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Cut Postage Costs with Drop Shipping

The Concept
Beginning in the early 1990s, the USPS began instituting policies to help defray operating costs. As part of this initiative, it now offers discounts to companies who decide against mailing items from their local post offices and instead ship them at their own expense to distribution centers closer to the recipients' addresses. The amount of postage savings received depends on where along the processing route the mail enters, or is dropped, according to the lingo.

Since the USPS is able to diminish the quantity of mail it handles, it can grant savings to companies who take on the responsibility of sorting, packaging, paying for, and shipping mail according to postal specifications. The upshot for companies honoring these regulations is that their mail can be delivered reliably, more quickly, and with less wear – at substantial savings. This is particularly important if the mail piece features a date-specific event or promotion that must be in customers' hands rapidly. to 80 cents, from 75 cents and 79 cents respectively.

  Industry News

  • Discounts on postage rates (as high
    as 29¢ depending on factors)
  • Reliable performance
  • Faster delivery
  • Less abrasion and wear on mail items
  • A viable alternative to First Class mail

The Basics
Any company interested in drop shipping must pre-pay and verify standard presorted mail at a local bulk mail facility with their own permit or under the service company's permit. They must also ship presorted standard mail on pallets to the nearest postal facilities from which the five-digit zip code would be delivered. The methods that a company can use to deliver items downstream to the USPS include truck, plane, UPS, FedEx, etc. Interested parties must be sure that any company they hire to oversee the process is schooled in the appropriate codes, standards, and legalities.

Industry News
The Definitions:
The initial "D" in these abbreviations applies to facilities on the "destination" side of the process. Comparable entities also exist in the "origin" portion of the chain.

DDU – destination delivery unit – local post offices – retail center and local mail distribution (no sorting) – 33,000 exist in the US (with closures expected) – mail accepted includes standard flat carrier route sorted, periodicals, bound printed matter, and parcel select – average savings per piece 4-8¢

DSCF – sectional center facility – regional facilities – sorts largely by piece – 350 exist in the US – mail accepted includes standard letter, flat mail, periodicals, bound printed matter, and parcel select – average savings per piece is 4-23¢

DNDC (DBMC) – network distribution center (formerly, bulk mail center) – primary sorting facilities – sorts largely by tray – 21 exist in the US – mail accepted includes standard letter, flat mail, periodicals, bound printed matter, and parcel select – average savings per piece is 3-18¢

The Example:
To demonstrate the variations in price and delivery time for a single mailing by Acme Widgets (used for illustration purposes), we've laid out the options that might be considered. Note especially how the drop shipping point affects the final results.

Business: Acme Widgets
Location: South Georgia, zip code 30286
Mail: 50,000 7x10 flat cards that weigh less than an ounce each
Delivery to: Saturated zip code carrier route area
Print production location: South Carolina
Print production completed: Tuesday, Oct. 4
Delivery needed on: Monday, Oct. 10
Goal: Quickest and least-expensive delivery

Options Delivery Time Postal Cost Ship Cost Total
Option 1 - Mail all pieces first class 3-5 days per postal documentation Variable, depending on choice of presort automated rates (37¢) or machinable presorted rates (76¢) – For this scenario, a cheaper rate of 38¢ is employed. $0 $18,850
Option 2 - Mail standard flat class from the local Bulk Mail Entry office in SC 7-14 days 19¢ $0 $9700
Option 3 - Mail standard class and drop into a DNDC 7 days (1 day shipping from SC, est. 2 days at DNDC, est. 2 days at DSCF, and est. 2 days at local DDUs) $8050 (saturation carrier route rates delivering into DNDC of 16¢ per piece) $325 (estimated shipping for a skid of mail to the DNDC) $8375
Option 4 - Mail standard class and drop into an SCF 5 days (1 day shipping from SC, est. 2 days at DSCF, and est. 2 days at local DDUs) $7550 (saturation carrier route rates delivering into DSCF of 15¢ per piece) $325 (estimated shipping for a skid of mail to the DNDC) $7875
Option 5 - Mail standard class and drop into a DDU (possible for a flat size mail piece but not for letter mail) 3 days (1 day shipping from SC and est. 2 days at local DDUs) $7100 (saturation carrier route rates delivering into DSCF of 14¢ per piece) $1500 (the sort for DDUs = 15 different DDUs or zip code service areas instead of 1 drop to the DSCF or DNDC, so $100 per skid for 15 different drops) $8600

Outcome:
The most economical solution is to drop ship into the DSCF, which is typically the case. However, sometimes combinations of options presented can change the results (such as dropping a portion through the DDUs and another portion through the SCFs). INDEXX can help you evaluate these possibilities to see which one best fits your budget and time frame.

Important Notes:

If you're concerned about delivery times using DSCFs rather than DDUs for saturated flats, check that the company you've hired to prepare the mail uses all tools available, such as FAST electronic drop ship appointments through mail.dat. With this method, the DSCF facility receives all information about the incoming job and schedules accordingly to help ward off delays.

Label all pieces with a requested in-home date, and include proper placards detailing this information with all corresponding trays. Be sure that the service you use to drop palletized mail at the DSCF is familiar with – and has a system for handling – mail drops. Such confirmation will help you and the DSCF receive the appropriate paperwork.

Find out if the company you've hired to process your mail is on good terms with the entire postal system and has a procedure in place to communicate all necessary information to the proper BMEUs (business mail entry units) within the facilities, along with any follow-up that's required. This consideration is particularly important in avoiding any hold-up that could thwart a successful project.

What INDEXX Can Do for You:
INDEXX has the experience and the know-how to make sure that you get the best price and time frame for your mailing. We're familiar with the USPS and the details of drop shipping, and we carefully weigh every alternative before informing you of the optimal scenario for your project. We're happy to help you understand why we make our informed recommendations, and we're certain you'll be pleasantly surprised by the option.

Content sourced by Mike Robinson, VP of Sales.

     
     
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