As a member of the ACMA (American Catalog Mailers Association), The Dingley Press sent David Barker, one of our sales representatives to last week’s National Catalog Forum in Washington, DC. I asked David to write up his key take-aways from the session for our Cata Lyst blog and before he could get pen to paper, our friend and catalog industry expert Steve Lett distributed his insights, which he kindly allowed us to re-publish here on our blog. David starts us off with his observations.
As I was summarizing my notes from last week’s ACMA meeting for the Dingley Cata Lyst Blog, I received a conference summary from Steve Lett. After reading his summary, I decided I couldn’t say it any better, so his ACMA summary is posted below.
Before we get there, I attended all 5 ACMA conferences myself, and I would like to congratulate Hamilton Davison, Paul Miller and Cathy Roden for their hard work and commitment to the catalog industry. Their efforts and the support of all the members of the ACMA will protect catalogers and provide continued growth for The Dingley Press and other suppliers to our industry. I would also like to encourage all catalogers to become members and provide support to the ACMA. They are a very valuable resource and voice for us.
On Tuesday evening, the ACMA group held a reception and the PMG (Post Master General) and many USPS high ranking employees were there. I had a great conversation with Krista Finazzo, Executive Director, Operations Integration & Support. It is apparent to me, due to the work of the ACMA, that the USPS is listening and open to suggestions by the catalog industry on how to keep costs down.
Patrick R. Donahoe, USPS Postmaster General and CEO, addressed the group on Wednesday in the last session. He has a large battle to fight with Congress, but his plans to cut costs, I believe, have some merit. He was also genuinely open, once his cost cutting measures are put in place, to review suggestions of “prospecting mail discounts” and other suggestions to increase mail volume.
- Become an ACMA Member.
- Catalogers should go online to the ACMA site and fill out the catalog mailers survey at www.catalogmailers.org. This will help to provide the ACMA with accurate information and will be a helpful tool to have available when discussing postal discounts and mail incentives with the USPS along with providing true costs and the primary interests of catalogs.
- Reach out to your state representatives pushing postal reform and how important it is for the life of your business.
The following in reprinted with permission from Steve Lett at Lett Direct, Inc. and his NewsLETTer.
ACMA Conference a BIG Success for Catalogers
I attended the 5th Annual ACMA (American Catalog Mailers Association) conference in Washington, DC, May 1. It was one of the best conferences for catalogers I have ever attended. The conference provided a great deal of insight into postal, tax, and privacy issues. There were more than 100 people in attendance; approximately 70% catalogers and 30% suppliers, representing the fifth straight ACMA Forum with record attendance. We heard from congressional and senate offices and from the US Postmaster General himself. It is impressive how far this organization has come from its start just five short years ago. That’s evident from the political insiders who spoke to us and with us. I say “with us,” because unlike other conferences, what makes this one stand out is that all the sessions were structured to be open “town hall”-like, with audience members encouraged to speak up at any time. These are my notes from the conference.
The ACMA has three important goals. It wants to be the advocate in Washington for catalogers where other can’t. Its defined goals are as follows:
- Postal (#1 priority)
The main issue with the USPS is costs.
- It must reduce the cost of processing flats (catalog mail).
- Costs have actually increased (not decreased).
- There is much more capacity within the USPS.
- This means the USPS can handle lots more volume without a fixed cost increase.
- Yet, all of this excess capacity is being charged against the cost of processing flats. In total, the USPS needs to reduce costs by $22 billion by 2015. This is what’s required for the USPS to be in the black again.
Catalog mail delivery performance was terrible last fall. On the other hand, for the past four months, the USPS has apparently recognized the problem and fixed it: deliveries have been the best they have ever been. That said, the goal of having 90% of a mailing hitting in-home within a 3-day window is not being met.
SALES AND USE TAX
There are 9,600 sales tax jurisdictions in the United States today. Unless a national sales tax were to be established, it would be nearly impossible for catalogers to collect from all those jurisdictions. What’s more, it would be burdensome and expensive. The courts have continued to uphold the landmark Bellas Hess case from 1967, which was upheld in Quill v. North Dakota in 1992. Some members of Congress are trying to overturn this ruling, but so far without success. Three states (OK, SD and VT) currently have laws requiring catalogers to give notice to customers that sales & use tax are due to their respective states. A fourth state, Colorado, imposed a similar law; however, a contingent led by the DMA and supported by ACMA successfully sued CO earlier this year to get its law overturned.
What are we really talking about with regard to additional tax revenue to the states? One projection is $10 billion nationwide. However, the real number is $3 to $4 billion. It amounts to one-third of one percent of all state tax income. The projection is less because this really only pertains to B-to-C catalogs. B-to-B are already paying use tax. This is not the big revenue producer the public has been led to believe.
The ACMA recently conducted an extensive consumer survey. According to this survey, more than 50% look at every catalog they receive. Approximately two-thirds use catalogs 92% of the time to order, but reading their catalogs to shop then going online to buy. The survey also said that consumers are looking for unique merchandise; items not available in retail stores. The three most important reasons why consumers shop by mail include:
- Like (liking what they find in catalogs)
Here is how consumers think: They see the merchandise in a catalog and feel it must have earned the right to be there. Catalogs provide creditability to consumers and give them the confidence to order. They believe in the products as presented.
Politics drives policy. That’s just the way it is. There are two important bills to watch. H,R, 2309 (House bill) and S. 1789 (Senate bill).
There is talk of having a “prospecting” rate and/or a “seasonal” rate. ACMA’s Postal Committee, has spearheaded this effort.
Labor costs continue to amount to 80% of total costs within the USPS. To deliver to individual mail boxes (vs. cluster delivery) costs $45 per hour. What’s more, the postal workforce’s no layoff policy makes it very difficult to operate the post office cost effectively. Most labor disputes end up in arbitration. Yet, the financial condition of the USPS cannot be used in the argument.
Privation of the post office is not an option
In summary, “excess capacity” of the USPS is clearly the big issue. The USPS must address the cost side as its No. 1 priority; it is the only way to go. The USPS is your largest vendor. Get involved. Join the ACMA and be sure to attend next year’s Forum.