How the Changes to the United States Postal Service Affect Businesses

USPS has raised rates.

To decrease its staggering financial losses the U.S. Postal Service is considering closing up to about 250 processing facilities and eliminating about 28,000 jobs. The U.S. Postal Service lost $5.1 billion dollars in 2011. According to a U.S. Postal Service press release, mail volume decreased by 3 billion pieces in 2011, a 1.7 percent decrease from 2010. According to spokesman Dave Williams, the proposed changes will save the U.S. Postal Service $2.1 billion annually.

Ruth Goldway, chairman of the Postal Regulatory Commission, which has oversight but not total authority over the U.S. Postal Service, said “The Internet does have an impact on first-class mail, but that’s not the major cause of the deficit. People are still using mail. Packages are growing and mail can adjust to the niche environment.” Goldway believes the major reason for the losses isn’t the Internet; she stated “The Postal Service is overly burdened to prepay health care benefits and to pay for that at a high rate has really drained the Postal Service” (Source: Wauwatosa Patch).

Closing Processing Centers

Williams mentioned the closing of post offices in small town and eliminating Saturday delivery are being studied. Local businesses throughout the nation are concerned the closing of processing centers will affect their business. However, in Terre Haute, Indiana, one business owner stated he received some assurance from officials that businesses will still have a place to drop off mail for a discount, although the new place is not official. Businesses should check with their local Postal Service officials.

Proposed Service Standard Changes for Package Services

The Postal Service reports it doesn’t have any plans to change service standard business rules for Package Services due to network rationalization. However, changes will be made in the service standards applying to specific three-digit to three-digit ZIP Code origin-destination pairs based on the reconfiguration of the network as well as changes to the labeling lists which implement the current service standard business rules. Relatively minor service standard business rule changes for Package Services unrelated to network rationalization are being proposed for mail addressed to non-contiguous U.S. destinations. No service changes associated with the request will be implemented before May 15, 2012 (Source: United States Postal Service).

Beginning January 22, 2012 the cost of mailing services are expected, on average, to increase by 2.1 percent and shipping services are projected to increase, on average, 4.6 percent. Price changes affect the full range of Postal products:

Mailing products include:

  • First-Class Mail Letters, Flats, Postcards and Parcels
  • First-Class International Mail
  • First-Class Mail Presort Letters
  • Standard Mail
  • Package Services
  • Extra Services

Shipping products include:

  • Priority Mail
  • Priority International
  • Global Express Guaranteed
  • Express Mail
  • Parcel Select
  • Express Mail International

FedEx and UPS will increase prices for expedited and ground shipments on January 2, 2012.

First-Class Mail

The USPS plans to end overnight delivery for first-class mail. The USPS has stated letters and many bills and bill payments will have a two to three day standard service. This could affect businesses requiring prompt billing which rely on the Postal Service instead of the Internet.

Williams mentioned beginning in spring the USPS plans on changing the geographic reach of its two-day standard from a 12-hour drive from a letter’s place of origin to approximately four hours, thus the Postal Service will guarantee delivery in two days or less within a four-hour window. Anything beyond that has a guarantee of three days or less. Only commercial bulk mailers might be able to have first-class mail delivered the next day; if they’re able to get it properly bundled to the Post Office early in the morning.

Beginning January 22, first-class mail will increase by one cent to 45 cents and post cards will cost 32 cents to send instead of the current 29 cents. The good news is mail weighing up to 1.9 ounces (as apposed to only one ounce) can be sent first-class mail, allowing businesses to place additional inserts in their packages at no additional cost.

It’s not certain all the proposed changes will be enacted or enacted without modifications. Due to pressure from Congress the Postal Service has delayed the changes until the middle of May. If the changes are enacted, some businesses using the services of USPS, including fulfillment centers, may have to make adjustments due to longer mail processing times and the possibility of the elimination of Saturday deliveries. Some experts claim the changes made by the Postal Service will likely just make slow delivery a little slower. We shall see.

A Great Press Release Gains Media Attention and Valuable One Way Inbound Links

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Many companies use a press release to announce their product, website or special offer to the world. An engaging, informative press release has the potential to reach thousands or even millions of people. The challenge is writing a press release in the format of a news article but maintain the basic aspects of a good sales letter. Editors and reporters seek interesting press releases to fill up their publications.

Submitting a press release to a wire service helps ensures journalists can find information about your product, services or company. A Middleburg/Ross survey shows 98 percent of journalist go online daily and 73 percent of them look for press releases.

A press release should actually announce news. Editors seek information which benefits their readers, typically about a product or service that solves a business problem saves money or provides a new way of doing something.

Gain Media Attention with a Press Release

To gain media attention, focus on pleasing editors and communications professionals. They read hundreds of press releases; to grab their attention using approaches and angles which make your product or service stand out from the competition. When considering what to publish, editors consider the demands of their audience.  Find out what’s popular in the target publications and find a way to connect your press release to a current hot subject.

Press Releases and Search Engine Optimization

Submitting press releases via a wire service is a great way to enhance a search engine optimization plan. After the press release goes out it’s picked up by publications, news organizations and search engine news services such as Google news, which link back to your website. An array of online news portals may also syndicate the content. Also, some social media websites monitor newswire syndication.

The more legitimate links you have pointing to your website the better the search engine rankings. Search engines respond favorably to one way inbound links from relevant websites. These links help a website move higher in search engine results for specific keywords. Also, include a couple of relevant links in the press release to your website.

A press release shouldn’t praise the company. Don’t use words such as “unique,” “revolutionary” or “best” in the press release. Editors prefer testimonials or quotes from customers instead of praise coming from someone representing the company. Write simply and clearly and don’t include jargon.

A Useful Press Release Concept

One approach is stating a problem and writing about a solution. The problem should be a pressing issue of your target audience. Discuss how the benefits of your product or service deal with the stated problem, but take a business approach, don’t make it look like a sales pitch.

Tips for Writing a Press Release:

  • Editors and reporters get bombarded daily with press releases so it’s best to keep it to one page.
  • Include quality keyword rich content and a couple of links to your website.
  • Use a short title and clearly display your news announcement. The title should entice people to read the press release.
  • Grab the reader’s attention, put the important information in the first paragraph; who, what, why, where, when and how. Impress the editors and readers with the first two lines or else they won’t continue to read it. Subsequent paragraphs expand on the important points with more details and relevant information. Don’t jump from subject to subject, stay focused. If appropriate include an image.
  • Link some information in the press release to something else that’s newsworthy. Communications professionals and publishers seek ways to connect your story to something else that’s popular. They’ll appreciate it.
  • Near the end of the press release, but before the “About the company” paragraph inspire the readers to find out more about your products or services with an interesting statistic, a quote, how your product or service ties into a current trend or provide a thought provoking question.
  • Provide details about the company in the “About the company” paragraph but keep it short and don’t use a lot of praise; it turns off editors and journalists.
  • Base the tone of the article on the audience.
  • Provide contact information at the end of the press release.
  • Make sure all the facts in the press release are correct and make sure the press release has no typos. Proof read it several times and have a few staff members proof read it. Errors can easily harm the reputation of a brand.

Send the press release to editors and writers of relevant newspapers, magazines and trade journals and obviously send it out online. Free newswire services such as pr.com and prleap.com are a possibility, however many companies prefer to pay a newswire service such as prweb.com or prnewswire.com to give the press release its best opportunity to gain attention.

An informative, engaging press release, connected to a popular topic easily grabs attention and enhances your search engine rankings.

UPS and FEDEX Changes Are the Most Important in Over 15 Years

How to Motivate Your Sales Staff

Within the last couple of months, FedEx and then UPS announced some changes to their pricing structures. Although they tried to keep the news under the radar, industry analysts and consultants were quick to pick up the ball and run with it. It’s understandable that these shipping titans would downplay the announcements, considering the fact that this could be the most significant and dramatic cost increase to come out in the last 15 years.

In the past, both companies have applied a dimensional (DIM) charge to packages larger than three cubic feet. Beginning on December 29 of this year for UPS and January 1, 2015 for FedEx, the DIM factor will be applied to all packages regardless of size. (The policy is already standard for FedEx Express and UPS Air.) If you’re an e-commerce retailer or do any type of shipping, these next few months will be crucial for understanding the changes and developing a strategy to mitigate the increases.

How Dimensional Pricing Works

Traditionally, shipping charges have been based on the actual weight of most standard-sized parcels. DIM pricing uses a formula that incorporates the size and bulk of the item being shipped to arrive at its dimensional “weight”. This is done by calculating the volume of the shipping container and applying a DIM divisor, which is currently 166 for both UPS and FedEx. (Other carriers may use a different number.)

For example: a cubic-foot container would yield a DIM weight of 11 pounds (12″ H x 12″ L x 12″ W = 1,728 divided by 166). If the item you’re shipping has an actual weight of 11 pounds, you’re in luck. However, if it’s six pounds you’ll end up paying nearly double the old charge. The change will have the biggest negative impact on companies that ship light but bulky products.

What the Changes Mean for the Carriers

It’s estimated that these price changes will affect approximately one-third of all ground shipments, although that number will be diminished somewhat since companies have several months to prepare and modify their shipping methods. They will certainly result in several millions of dollars in revenue increases for both companies with little to no corresponding increase in capital investment.

The e-commerce boom is a major driving force behind the new policies. It’s caused a significant increase in business-to-consumer shipments, which are less desirable because they’re lighter and require individual stops to deliver single packages. On the other hand, business-to-business shipments provide greater revenues per stop because the packages are heavier and involve larger quantities.

What the Changes Mean for You

The most immediate concern is formulating a plan to adjust your own shipping policies to avoid a significant financial burden. Depending on your volume of shipping and size of your products, increases could be anywhere from five to 25 percent. If you offer flat-rate or free shipping to your customers, you’ll need to rethink that strategy or figure out another way to absorb the costs.

Fortunately, UPS and FedEx made the announcements earlier than usual to give companies ample opportunity to prepare. Here are some tips to get you started.

  • Keep a variety of container sizes on hand so your employees can use the correct one.
  • Train all employees to calculate dimensional weight and pack items as densely as possible. Beware of expensive automated systems that claim to perform the calculations for you. It’s easy enough to do it manually.
  • New pricing won’t be in effect for the holiday season, but since it’s the busiest shipping time it’s a good opportunity to calculate projected DIM charges for a comparison.
  • Meet with your carriers to determine potential cost increases up front. Don’t be afraid to negotiate a change in contract terms. The greater your shipping volume, the more leverage you have.
  • Shop around. Smaller regional carriers may offer more pricing flexibility.

With some planning and creative thinking, you can accommodate these changes with a minimum of disruption to your operations. Start now and take advantage of the window of time before they go into effect.

As always Medallion is here to help when you outsource your warehousing and shipping to us you take advantage of our special negotiated low shipping rates helping to squeeze more profit from each dollar you sell.

Could the Price Changes for FEDEX and UPS Drive More Customers to the USPS?

California Fulfillment Services

For several years, the United States Post Office (USPS) has struggled to remain a viable mailing and shipping option. Email and the Internet have steadily eroded first-class mail, its most profitable segment, while FedEx and UPS have cornered the package delivery business. Ironically, a significant portion of the shipping done through the USPS comes from its two private sector rivals.

FedEx and UPS both move a significant portion of their ground shipping business through the USPS. UPS won’t reveal actual numbers, but the post office delivers approximately 2.2 million packages per day for FedEx, which accounts for 30 percent of its total ground business. The good news is that the USPS desperately needs this increased volume. The bad news is that it’s taking its toll on an antiquated, overtaxed system.

Contracted shipping, by these two mammoth shippers, to the USPS falls under the umbrella of the post office’s Parcel Select service, which is designed to accommodate extraordinary high volume resources. Parcel Select accounts for about one-third of the USPS’s annual package-delivery volume, with a staggering 500 percent growth between 2009 and 2013 for a current total of 1.29 billion packages. Projections call for a healthy 12 percent growth next year.

Parcel Select, started in 2008, is incorporated in the less expensive two- to seven-day services of FedEx (Smartpost) and UPS (Surepost). These two companies move the packages across the bulk of the distance then sort them by ZIP code and take them to the local post office for final delivery. This final leg of the process is the most costly because it involves multiple stops to deliver single packages at each and FedEx and UPS are glad to do the handoff as a cost saving action.

The huge volume of business and dire financial straits of the USPS have many people wondering if the post office is undercutting itself by not charging enough for Parcel Select. UPS is even questioning whether or not the USPS is unfairly cross-subsidizing other services to keep prices down.

Postmaster General Patrick R. Donahoe dismisses criticism of the Parcel Select pricing, saying that the delivery stops are being made anyway so there’s no appreciable increase in labor or costs. He has also stated that the USPS’s goal is to more than double its package delivery business in the next few years, seeing that as the area with the most potential for growth.

However, the post office is already starting to show signs that it may not be well-equipped to handle this surge. The agency was formed in 1775 as a way to handle correspondence during the Revolutionary War and has remained first and foremost a service to handle letters. When it comes to package delivery, the USPS is light years behind UPS and FedEx in terms of sophisticated technology, continuing to do many functions manually.Our new warehouse location.

In addition, almost three-quarters of the post office’s vehicles are more than 20 years old. Donahoe has plans to invest $10 billion in much-needed improvements over the next four years, but given the depleted coffers it’s a bit murky as to where this money will come from. The Postal Service exhausted its $15 billion credit limit with the Treasury Department back in 2012, so Donahoe is hoping for help from a proposed Congressional bill that would allow some flexibility in finances.

The USPS is at a serious crossroads with its Parcel Select service. If it misjudges its ability to effectively handle the business, it will create a domino effect putting all its other functions in jeopardy. Additionally, with the pending rate calculation changes scheduled to go into effect at UPS and FEDEX the United States Postal Service’s shipping options for businesses are looking like a deal, but can the USPS step up to take on the increase load?

When Does it Make Sense for a Business to Use a Fulfillment House? What Companies Need to Know

How to Motivate Your Sales Staff

Most ecommerce companies are surprised by how little third-party fulfillment costs, particularly when compared to how much they already spend to warehouse, package, and ship products. Outsourcing order fulfillment is cost effective and allows you to switch variable costs to fixed costs. Gene Kent, CEO of Medallion Fulfillment & Logistics said, “Many times companies are surprised at the overall cost savings our services have supplied when they review their bottom line after the first six months. As we have heavily invested in technology, both in order processing and bar coding in our warehouse, we are able to process orders faster and cheaper than you can typically do yourself.”

When you compare the total cost of order fulfillment, i.e. maintaining a warehouse, lease payments, staff, benefits, unemployment taxes, insurance etc., to an order fulfillment provider’s fixed cost model, you quickly realize that making the switch saves money. Your business can save from 20 to 50 percent on current order fulfillment expenses.

Minimizing Errors Saves Money

If you’re experiencing even slight errors in the order fulfillment process you might be losing a significant amount of repeat business. Order errors inspire new customers and dedicated customers to buy products from other companies, especially in highly competitive niches. A high quality order fulfillment company satisfies customers which lead to repeat business. “Our warehouse bar coding system eliminates problems. When customer merchandise is received in our warehouse it is immediately bar coded and entered into inventory. Hand held scanners are used by our packers and your inventory is tracked all the way to order shipping. We are using one of the most technologically advanced order and inventory management systems allowing business owners to review stock and order statuses of items on our system 24/7 from anywhere in the world just by using the Internet.” said Gene Kent.

Looking to Expand Your Reach?

Fulfillment houses are ideal for companies seeking to sell products overseas because they have the expertise to ensure your products arrive on time and safely. If you’re seeking to expand your company’s customer base by providing customers more alternatives for ordering products and paying, don’t increase your overhead, outsource the fulfillment process.

Wholesale Orders or Business to Business Orders

As your company expands, a fulfillment company can handle your wholesale or B2B orders. Wholesale orders from large retail chains, catalogs and other mass merchants have different demands than business-to-consumer orders. The penalty for noncompliance with an order from a chain of retail stores for even something trivial can be costly.

Fulfillment houses routinely work with wholesale orders and can develop order processing checklists for your account to assure that your orders are completed based on the requirements of the wholesaler saving you costly chargebacks.

Huge, Sudden Increase in Orders

If you’re considering adding new distribution channels or initiating major new promotions, be prepared for potentially thousands of new orders overnight. A huge increase in orders may overwhelm your back-end system; delaying shipments which leads to unhappy customers. An experienced fulfillment company knows how to properly take care of a large increase in orders. A fulfillment house allows you to ramp up very quickly without increasing your overhead.

If your company has a difficult time maintaining a balance between inventory supply and demand, a knowledgeable order fulfillment company can make a huge difference.

Foreign Companies Selling in the U.S.

Businesses based outside of the United States, partnering with a fulfillment service save time and money because they don’t need a warehouse, office and a staff in the United States; they can focus on obtaining new customers.

The Real Advantages of Partnering with a Fulfillment Service:

  • They know how to handle opportunities and problems which may occur as your business expands.
  • Only pay for fulfillment services when you generate sales.
  • Reduce fixed cost overhead.
  • No need to obtain a larger facility to store products when the business expands.
  • Bulk shipping rates available to fulfillment companies; high shipping cost can break deals with clients.
  • They buy shipping materials in bulk at better rates.
  • An active fulfillment company stays current with the latest software and order processing technology.
  • If your business experiences low volume and high volume days, fulfillment firms eliminate the employee cost associated with the fluctuation.
  • You refine and improve your backdoor operations.

Many nationally known companies reap the benefits of partnering with a third party fulfillment center. Small, medium and large businesses can do the same. With 25 years as a fulfillment service provider, Medallion Fulfillment & Logistics understands your culture, brand, and products from a depth of real world experience.

Isn’t it time to find out how you can save time and money on order processing while you work on expanding your market and sales?