Flats have a poor reputation with presort mailers, so very few are automated. To be sure, flats aren't letters and differ from them in a number of critical ways. A number of perceived issues exist with flats that have depressed the enthusiasm for sorting them, including:
The bottom line is that most presort mailers simply aren't interested in processing flats due to these negative perceptions. But are these really impediments or just challenges that must be overcome before converting flats processing into a highly profitable business? The following analysis examines each of these issues.
There Aren't That Many Flats and There Is Still Plenty of Letter Mail
While abundant letter mail does exist in some instances, most locations have seen a decline in letter mail for several years. Flats automation is a viable alternative to replace at least some of that lost revenue. In addition, substantial flat mail volumes can usually be generated from within an existing base of letter mail customers, so new customers don't necessarily have to be sought. Once the decision to automate flats is made, the rules for sorting them must be dealt with, such as package or tray-based rules in First Class. And if you automate Standard Class flats, you can only sort using packages.
But in those unusual cases where flat volumes simply don't justify automation, services for flats can still be created to meet customers' needs, including:
Per piece fee: For a per piece fee, pick up the flats with the letter mail and apply the required postage, saving the customer a trip to the post office and the labor expense of postage application.
No fee: If competition is particularly fierce, pick up the flats for select customers and apply the postage at no additional charge, again relieving the customer of that labor expense. Although you won't enhance your revenues, you may differentiate yourself by offering a service to customers that your competitors hadn't considered.
There Isn't a Reliable Method of Automating Flats
This used to be the case, but it is no longer. Advancements in weighing technology and software now allow unmetered flats to be placed on an MLOCR sorter, where they are printed with a permit and then sorted and a mailing manifest is created. When manifesting is used, neither you nor your customer needs to apply postage. Manifesting allows each mailpiece to bear a permit imprint, and the postage is paid via a central account. It also allows Standard Class flats of different weights to be submitted via an MLOCR, something not normally allowed by the U.S. Postal Service because individual item weights and the total postage could not be verified. Manifesting also eliminates the need to apply postage to First Class items and allows a much quicker, simpler acceptance procedure. The manifesting process works much like this:
control system.
The method known as Itemized Manifesting under Postal Publication 401 accounts for each mailpiece by weight and by destination ZIP Code.
The Discount doesn't Justify the Additional Time and Effort Required to Sort Flats
If the discounts and per piece fees were the only available revenue, this would be correct. But automation discounts and per piece fees are just the beginning. There are millions of flats mailed every day as First Class that could just as well be mailed as Standard Class but aren't in order to avoid the Standard flat sorting rules. In a single city with fewer than 200,000 residents, there is a verifiable annual volume of at least 2.5 million such flats. Imagine how many there are in New York, Los Angeles and Chicago!
But how can revenue be extracted from this situation? Start with the information in Table 1.
Note the difference between the First and Standard Class postage for a flat of four ounces. Such a difference allows considerable savings to be generated by sending items Standard Class that would otherwise be sent First Class. This savings is shared between the processing bureau and the customer. If such a service is embraced, the revenue generated from it can dwarf that created by automation discounts and per piece fees. Using this First to Standard conversion model, several companies now consolidate Standard Class flats and annually gross over $500,000 with fewer than 10,000 daily pieces. As illustrated in the following example, the processing cost is the sum of the per piece costs for hardware and software, labor, in-bound mail transportation, postage and out-bound mail transportation, including any expediting fees.
Example:
The number and weight of flats, a change in out-bound shipping method or a larger fee, can each effect the presorter's revenue. The desirable client for this conversion service is a mailer of fairly heavy First Class flats, or one that doesn't require the faster delivery times for First Class. Convertible mail types include annual reports, advertising booklets, insurance benefit booklets, mutual fund quarterly reports and distributor sales kits.
For additional information on this and other applications contact Eric at edunlap@idmailsystems.com or to contact Jeff, send him and e-mail at jcraigie@idmailsystems.com. They may also both be reached by phone at 888-IDMAIL9 (436-2459).
