Ahead of a shipping fee increase taking effect this weekend, the trade group representing mail-order firms is planning to appeal to the U.S. Postal Service for a discounted rate for parcels and catalogs, a move that ecommerce merchants might similarly consider as they try to keep their own shipping rates in check.
The American Catalog Mailers Association (ACMA) is canvasing both member companies and non-members alike as it tries to assemble a bloc of mailers that, collectively, would be eligible for a negotiated service agreement (NSA) with the Postal Service.
“I’m looking at not only how to increase our membership and broaden our footprint, but also all the ways we can add additional value to those who are our members,” explained Lynn Noble, the ACMA’s vice president of industry relations. “One of the things that is a very critical component to all of their success right now is the area of parcel shipment and how competitive they can remain when they’re talking about the likes of Amazon.”
The ACMA’s precise strategy remains somewhat in flux, given the changes that the Postal Service is making to its own shipping options. The agency has stated that it is looking to phase out Commercial Plus pricing as a standalone category, but spokeswoman Darleen Reid-DeMeo indicated that mailers will be able to get those same discounts through an NSA.
“The USPS is ending CPP, but the CPP pricing is available with a contract,” she said.
The ACMA will simply be looking for the best deal for its members, many of whom on their own would not meet the baseline shipping volume threshold for those rates.
“What we’re going to pursue is whatever is available that we can meet the minimal criteria,” Noble said.
“If CPP pricing is still available, and it is right now, and it is a better rate than what I would get without being able to qualify for it (on individual members’ mailing volumes alone), then that’s the one I’m going to go for first,” he said, adding that he is confident that his group will be able to win an even more favorable rate through a negotiated agreement. “We should be able to further demonstrate that we can meet the criteria to validate and support growth in an NSA environment as well.”
Noble, who previously served as a senior official at the Postal Service, noted that the agency has been moving more aggressively to strike deals with ecommerce firms and other shippers who have sufficient volume to warrant a discounted rate.
And it has found ready partners across the industry, as large-volume mailers have been working feverishly so negotiate agreements not only with the Postal Service, but also with other commercial mailers like FedEx and UPS.
“I think there’s a willingness on the Postal Service’s part to work with anyone who is going to bring them additional volume and profitability,” Noble said.
Noble declined to identify any ecommerce firms that have struck NSAs with the Postal Service, though it is known that eBay and Amazon have brokered shipping arrangements with the agency. Reid-DeMeo reiterated the Postal Service’s policy of not divulging proprietary details of the NSAs, which are subject to non-disclosure agreements.
A spokeswoman for the Postal Regulatory Commission also declined to comment on individual parties, but provided a fact sheet that shows an increase in negotiated agreements that the Postal Service has struck in competitive-product areas such as shipping. In fiscal 2015, the USPS reached NSAs with 81 domestic firms in competitive product classes, well above the previous high-water mark of 52 in 2013.
“Almost anyone who’s a large shipper has one. If they wanted one, they got it. That’s just the nature of the business over there,” Noble said, noting the plurality of shipping providers large firms are working with. “Almost everyone in the space, whether they are historically an ecommerce-originated company or a cataloger or a retailer, they’re all intermingled now and every single one of them is looking across the board. There’s hardly anyone out there who’s giving everything to one carrier.”
Noble said that the baseline criteria for reaching an NSA requires the applicant to demonstrate that the increased volume that such an arrangement would bring would offset any revenue losses from the discounted rates.
“The Postal Service has to come out in a better position having done the deal than they would have not having done the deal,” he said. “The net-net to everyone is everybody’s in a better position for having done the deal.”
But those agreements haven’t generally been available to smaller shippers, which led the ACMA – whose membership ranges from boutique shops to large-volume businesses – to launch the initiative to band together for a group discount based on aggregated shipping volumes.
Noble said that talks with the Postal Service are only in the preliminary stage, and that the ACMA is hoping to gather all the data on shipping volumes from interested parties by the end of the month. After that, negotiations will begin in earnest, and Noble is hopeful that the group will have a final agreement hammered out within a few months.
All NSAs must win approval from the Postal Regulatory Commission, but Noble said he is confident that his group will emerge from the process with a favorable deal in hand.
“Ultimately we want to drive costs out of the costs of delivering catalogs and we want to drive costs out of the costs of delivering packages,” he said.