Despite the fact that the USPS has been consistently increasing postage rates, spending on direct mail has increased by only 0.39% per year since 2010. Mailing service providers wishing to remain competitive have been forced to search for innovative ways to reduce their costs. Many have found that a postal logistics strategy that includes commingling is crucial to their success.
As you probably know, mail dropped off at your local post office goes through multiple locations before it reaches its destination. It is taken first to the Sectional Center Facility (SCF) closest to its origin, where it is sorted and combined with other local mail. Next, your mailing travels to the nearby National Distribution Center (NDC) - a much larger facility - where it is once again sorted and merged. The mail is then sent to the Destination NDC and on to the Destination SCF where it is broken down, distributed to the local post offices, and finally delivered to its addressee. This is an effective but lengthy process, and far from the most efficient - or budget-friendly - option.
Because the USPS reduces what it charges to deliver a piece of mail commensurate with the work you save them, savvy mailers typically use postal logistics strategies to cut costs. By using drop shipping, commingling, or a combination of the two methods, companies are able to reduce their budgets, speed up mail deliverability, and even track the delivery of their mail to its ultimate destination. Understanding the difference between the two methods will help you choose the best method for each particular mailing:
Drop Shipping: Drop shipping eliminates at least three steps in the mail stream by delivering your pieces directly to the Destination NDCs and SCFs. If your mailing is large enough, you can probably achieve postage savings of between 12% and 20% by having your mail drop-shipped to Network Distribution Centers (NDCs) and Sectional Center Facilities (SCFs) across the country versus delivering the mail to your local Post Office.
While the postage savings for drop shipping can be enticing, there are several steps you need to take to ensure your mailing is accepted. All mail being drop shipped must be completely sorted, sleeved, tagged and strapped according to strict USPS regulations and submitted with the appropriate paperwork. And, of course, you must pay to deliver it. So when calculating the total delivered cost per piece, you must consider the extra cost of labor for this work as well as the freight charges involved in actually getting your mail to the desired NDCs and SCFs.
Commingling: An easier alternative to drop shipping is to hire a commingling company. These companies pick up your unsorted mailing, combine it with mail from other sources, and then sort, sleeve, tag and strap it before shipping the mail to the appropriate Destination NDCs and SCFs. We've found that in addition to saving on labor, MailSmart Logistics customers typically save an average of 12% versus standard bulk mail postage rates on their commingled mail. We've also found that our commingled mail is delivered an average of 2.4 days faster that bulk mail dropped off at the nearest bulk mail entry unit.
If you have decided to use commingling as part of your mailing strategy, finding the right postal logistics company is crucial to maximizing your savings. Some companies advertise a highly competitive postal rate but charge extra for pick-ups and mail tracking. MailSmart Logistics, by comparison, provides free mail tracking and locks in your total cost per piece for all mail commingled between now and the next USPS postage increase.
If you'd like more information about how commingling can improve the profitability of your mailing services, please download our free e-Book titled "Is Commingling Right for You?" at www.ComminglingInfo.com.