The volume of business mail continues to increase throughout the United States, and postage rates are rising. Yet in many companies, mail center staffs have been cut, and budgets have been slashed. As a result, managers at small, medium and large companies alike are forced to look at operating expenses and identify new areas for savings. Many budget-conscious companies are finding tremendous savings opportunities in their mail centers with the help of consolidators.

Consolidators or drop shippers work with companies to relieve the pressure of tighter budgets and fewer staff. They don't replace a company's mail center, but they help manage increasing mail volumes and capture significant postal savings. With consolidators, companies can take advantage of reduced postal rates without having to make large capital investments in automation equipment or staff. In addition, drop shippers provide an excellent alternative for companies with limited storage space. Many offer warehousing space where mailings are held until their shipping dates.

How Does Mail Consolidation Work?

Consolidators pick up and process mail from a number of customers, then they sort and commingle it. This enables their customers to achieve volumes of mail that qualify for reduced postal rates. The consolidator typically transports the mail deep into the U.S. Postal Service mailstream, very close to its final delivery destination. From there, it is handled by the Postal Service, and final delivery is made.

By teaming with consolidators, the Postal Service is freed of front-end processing and long-haul delivery costs and can focus on local delivery. Customers benefit by experiencing nearly First Class service but at much lower costs.

In addition to delivering the mail "downstream," consolidators evaluate individual pieces of mail and identify postage-savings opportunities for their customers. For example, mail sent by companies via First Class often times qualifies as Standard Mail, which delivers at a reduced rate. Many parcels sent via express carriers qualify for Package Services rates (i.e., Bulk Bound Printed Matter, Media Mail or Parcel Select) through the Postal Service which offers considerable cost savings.

Consolidators also offer expertise on rates and regulations. In June 2002, the Postal Service raised its rates by an average of 8.2% on First Class Mail and 13.5% on Priority Mail. In addition, postal rules changed including the zoning of one-pound packages and increases in the surcharges on many types of mailpieces. Consolidators relieve mail centers of the burden of keeping current with constantly changing rules and regulations.

Creative Solutions

In the Mail Processing Center of one of the largest healthcare providers in the Midwest, Mary Olson and her team are responsible for distributing information as quickly and efficiently as possible. The company has a self-imposed deadline of getting members their ID cards within 72 hours of joining the health plan.

Previously, ID cards were mailed in packets that also included benefit summaries, provider directories and other administrative information. At times, Mary and her team worked under tremendous pressure to ensure benefit packets mailed on time, only to find the packets didn't make it into the hands of members within the 72-hour window because of how slowly the 10-lb. benefit packets moved through the delivery system.

Then the company partnered with a major consolidator. The consolidator suggested they split up the mailpiece, sending the ID cards via First Class Mail, in letter-sized envelopes that move much more quickly through the postal stream. The remaining items were then prepared as a separate mailing.

"I've been impressed with my consolidator's innovative approach to finding mailing solutions and cost-savings opportunities," says Mary. "It has a broad knowledge base and is continually evaluating what we're sending to improve delivery and maximize savings."

The cost savings have been considerable. Since partnering with a consolidator, the company has saved over $1 million in postage and has significantly cut overtime, temporary help and mail-handling expenses.

When to Use a Consolidator

Consolidators can help businesses capture significant postage savings sometimes up to 70% when mailing: