Editor's Note: This originally appeared in our sister publication, PARCEL, but as more and more mailers are taking on shipping duties, we wanted to share it with our Mailing Systems Technology audience as well.
Every year, incorrect postal information costs the United States Postal Service (USPS) $1.4 billion. With such a massive fee looming annually – none of which is going to USPS operations, but simply to rectifying incorrect postal information – the carrier’s soon-to-be-launched Delivery Point Validation (DPV) mandate should come as no surprise.
The regulation, which will charge retailers incremental fees for incomplete address information (think a wrong apartment number or a missing street versus avenue designation), could go into effect as soon as in the next few months. A single chargeback could cost mailers as much as $0.20.
Although USPS is championing the DPV regulations, it is important to understand that compliance with the updates is in everyone’s best interest. Retailers may be upset by the potential for increased shipping fees, but if they simply comply with the mandated address updates they will avoid penalties entirely while also benefiting from stronger package delivery operations. Better regulated shipping information with reduced room for error elevates the e-commerce retail industry at large, ultimately saving mailers money, driving a more efficient shipping process and facilitating a seamless customer experience.
For more than 200 years, USPS has been a trusted partner of retailers around the world. In order to sustain this valued network, it is in retailers’ best interest to get on board.
What the USPS DPV Mandate Means for Retailers
To ensure maximum efficiency, USPS plans to fine shippers that do not include a complete address that electronically validates prior to delivery. The bottom line here is that address shipping information must match what USPS has on file for address. Currently, only 87% of packages shipped in the U.S. are compliant with this standard. If DPV mandates had been enforced in 2014, for example, retailers and other shippers would have incurred fines estimated at $55 million for non-compliant parcels. Moving forward, DPV will be particularly costly for high-volume shippers who may suffer multiple infractions at once.
Specifically, DPV requires retailers and other shippers to improve:
1. Manifest Quality: Information in a manifest file must be accurate and up to date before shipping. Shippers should make every effort to improve the quality of an address. Also, shippers should make sure that the field lengths are correct for each address field and that no punctuation and special characters are used. For example, the following address meets the standards:
OSM WORLDWIDE
651 SUPREME DR
BENSENVILLE IL 60106-1157
2. Address Quality: Every package recipient's address must meet DPV standards. This includes correct recipient address details down to street versus avenue versus lane, cardinal directions and apartment number. The shipper must verify that the street or zip-11 included in the Shipping Services File (SSF) is delivery point validated. When address information is missing, USPS will consider a package invalid and institute a fine, even if the package is still properly delivered. A single incorrect piece can affect an entire shipment.
3. Barcode Quality: Barcode construction and readability will be used as metrics for package validation.
DPV mandates will affect products such as USPS Priority Mail Express, Priority Mail letters, flats and parcels, Parcel Select irregular and machinable parcels, Parcel Select Lightweight and First-Class Package Services. Many e-commerce retailers depend on exactly these packages to transport customer orders daily.
Tips to Become DPV-Compliant Today
USPS has delayed DPV implementation a number of times, in large part due to a tremendous amount of industry pushback, the majority of which is financially motivated. However, little discussion has happened around what retailers and other shippers should do in the meantime.
With the possibility of millions of dollars in DPV fines on the line, retailers and other shippers must validate addresses and repair discrepancies now. Updating shipping information is not something that can be done overnight, and the longer retailers wait to make improvements, the heftier the fines they risk suffering when DPV goes live. The upcoming regulatory change will only become more difficult to address as time passes.
For new customers, it is critical that brands obtain shipping information that is as complete as possible. For online retailers, this means prompting shoppers to enter detailed address information that meets the DPV quality specifications mentioned above.
Even details as small as street type and unit number are necessary to fully comply with DPV standards. For example, there are many streets with the same name, which makes it impossible to automatically connect an address with its correct avenue, boulevard, lane, etc. Securing this information at initial purchase is the best way to avoid rectifying discrepancies later.
For existing customers grandfathered in with address information prior to DPV mandates, avoid blanket correction campaigns, as these may alarm or displease shoppers who have already provided proper delivery details. Rather, updates can be implemented on a case-by-case basis. For instance, after receiving feedback from USPS that an address is invalid, an online retailer can reach out to that specific customer via email and request that he or she either confirms a delivery address or updates it.
This approach helps target habitual offenders without annoying compliant customers. Again, USPS should be seen as a helpful alarm system here, not a necessary evil, as correcting inaccurate addresses early on limits the number of fines incurred.
Cleaning and updating address data can be a tall task for retailers. While it certainly behooves companies to become more educated on DPV mandates, it is also a smart choice to partner with a shipping provider aware of DPV regulations. Qualified shipping companies are capable of verifying customer files and delivery information against the USPS address databases, automatically making changes to address data when necessary.
The best partners are those with existing relationships with USPS (USPS approved partners), as they will be more familiar with USPS regulations and can prioritize compliance while also finding shippers the best deal possible.
USPS may not yet have determined when its DPV mandates will go into effect, but retailers and other shippers can be certain that they eventually will. The move is a smart financial choice for USPS, and let us not forget that it improves profitability and efficiencies for all parties involved. Compliance is inevitable, and retailers would be prudent to get on board now, or work with a shipping partner that can, to prepare for the future of USPS operations.
James Bishopp is Vice President of IT, OSM Worldwide. To learn more about OSM Worldwide and its approach to USPS regulations, click here.
