eNews

This is your weekly direct marketing & mailing industry news source
September 4, 2001

--------------In this Issue--------------------
*37-cent Stamp on Horizon
*Congress Set to Tackle DM Issues
*List Execs Doubt Privacy Legislation Will Pass
*Small Business Exemption Planned for California's DNC Bill
*Direct Mail is Seeing a Renaissance
*FedEx, USPS Partnership Off to Flying Start
*Direct Marketing Tips from the Pros
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--------------This Week's News--------------------

*** 37-cent Stamp on Horizon ***
The cash-hungry federal agency is likely to make a new request for still higher stamp prices later this month or in early October, according to postal industry trade groups. Gene A. Del Polito, president of the Association for Postal Commerce, a group composed of bulk mailers, said postal officials have let it be known that their requested increase likely will be 9 percent to 10 percent. That would boost the price of a 34-cent letter by 3 cents - one of the largest increases the agency has sought in recent years. Higher percentage increases may be expected for publications, printed material, advertising, and the agency's two-day Priority Mail service, Del Polito said. Costs for handling those types of mail have increased more rapidly, according to postal officials. If there is any good news for postal customers, it's that the increases now being discussed are down from increases of 10 percent to 15 percent the agency had been planning. Postal officials declined to comment on the issue. "That's a board issue," said spokesman Mark Saunders, referring to the Postal Service Board of Governors, which must approve all rate increases. Worried about the impact of such a large increase, mail industry lobbyists have been urging the Postal Service to phase in the next increase over several years. But Del Polito said those efforts have been rebuffed by postal executives who say the agency urgently needs an immediate infusion of cash to offset its mounting costs and its slow stamp sales. Postal revenues tend to track the national economy, and the current slowdown is holding down growth in mail volume. "That's their biggest worry," Del Polito said. Through mid-July, the agency had posted a deficit of $1.4 billion. That makes the agency's loss for the current fiscal year likely to be about $1.6 billion, Del Polito said.

***Congress Set to Tackle DM Issues ***
Postal reorganization, Internet taxation, privacy and direct-to-consumer drug advertising are just some of the issues Congress is to address as both chambers return this week from recess. Some of these bills may be adopted by early October, when Congress most likely will adjourn, while others may be reintroduced next year. Marketers are watching Internet taxation closely. A moratorium exists on new e-commerce access taxes as part of the Internet Tax Freedom Act, which was signed into law in 1998 and imposed a three-year ban on new state and local Internet taxes. With that act set to expire Oct. 21, Congress is considering several proposals. Before going on recess last month, a House Judiciary subcommittee approved by voice vote a bill that would extend the moratorium on sales taxes for online purchases through October 2006 and would permanently ban Internet access taxes. The bill, the Internet Non-Discrimination Act, HR 1675, is sponsored by Rep. Christopher Cox, R-CA. It is expected to reach the full Judiciary Committee and House floor this month.

***List Execs Doubt Privacy Legislation Will Pass ***
Though far-reaching federal privacy legislation could have a huge effect on the traditional list business, several list professionals are confident that such legislation won't be enacted this year, or perhaps ever. "Obviously, everything would be dependent on how the legislation was worded," said Patrick O'Hara, CEO/CIO of The List Group Inc., Boulder, CO. "Assuming it was worded in the worst-case scenario, where you would actually have to grant permission before anyone could send you any piece of direct mail, I think that would be catastrophic." Such an opt-in approach would cripple traditional mailers because their lists always have been maintained as opt-out files. "Opt-in would be pretty difficult for offline direct marketers," said Henry DiSciullo, executive vice president of list and insert services at Venture Direct Worldwide, New York. "Opt-in is great and is a wonderful way to set the standard, but if we really had to live by that standard, it would cost us in terms of marketing efficiencies." However, among the dozens of privacy bills introduced in the House of Representatives and Senate, it is unlikely such an extreme mandate would pass, O'Hara said. At least one commissioner at the Federal Trade Commission voiced an even more sweeping opinion. On Aug. 20 at a new-economy conference organized by the Progress & Freedom Foundation, commissioner Orson Swindle told Reuters that he did not expect any privacy legislation to pass this year.

*** Small Business Exemption Planned for California's DNC Bill ***
California Democrat State Senator Liz Figueroa agreed to expand the list of exceptions in a bill creating a state telemarketing do-not-call list to include small businesses with fewer than five employees. She made the agreement Wednesday after a hearing on the legislation, SB-771, previously approved by the State Senate, by the Appropriations Committee of the General Assembly. While a majority of the committee members said they supported the measure, cleared just a week earlier by the Assembly's Committee on Business and Professions, a few said they felt the measure in its present form was not completely fair. Among them was Democrat Assemblywoman Jackie Goldberg who, while endorsing the bill's intent, said she was afraid that the bill would thwart competition, particularly among utilities and small businesses, creating an advantage for one particular group over another. Although she said that there were many other avenues for businesses to reach potential customers, such as direct mail and direct response print and broadcast ads, Figueroa said she would agree to give small businesses with fewer than five employees a break and include them in the list of exceptions to the measure. As the bill currently stands, nonprofit and political organizations would be allowed to make calls to people on the do-not-call list, maintained by the state's Department of Consumer Affairs. The exemption would also extend to businesses with an existing relationship to a consumer on the list. All others calling consumers on the list could be fined as much as $1,000 for each unwanted call. Action on the bill by the full Assembly is expected within the next several weeks. Gov. Gray Davis has indicated that he will sign the measure into law when it reaches his desk.

*** Direct Mail is Seeing a Renaissance ***
"Direct mail is seeing a bit of a renaissance. A couple of years ago when the Internet was thriving, a lot of people speculated that catalogues and direct mail were going to become irrelevant quickly," said Ken Cassar, e-commerce analyst for Jupiter-Media Metrix Inc. Instead, Internet retailers have discovered their value, he said. Online and catalogue sales have grown in tandem. Target Corp. stores, for example, have never sold by catalogue before, but Target owns Rivertown Trading Co., a company that produces catalogues, including public radio's Wireless. Target.com is experimenting with a catalogue that will be distributed for the holiday season, according to Target.com general manager Cathy David. Even Amazon.com, which dominates online sales, experimented with a catalogue earlier this year. In April it mailed several thousand copies of an Amazon.com Home catalogue, offering tools and hardware, kitchen and housewares, and outdoor items such as grills and furniture. The book was produced by Tool Crib, one of two catalogue companies Amazon has acquired. Although the company, best known for its sales of books and music online, had used direct mail to advertise promotions on the Web site, it was the first time it has tried a true catalogue, offering shoppers the option of ordering by mail or by calling a toll-free number. The high mortality rate among many online retailers helped underscore some hard truths, according to retailers and e-commerce specialists.

*** FedEx, USPS Partnership Off to Flying Start ***
Everything went smoothly this week in the launch of the U.S. Postal Service-FedEx Express air transportation agreement. "The planes are taking off and landing on time. Everything is coming in smoothly, and the few bugs we've seen are virtually insignificant," said Paul Vogel, vice president for network operations management for the USPS. Announced Jan. 12, the air transportation agreement gives the USPS shared access to FedEx Express, the world's largest air cargo airline. Under the contract, FedEx Express, Memphis, TN, will carry -- and sometimes sort -- Express, Priority and First-Class mail. The USPS will pay about $6.3 billion over seven years for shared access to the FedEx Express national air transportation network, saving about $1 billion in air transportation costs while extending the delivery area for its next-day Express Mail and two-day Priority Mail services. Given the range of transportation options available to the USPS -- rail, surface, commercial passenger airlines and the new air cargo contract -- more communities will be able to get Express Mail overnight guaranteed service. They also are likely to get more consistent Priority Mail two- to three-day service. Up to 3.3 million pounds of mail will be carried on FedEx planes daily. Most of the mail will come through the company's hub at Memphis International Airport. FedEx has hired nearly 500 pilots, 250 aircraft mechanics and 1,200 cargo handlers to deal with the air-transport phase of the contract.

*** Direct Marketing Tips from the Pros***
--Anticipate Everything
Please your customers by knowing what they'll appreciate before they know it. Win over new customers by accurately anticipating your competitor's service capabilities and strategies, and then beating them to the punch. There's not a market leader in any business that can keep its position by being complacent. Look ahead to see what your customers will want in the future. Then plan a strategy to deliver it to them before anyone else in the market place. (Taken from Tested Secrets of Direct Marketing Success by Denny Hatch & Don Jackson)

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