mailers, it depends on the software and hardware capabilities that mailers currently have. The Postal Service will help mailers become full service capable but the cost depends on the mailer's technology.

Thank you for your comments. We completed a review of the Postal Service's Commercial Mail Entry and Acceptance Initiatives and we too reported similar issues (Sept. 2012). You might be interested in reading the actual report at http://www.uspsoig.gov/foia_files/EN-AR-12-004.pdf

As a mail owner, service consistency and reliability are key components that drive our business decision to use mail for marketing and other business communication. The USPS is using the Imb data to improve service performance. Getting more mail included in the service measurement (FS Imb) allows the USPS to better understand service issues and correct them. This helps keep mail a viable communications channel.

Another component is the total cost of mail as a marketing or business communication channel. This includes both postage and production-related expenses. The Mail Service Providers (MSPs) incur a cost to implement FS Imb. Some of those costs are passed along to the mail owner in the form of processing fees. The larger MSPs may have been early adopters because they could handle the up-front capital expense and then recoup some of that through additional fees to mail owners. Therefore I support that the tech credit would be for both mail service providers and mail owners since both “subsidize” the USPS requirement. Depending on many variables, the credit may not cover much of the costs incurred.

As for why the slow adoption - For smaller MSPs, they may not have the up-front capital to make the investment required to support FS Imb. I would think these MSPs look at the cost along with other factors* when considering if it's a viable option to make the change or if this is the requirement that shuts their doors as a MAIL service provider.

*Some of the other factors may include whether or not they see the USPS as being "Consistent and Reliable" with implementing changes. The work-arounds/fixes that the MSPs need to do when the USPS implements changes that may not be 100% right (software related, for example) could play a role in whether or not a small MSP can stay in the game. They may not have the resources to keep up. If they do, these work-arounds/fixes could cause work delays and additional costs that are either absorbed by the MSP or passed along to mail owners through additional processing costs. This may also drive mail owners with smaller volumes out of the mail as well, if the total cost of mailing makes the mail too expensive to be a viable communications channel.

On another note: If some smaller mailers were "caught by surprise", it is an opportunity for the USPS look at how they are marketing/communicating/building a business relationship with their industry partners. The mail channel doesn’t begin when the mail is entered at the USPS. There needs to be collaboration and open communication with all stakeholders in order for MSPs and mail owners, big and small, to have an end-to-end channel that is viable, reliable and affordable.

Given the highly technical industry the Postal Services competes within, some would declare that if the Postal Service is just now implementing a requirement for business mailers to use Intelligent Mail Barcodes (IMb) they are well behind the eight ball. While others may see it as the Postal Service moved at an adequate pace to provide its business partners amble time to acquire computer software in preparation for the new IMb requirement. I applaud Postal Service Management for their actions and considerations given towards its business partners relative to the new IMb requirement timeframe. Could this have been done faster? Probably so. Would they have lost some business partners and revenue if this has been propel forward without the Postal Service considering the financial impact and burden the requirement would make on its business partners? More than likely. Congratulations Postal Management, slow and steady does pay off.

We're going out of business and we're bleeding cash. We shouldn't be giving discounts to anybody.

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