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Co-Mail: More than Just Postage Savings

January 3, 2014

It’s a familiar fact to every marketer: Postage is the largest single cost when it comes to producing and mailing a printed product. Another fact: Postage rates never go down.

Fortunately, even as postage rates continue to rise, there is a proven way to significantly reduce the costs of mailing: co-mail.  By merging the mailstreams of several different magazine or catalog titles into a single large mailstream, co-mail creates the highest volume and best presort discounts for all contributors and delivers quantifiable postage savings.

Co-mail got its start in the 1980s when periodical mailstreams were merged on simple offline machines after the binding process. Printers drove the process as a specialty offering that provided limited savings, but savings nonetheless. By the turn of the century, catalogs had started to join the party; but the need for personalization on order forms and other “inner body” pages restricted offline catalog co-mailing. It had to be done inline during the binding process.

As postage rates continued to rise, so did the interest in and urgency surrounding co-mail. The 2007 postage rate increase became the tipping point, as mailers saw their margins severely erode. A co-mail solution – provided either by a printer or one of a growing number of third-party print logistics providers – was no longer an “extra.” It was essential to remaining competitive.

Quantifiable Savings. For mailers, the biggest benefit from a co-mail solution is the direct and immediate impact to one of their largest cost segments: the production and mailing of the printed product.

Co-mail savings depend in part on the number of unique titles and the total volume in a co-mail event. In general, the larger the mailing, the better the chances for creating a greater percentage of carrier-route mail, or neighborhood level sortation. Carrier-route sorted pieces are far more efficient for the USPS to process, which is why the cost per piece is lower and more attractive than lesser sort levels such as 5-digit or 3-digit.

Postage rates are designed to reflect levels of efficiency within the USPS. More efficient mail results in lower rates because it requires less processing on the part of the USPS. The chart here demonstrates the advantages that occur when carrier-route bundles don’t need to be broken open and sorted until they reach the carrier’s station in the local delivery office (i.e., local post office). The shift of mail from sacks to pallets and from low-level pallets (National Distribution Center [NDC] pallets) to higher-level pallets that are Sectional Center Facility (SCF)-eligible results in fewer touches by the USPS. Fewer touches mean less hassle with processing, transportation and delivery…and lower postal costs.

Co-Mail Presort/Container Efficiencies*

# of Titles:
Total Quantity:
68
12,755,622
Sort LevelsPercentEntry LevelPercent**
Before:

Carrier Route
Balance
8.06%
91.94%
SCF
NDC
66.08%
32.03%
After:Carrier Route***82.15%
17.85%
SCF
NDC
93.97%
4.56%

*Actual results from a Quad/Graphics co-mailing event
**Contains Saturation and HD levels
***Represents eligible drop ship container

The efficiencies of merging these almost 13 million pieces into a single mailstream resulted in savings of about $1.2 million for the participant pool.

Additional Benefits. Reduced postage may provide the initial motivation for turning to co-mail, but a wide range of ancillary benefits may ultimately emerge as even more significant long-term. These include a better overall percentage of mail that is eligible for SFC pallets. This means more mail qualifies for a greater drop ship discount, bypassing the less efficient NDC entry, and realizing more consistent and predictable in-home delivery as a result. As the chart demonstrates, carrier-route and SCF-eligible mail increased from approximately 8 percent to more than 80 percent for this co-mail event.

Improved delivery increases targeting capability, enhances flexibility with regard to mail timing, and creates significant potential reduction in “waste mail” expense.

A Win-Win Solution. Co-mail benefits both mailers and the USPS. Mailers win through reduced postage and better overall delivery, such as speed and product integrity. The USPS wins through lower processing, distribution and delivery costs. And, perhaps most importantly, co-mail creates a partnership that ensures mail sustainability.