A U.S. Postal Service struggling to compete against private shippers just cut a deal that undermines some of its best customers.
The Postal Service in August signed a deal authorizing deep discounts for one direct mail firm eager to wrestle away insert business from our newspaper and other direct mail firms across America.
Valassis Communications is now the Postal Service's preferred provider of the same kind of retail advertising inserts we've delivered to our customers for decades. Previously, the inserts were too large -- and expensive -- for direct mail firms to include in those coupon bundles delivered in bulk to "occupant."
That's why newspapers, with their own delivery operations, won most of that business. American newspapers have built a $1 billion a year business delivering inserts from national retailers. That's revenue we rely on to operate our newsrooms and run our presses.
But the Postal Service granted only Valassis a volume discount to mail the same kind of inserts our customers find in our daily print products. We welcome competitors who manage their own delivery system like we do. And we welcome competitors who pay the same Postal Service rates as everyone else.
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What stings is this government agency naively cutting a deal that favors a single competitor. The comical part is that it's not clear this sole-provider discount will do much to help the cash-starved Postal Service. As Valassis exploits this government-granted discount and increases its mailings, newspaper companies and other direct mailers will likely reduce use of the Postal Service. It's not clear the Postal Service will ever see much of a net increase in volume or revenue.
Our business already is changing dynamically as we adjust to our customers' evolving print and web information preferences. We embrace those changes and are innovating new products that reflect those preferences. But there's nothing we can do when our Postal Service picks a single winner.
"The Postal Service should focus on cutting costs and getting the mail delivered on time -- and not on using special rates to confer a significant and unwarranted advantage on one competitor at the expense of an entire industry," said Caroline H. Little, president and chief of the National Newspaper Association.
