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Pushing the Envelope Beyond Ordinary

Print, Mail & Envelopes in the New Century

Posted by Jerry Velona on Sep 16, 2016 3:20:45 PM

Ask most anyone these days in the print, mail or envelope industry about the current state and future of mail and you’ll generally get an answer that’s hopeful but cautious.  The great digital disruption of the last 25 years or so has caused an irrevocable change in printed communication.  Those of us who’ve seen these changes as they’ve occurred are naturally wary about what is to come.  It hasn't always been pretty!

nervous_person.jpg

On the one hand mergers and acquisitions continue apace with smaller, less capitalized companies unable to profit in the new landscape and selling out (if they’re lucky) to larger firms more able to diversify and adapt to changing market conditions. Obviously, creative destruction is part of every sector of the economy and generally indicates overall health in the market. But it does seem that there’s more of it going on in our industries of late and it’s been accelerated by the ubiquity of smart phones among other things. Not a week goes by when we don’t receive some notice of an equipment auction. Used envelope and printing equipment has never been less expensive and more available. That’s a tangible sign of over-capacity due to a still-shrinking market.

However on the other hand direct mail is certainly coming back with a vengeance.  After a relatively brief flirtation with relying exclusively on digital-based marketing, fund-raising companies as well as colleges and other large institutions are coming back to mail solicitations because they achieve better results even with the added costs of printing, envelopes and postage.  And at Elite Envelope, we have seen a significant increase in new customers comprised of small start-ups ranging from print brokers, consultants, marketing agencies, and craftspeople making a high value product that needs to be mailed in a printed bubble envelope or promoted with a full-color package including a window envelope and reply envelope.

We speak to customers every week who are changing their business around; getting into providing new services and products to customers in order to capture more of their business. And far from being the bane of our existence, technology is enabling us to work smarter with more information at our fingertips and marketing software and website apps which allow a one-person marketing “department” to reach thousands (or millions) of potential customers with a few clicks.

It might sound contradictory for companies in the print communication business to use website and e mail to such an extent to promote their wares but it’s really not.  It’s all part of the grand, shaking-out and reorganizing that’s going on not just in our industries but in just about every business across the entire economy.  And what we’re finding is that print and mail is settling in to have its place in the mix of ways people communicate, sell and solicit.   It’s up to us to increase the value of what we provide and hopefully our share of the market.

Topics: elite envelope, envelopes and printing, envelope industry, declining mail volume, printed bubble mailers

Post Office Keeps Trying – Direct Mail World Keeps Hoping

Posted by Jerry Velona on May 27, 2014 11:06:00 AM

The ongoing mess at Veteran’s Administration hospitals across the country is yet another example of the futility of providing necessary services through a bureaucratic, unionized government monopoly.  In a market-based enterprise, the imperative of good customer service is driven by entrepreneurial energy, the desire for upward mobility and profits as well as competitive pressure.  In the government model, these factors are virtually non-existent and instead are replaced by an unholy alliance of rent-seeking politicians, interest groups, corporate supplicants and union bosses whose primary mission is to preserve the jobs of their members at all costs.

The latter factor was on painful display recently in a recent article in the BostonGlobe entitled “Postal Union Targets Staples over Mail Services Program”.  In 2013, the Post Office entered in a deal with Staples to put small customer centers in 82 of the office supply company’s retail locations.  The mini-postal counters would provide most of the services available at Post Offices.  “Customers like it because it’s more convenient and we’re open longer hours,” said a Staples spokesman.  Sounds like a reasonable plan to provide better service at a lower cost from an enterprise that lost “only” $5 billion in 2013; the seventh straight year of huge losses for the Post Office.

 Well apparently it’s not reasonable to the Postal Workers Union who’ve been picketing Staples stores with signs that read “The US Mail is Not For Sale” (?).  The article points out that the USPS already has deals with over 3,600 small businesses throughout the country to provide basic postal services. I’m guessing that a big, fat corporate target like Staples provides a more useful foil for the protests than the small independently-owned pharmacy. 

 While I’ve been critical of the Post Office in previous posts, I’m a fan of the present Postmaster General Patrick Donahoe who’s been trying to bring the costs of the Post Office in line with current revenues which have been trending downward for many years.  The Staples deal is just the latest attempt to bring about a win-win with two entities that have been struggling with the trend away from paper and mail. The union was able to scuttle a similar deal with Sears decades ago. They are now gearing up to increase the pressure through the teachers and other large unions.  Will Staples management eventually cave?  Will the union ever be realistic about the need for the Post Office to balance its budget for their own long-term survival?  Pardon me for being pessimistic about the likely answers to those questions.

The real victims here, besides the taxpayers who must continue to fund the Post Office deficits, are the direct mail, print and envelope industries which continue to swim against the tide of higher paper costs and postal rates.  According to a recent article in the DMA newsletter, second quarter periodical mailing volume decreased 7.8%. This follows a recent rate increase of 5.9% passed by the Postal Rate Commission late in 2013.  At that time, many in the direct mail industry protested that the increase would depress volume. The Post Office responded that mail rates were “inelastic” or mostly irrelevant to the mailing industry.

Direct Mail Elite Envelope & Graphics

The recent drop in catalog mailing volume may be an anomaly and small increases in mailing costs may not have significant short-term impact. But unless we suspend the basic laws of economics, prices do matter and they will affect the decisions of mailers to mail, printers to print and envelope makers to convert to some extent at some point.  Those effects will be mostly negative unless the Post Office can find ways to end-run Congress and implement the necessary cost-savings measures.

In the meantime: stay strong Staples!

Topics: direct mail, post office problems, envelope industry, direct mail printing, declining mail volume

Revenge of the Snail (mail)…

Posted by Jerry Velona on Mar 3, 2014 9:34:00 AM

snail photo

Ah yes, pity the poor snail. He plods along contentedly while the rest of our Can’t-Wait-for-Anything culture whizzes by waving while checking endless messages and updates.  

Snails provide a very useful purpose in gardens by eating debris and promoting the recycling of dead plants.  I’m told they are delicious and quite nutritious (minus all the butter from fancy French cooking but then, what’s the point?). I have to say I’ve never thought of ordering escargot at the bistro but that doesn’t mean I don’t hold snails in the highest esteem.

So what about “snail mail”?  Those of us in the envelope converting, envelope printing and direct mail printing industries have been hearing this clever canard for decades now.  It’s generally used with a dismissive tone that the speaker seems to think conveys a certain superiority or irony as in, “I also sent it to you snail mail; you’ll get it at some point – whatevs”.  Yes, we get it all right – it’s just soooo slowww! I mean, it might take a whole day or two to arrive. Just think of all the “Likes” one can receive during that time.

Now the speed of texts, e mails, etc. is a great thing provided people actually respond in a timely manner (don’t get me started on that!)  With a few keystrokes you can line up appointments, expedite orders, write a blog article and do all sorts of great things that used to take much longer.  But what about receiving a call to action in the mail requires it to arrive instantly?  Nothing really.  So the speed of mail – and I’m talking about direct mail right now – is not really relevant to its mission.

After all, what direct mailers and direct marketers are looking for is a healthy response and a return on the investment. On those criteria, direct mail works extremely well compared to e mail. 

Laurie Beasley of the Online Marketing Institute issued a paper in June of 2013 entitled Why Direct Mail Still Yields the Lowest Cost-Per-Lead and Highest Conversion Rate. She writes that, “According to the Direct Mail Association (DMA) Fact book for 2013, 65% of consumers of all ages have made a purchase as a result of direct mail.”  The paper also states that “According to Direct Mail News, in 2012 the average response rate for direct mail was 4.4% for both business-to-business and business-to-consumer mailings—considerably higher than industry expectations, and surging past electronic mail’s response rate of just 0.12%.”

What about ROI you ask?  Ms. Beasley makes the point that while print production will certainly cost more than an e mail campaign, the proper way to gauge effectiveness is tracking the cost-per-lead. By this measure, direct mail outperforms other forms of advertising.


Source: DMA, 2012 Response Rate Report

The savvy marketer understands that it’s not just an either/or proposition. For instance, including a URL to a landing page in the mail piece gives the potential customer the opportunity to actually make the purchase online which many people prefer.

So All Hail to the mighty snail!

Topics: direct mail, elite envelope, e mail and direct mail, direct mail printing, declining mail volume

National’s Demise and the State of the Envelope

Posted by Jerry Velona on Sep 10, 2013 12:10:00 PM

As anyone who works in the envelope and printing industry is aware, National Envelope has recently been acquired by Cenveo and will face liquidation of some sort. As of this writing, it’s still unclear how much of National’s capacity will remain. Cenveo already maintains approximately 20 envelope plants throughout the US and the overall amount of first class mail has been in decline for the past decade so it says here that most of National’s plants will be closed and sold off in order to solidify Cenveo’s leadership position in the market.

National Envelope was one of those great American success stories. Started by William Unger, a Holocaust survivor who arrived in America on a ship for displaced persons after the war, the company  grew to become the largest privately held envelope manufacturer in the United States. National was known as a quality shop with a very solid market position primarily as a wholesaler. At a time when American manufacturing was shifting away from low-tech products in textiles, shoes and other consumables, envelope manufacturing provided solid jobs for thousands with good wages and benefits.

National filed for bankruptcy over three years ago and was acquired by a California-based private equity company called The Gores Group. At that time, Cenveo was making a bid for the company but it seemed that the Ungar family couldn’t stand the thought of surrendering the company to their fiercest competitor so they saw the Gores offer as the better choice.  It was always curious why a private equity company would consider a company like National a candidate for a turnaround and sale for a profit. The company was over $500 million in debt in a declining industry.The fact of overcapacity in the envelope market was as clear then as it is now. But while Gores closed a few of National’s plants and sold off a bunch of its equipment (at bargain-basement prices) it seemed to keep the same low-margin pricing structure that one could argue was one of the prime causes of National’s decline and eventual demise.

Gores tried to impose draconian production controls on some of the plants. This resulted in some adverse publicity and ultimately did nothing to solve the problem. As anyone who runs a factory is aware, treating your employees well makes for a happier and more productive environment. I also had some fun with Gore’s somewhat lame attempts at spinning the purchase of National and wrapping the package in meaningless MBA jargon.

The news about the second Chapter 11 filing by National Envelope and its impending liquidation earlier in the summer was played by most of the press as the end of an era and symbolic of the decline of the envelope and mailing industry.

Those of us in the industry know that's a convenient media angle but ultimately a superficial take on the story. National's problems were mostly self-inflicted. There's certainly been a decline in first class mail in the past decade but there are still billions of envelopes being mailed and the direct mail industry has seen growth during the same period.

It’s truly a shame that thousands of people will likely lose their jobs as a result of the National bankruptcy. If there’s a lesson to be learned, it’s that the model of the large, high-overhead envelope operation selling its product at commodity prices is mostly over.

We believe the future of our industry lies with the smaller, regional companies that provide value and great service to their customers. While first class mail volumes are declining due to the inexorable expansion of the digital economy, direct mail has remained a viable way for companies to promote their products. The percentage of direct mail as a total of the overall postal volume has increased and continues to do so. Marketers are re-discovering direct mail as a solid (literally) alternative to digital information overload.

The envelope companies who keep their costs at a reasonable level with little leverage, stay lexible and responsive to customer demands, use technology to its maximum advantage, constantly add value to their product offerings and aggressively market and sell will stay viable well into the twenty first century. Print and mail isn’t going anywhere anytime soon.

In the meantime, RIP National Envelope and may its many fine employees find productive work either in the envelope industry or elsewhere.

 

Topics: direct mail, envelopes and printing, printing and envelopes, envelope industry, declining mail volume, national envelope

The Post Office and the Envelope Industry – Part One

Posted by Jerry Velona on Feb 6, 2013 12:43:00 PM

As anyone who keeps up with current events is aware, the United States Postal Service is in a very bad way.

The price of a first class stamp has just gone up again to 46 cents. If only that solved the problem, then we’d just accept it and move on. However, the Post Office posted a $15.9 billion dollar loss for the fiscal year that just ended in September 30th of 2012. And if that’s not enough bad news for you, they are declaring that they will be out of cash sometime around October of 2013 unless something is done.

As the chart below demonstrates, (courtesy of the Wall Street Journal) the volume of first class mail has seen a precipitous decline in the past ten years. The number of pieces mailed is now about half of what it was in 2002.

Mail Service decline graph

Now obviously the digital world has made a serious dent in the number of pieces mailed. Companies are saving money by pushing their customers to pay their bills and receive statements on-line.  Financial service companies which used to mail huge numbers of proxy statements and prospectuses are now going digital. Back in the 1980's, I was a bank purchasing officer and we bought huge amounts of paper and printing much of which is no longer necessary because of the personal computing revolution. You can’t stop companies from reducing their costs through greater efficiency; especially when it’s what most of their customers find more convenient.

Another significant factor in the decrease in mail is the lousy economy of the past four years. The so-called recovery we have been experiencing is tepid at best with growth that doesn’t even keep up with the increase in new people entering the job market. While the movement away from certain kinds of mail would have happened regardless, robust economic growth would mitigate some of the pain for envelope and printing companies.

In its attempt to cut costs, the Post Office has slowed down first class mail delivery and is considering cutting Saturday delivery service. This is probably the worst possible way to deal with the problem. We are in the age of instant gratification courtesy of those same computers that are driving down the mail business. A recent article in the Boston Globe references a study by the Pew Research Center’s Internet & American Life Project concerning people under the age of 35 and the dangers of their hyper connected lives with this warning:  “Negative effects include a need for instant gratification and loss of patience”.   So at the same time that Gen X and Gen Y are moving away from mail partly due to the time involved, the Post Office decides to make us wait longer. Great.

As I’ve suggested in previous posts, the politics surrounding Post Office reform will make it virtually impossible to fix.  Yet, the best solution  for direct mailers and the many small businesses that serve them would be to abolish the government monopoly on first class mail service and allow private companies to compete for that service in the same way that FedEx and UPS have done for parcel delivery.  That would allow direct mailers who provide the biggest chunk of concentrated business for the post office to receive preferred rates which would drive down the cost of direct mail and keep it strong along with the printers and envelope companies who provide the components.

In my next post, I’ll delve into the politics in a bit more detail and also flesh out a simple proposal for reform.  As always, your comments are most appreciated.

Topics: direct mail, elite envelope, post office, printing and envelopes, postal monopoly, post office problems, envelope industry, declining mail volume

Envelopes, the Post Office and Ma Bell: – Part 1

Posted by Jerry Velona on Dec 27, 2011 11:28:00 AM

We left our usual package of homemade cookies and wine for Dave, our mailman this Christmas. He responded as he usually does with a thank-you card including a handwritten note.  He gives us great service throughout the year and, as the saying goes, is not deterred by “snow nor rain nor heat nor gloom of night”… (Although I have to say I don’t see Dave much at night. We’ll chalk that part up to poetic license).

The 6 day week of mail delivery by the regular mail carrier is a fixture of our culture and only one of the many reasons why it would be very difficult to sell a private mail service to the American public. The mail has been immortalized in art and song and goes back to the founding of America. For many, in a world of increasing complexity and depersonalization, the constancy and daily contact that many have with the “mailman” harkens back to a simpler time.

Norman Rockwell jolly postman resized 600

However, many of the same feelings and connections were associated with the monopoly that AT&T had on telecommunications for most of the 20th century. How many scenes in the movies involved those old, black telephones and the battery of operators who connected the calls?  Wasn’t there something reassuring about dialing “O” from any phone and being able to speak to a live person who could give you a number or answer your questions?  Everyone had that spot in their kitchen or pantry for the monstrous phonebook including the yellow pages which were so handy.

These days, with cell phones so universal and inexpensive, even in the poorest countries, coupled with rate plans that make the average call a fraction of what it once cost under the regulated system, the days of Bell Telephone being the only game in town seems unthinkable.  I have kept a telephone with a cord in my attic so my 12 year old daughter can see what it was like. It’s right next to the gigantic metal calculator my Dad bought in the 1960’s and not far from the turntable my mother had that played 78’s: all relics from the past.

Sad to say, but the Postal Service is now also a relic from days gone by. Times are changing but as with all huge public bureaucracies, adapting to change is never high on the list of priorities. Nowhere is this more evident than in the Social Security system. When the program was first proposed and enacted in the 1930’s, the retirement age was set at age 65. At that time, the average life expectancy for a man was below 65.  Fast forward 75 years to the present when the average man lives well into his late 70’s, and the retirement age for Social Security is still age 65.  As a result of this and other factors, the system is going broke.  Anyone who dares suggest that we adjust the retirement age to reflect current realities even slightly  is met with howls of protest or worse from the vested interests of the current system.

Even though the amount of first class mail has decreased substantially in the past 20 years, there are billions of envelopes that need to be delivered.  We still need the mail for a variety of reasons, most notably to facilitate the advertising/fundraising function of direct mail. However, there is no longer any reason to perpetuate a government-sponsored monopoly to provide this function. In fact, doing so could do much more harm than good.

More on this later.

Topics: direct mail, envelopes, post office, postal monopoly, declining mail volume

The Post Office and the Direct Mail Industry

Posted by Jerry Velona on Dec 12, 2011 11:47:00 AM

The classic blues song Born Under a Bad Sign has a line that says, “If it wasn’t for bad luck, I wouldn’t have no luck at all.”  That pretty much sums up the state of the US Postal Service these days.  Except, as Ernest Hemingway famously said, “you make your own luck.”

The latest consequence of the continuing fiscal woes of the post office came last week when Postmaster General Patrick Donahoe announced plans to reduce costs $3 billion by slowing the delivery of first class mail and eliminating about half of the 461 mail processing centers spread throughout the US.  This is on top of the planned increase in the price of a first-class stamp next year.

 post office problem cartoon Elite Envelope

Unlike many heads of sclerotic government bureaucracies, Donahoe seems to know what needs to be done to restore the Postal Service to some sort of viability. He has commented on how the drop in first class mail volume requires cuts in staff and facilities. He has stated that the Service needs to run more like a business.  Good luck with that Mr. Postmaster.  According to a recent article in the NY Times, labor costs at the Post Office represent about 80% of the total budget compared with 53% at UPS and 32% at FedEx.  These costs are locked in by union contracts and any talk of give-backs or cuts is met with the type of apocalyptic, harsh rhetoric we’ve come to expect from entrenched unions fighting for their lives.

Aside from the unsustainable labor costs, the difficulty of closing a single post office due to politically driven opposition by members of Congress further illustrates the impossible task faced by Postmaster Donahoe to bring some semblance of budgetary sanity to the Postal Service.

It’s clear that electronic mail and the internet in general are having an effect on the amount of mail being delivered by the Post Office.  We read that the amount of first class mail has declined by 19% since 2001 and is expected to fall another 37% by 2020.  However, during the same period, direct mail volumes have stayed relatively stable mostly declining only during economic downturns but then rebounding as business in general improves. Advertising mail now accounts for 48% of total mail volume.

Postal Service woes are mostly discussed only in the context of how any changes will affect the average family waiting for a letter in their mailbox. What generally doesn’t get mentioned is the negative impact on the direct mail industry; all those printers, agencies, marketing firms, mail fulfillment companies, and, yes, envelope companies all of which depend on the Postal Service to provide good service at a competitive price.  Somehow, the recent announcement of slower service at a higher price doesn’t seem like a prescription for the health of the Post Office or the thousands of small businesses who depend on it.

In my next post, I’ll propose a solution.  I’ll give you a hint; it contains the "P word".

Topics: direct mail, elite envelope, e mail and direct mail, post office, post office problems, envelope company, declining mail volume

Envelopes and the Post Office

Posted by Jerry Velona on Jul 25, 2011 11:28:00 AM

The future of the United States Postal Service is one of the great question marks to anyone in the envelope, printing or direct mail business.

As overall mail volumes continue to decrease nationally and internationally, the ability of the Postal Service to continue to deliver mail economically will be a major factor in the continued viability of our industries.

Like any other government-provided service, the post office has been the butt of many jokes about poor, unresponsive service over the years. Some of it is certainly justified (is there a private business that consistently keeps too few people up front to handle customers? Probably, but they don’t stay around that long.) However, I’ve often remarked that the business office people I’ve dealt with provide a high level of prompt and friendly service; comparable to any private business and superior to many.

However the business model of the post office; with its monopoly power over first-class mail , tax-free status, heavy brick and mortar presence throughout the nation, unionization of the majority of its workforce and ultimately being under the control of politicians for any changes or reforms puts the mailing industry in a tenuous position here in 2011 and beyond.

We’re all aware of the changes in our culture and economy that have led to fewer mail-pieces.  Certainly the continuing influence and penetration of the digital world is at the top of the list. To cite only one example; going back less than 20 years, just about every mutual fund company in the country regularly mailed out a big, thick prospectus for each fund to millions of customers.  I have to admit that along with probably the vast majority of mutual fund customers, I now receive prospectuses via e-mail.  If I need to read it, and frankly I rarely even glance at it, I can access it on my computer. Much easier and more convenient that way, right? Well yes, but it also means a lot few envelopes and brochures being printed and that’s just one example.

As I’ve written about in previous posts, the Green movement has done a fine job convincing millions of people that generating and mailing printed material is somehow a sin against Mother Earth. And right on cue, the private sector is now taking up that rallying cry in a somewhat disingenuous attempt to lower their costs.  As I write this, Elite Envelope is imprinting a message on some bank statement envelopes we produce imploring the recipient to “Go Green” and get their statements electronically.  It’s a nice, little order for us today. But it’s kind of like a rough draft of our obituary.

Nevertheless, we can’t swim against this tide. Our industry must adapt and come up with new ways to thrive. In order to do that however, we’ll need some help from the Postal Service.  In future blog posts, I will be focusing on the problems we face today and will suggest some possible solutions to help keep the mail moving at a reasonable cost into the future.

Topics: postal monopoly, declining mail volume, envelopes and post office

Yet Another Blog Post

From Jerry Velona - co-owner,

Elite Envelope & Graphics, Inc.

Jerry offers pertinent, often useful information on envelope converting and printing, web printing, direct mail, the post office, songs that have to do with mail and letters, digital overload and much more!

(Non-spam) Comments always appreciated.  Spread it around!

 

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