This is my last post on USPS performance. If you are in the direct marketing or direct mail business, you have seen these before, but unless things stabilize, I don’t want to report, thanks.
The USPS Postal Regulatory Commission has just released the latest Revenues, Pieces and Weights quarterly report. They call it FY Q1/2020.This covers October 1 to December 31, 2019.
Cutting to the chase, I highlight these numbers:
1. First Class revenues are off $161 million, down 2.3% just for the quarter. This was supposed to be the Christmas, Thanksgiving, Halloween and holiday greetings season.
2. Direct Mail or “Marketing Mail” as they have renamed it, down $252 million, or off 5.4% during what was traditionally a good season.
3. Direct mail volume for the quarter was off 1.7 billion pieces…down 7.9%. Hello??
4. Periodical mail continues its slide, revenues off 7.7%, volumes off 7.4%
5. Competitive Packages and Parcel mail, revenues up $137 million, or 2.1%, but quantities down 68 million pieces, off 4.0%.
I suppose I am naiively conservative, but I really expected for this past quarter to shine, and I have been rudely shaken to grasp what everyone else has been saying for years.
On an annual basis, the numbers are no more encouraging. I have created the chart below, converting the USPS fiscal year reports to normal business calendar years: January to December.
Compared to 2018, here are a few highlights about 2019 volumes:
1. First Class revenues off 2.2%; pieces off 3.4%
2. Direct mail revenues off 3.7%; pieces off 5.6%
3. Packages and Parcels revenues up 3.5%; pieces down 2.8%
Clearly, email, chat, web, and social media has displaced the need to use the mail. The only beneficiary in this trend is the package delivery business, which the USPS has carefully cultivated, though the decline in pieces is still a concern.
If there is any bright spot in this numbers soup, it might be that the direct marketers who mail to live know what they are doing; that it’s the small local businesses which used to mail have opted for web and social media instead.
We’ll see, but unless they do, this is my last post on the USPS.
Thanks for reading and sharing. If you are in the DM business, and have an alternative observation to make, I would love to hear it!
4 thoughts on “The Last Post”
Phil—- Thanks for your posts and data over the years. I have shared with you that I do some paid consulting in our field—not as much as it used to be. But can I get your thoughts on a question I am often asked? I give the 10-year “Decade of Facts and Figures” from the USPS site, and then a client asks me “Where does this end?” Is there a floor where people and businesses still will mail bills and use marketing mail? My answer is complex—including that the coming demographic age ranges have grown up using paper mail less and less, and as they replace Boomers, it could go much further down. Still, US population is growing some, and possibly print production for compliance reasons gives a little upward pressure. Your answer to that question?
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Hi Grady: I wish I could tell you. You are reading the thoughts of a guy who flunked Economics 101at U of T. I did get it second time around. Here is what I think is troubling. There may be a floor, but as it involves lower volumes than we have yet seen, the USPS must continue to raise prices, or cut services. Either tactic may further reduce its desirability for communications. At some point, the ROI is not sustainable for marketers. Compliance mailers will find an alternative on the web for legal mail. There comes a point where it just augers in. That is the tipping point. This past quarter, October – December 2019 was chilling. It is historically a strong quarter, but this time around, it fizzled. Why is that? The one upside I do see is that marketers who use package inserts should be out in full force. Amazon, USPS and UPS have delivered more parcels than ever before. Every one of those packages could have ride along ad inserts. All the best to you!
Hi Phil, gloomy start to my day but…..I’m reminded that the death knell of DM has been sounded many times e.g. retail mall expansion in the 50’s and 60’s, catalog sales explosion in the 70’s and 80’s,TV direct sales and of course the internet after that. I’m also reminded that few people wake in the morning saying i need to make a donation to ALA today or I need to subscribe to WSJ today or i need to buy end of life insurance today etal. These needs are created by that piece of mail delivered that day to your mail box. At the end of the day cost per order, per donation, per subscriber etc. will determine DM’s viability. This will not change and the danger as your charts show is who will be delivering that mail in the future. Could be a privatized delivery service, a once again re-organized USPS or some drone synced to your newly designed mail box. I’m feeling better already! Regards to Jane. Allan
Hi Allan! I knew I would hear from you, and I am glad. As I advised Grady, as long as the ROI works, “mail-to-live” direct marketers will still be in our respective mailboxes. It is interesting to note, I went back to the year 2000 and reviewed the RPWs for that period. First Class mail for the year: 103 billion pieces, compared to 55 billion in 2019..a 47% drop in 20 years. Direct mail in 2000 was 89 billion, compared to 74 billion in 2019…only a 17% drop twenty years later. Clearly, direct mail can be sustainable as long as costs stay in line. Always a treat hearing from you; enjoy the sunny side of Florida!