Mail Volumes Plunge in the Age of COVID

Since the COVID-19 lockdown across the country in early March, mail volumes have plunged—but the pandemic is only accentuating the USPS’s pre-existing problems. This feature, by Paul Miller, vice president and deputy director of the American Catalog Mailers Association (ACMA), also includes highlights from an ACMA survey of catalog mailers and suppliers.

By Paul Miller, ACMA

Since the COVID-19 lockdown across the country in early March, mail volumes have plunged. No category of mail has been hit harder than Marketing Mail, which saw steady weekly drops in volume vs. same period last year (SPLY) in 30 and 40 percents, peaking at a 45.4% plunge in late April, according to U.S. Postal Service figures. The USPS estimates that some 20–25% of this volume may be lost for good, even once the pandemic is over.

All along, package volumes have gone in the opposite direction, as consumers have turned to e-commerce shopping in droves. Weekly volume increases have at times nearly doubled vs. SPLY, with increases often running in the 60–80% range.

As the virus cases diminished (before the more recent uptick), Marketing Mail volume declines were easing up. For the week of June 22, for example, Marketing Mail volumes fell by 24.5%. Hope springs eternal…or does it?

Fixing an Old Problem

For much of the past decade, and with annual losses mounting, the USPS was facing a catastrophic problem long before COVID-19. In recent years, several bills have been drafted only to fail to get out of committee. There seems to be a pattern: Congress holds hearings about the future of America’s postal system; sincere passions pour out of most committee members vowing to fix the nation’s postal system. The discussions often include obvious solutions, such as repealing the mandate that USPS pre-fund health benefits for future retirees.

However, postal reform solutions typically break along party lines with Democrats generally supporting the heavily unionized postal workforce and Republicans often seeking to privatize or reduce government involvement. Postal stakeholders frequently Balkanize, adding to the confusion about what should be done. Some parties often overreach to stake out politically impractical solutions.

If there had been any momentum building for postal reform legislation, the intense focus on COVID-19 economic relief has at least temporarily put such discussions on the backburner. It’s also been further blurred by President Trump’s threat to veto any stimulus bill if it contains USPS funding, unless package rates are increased by four times—a threat he’s transparently made as a means of sticking it to Amazon and Washington Postowner Jeff Bezos.

When the ACMA surveyed the catalog mailing industry about mail circulation plans during the second quarter of April 1–June 30, nearly 58% said they were decreasing their circulation. (See “COVID-19’s Economic Impact on The Catalog Mailing Industry” below.) Meanwhile, looking beyond the COVID crisis, nearly 28% anticipated expanding beyond their pre-COVID levels; 40% said they intend to contract and be smaller than their pre-COVD levels; another 15% said they don’t anticipate much difference, while 17% have no idea.

ACMA, which represents the interests of catalog mailers/online merchants and their suppliers, finds widely varying impacts from the pandemic’s impact; it’s largely based on the merchandise categories. Those who sell home goods, gardening supplies, home school supplies, and the like have experienced growth. Those selling soft goods are clinging for life right now. Specialty merchants to restaurants or dry cleaners have been hit hard. Regardless of product offerings, any marketers who also have sizable brick and mortar retail stores are suffering.

Post-COVID Adjustments

All types of merchants will face consumers with transformed buying habits once the pandemic abates. Some consumers may be completely scared off from shopping in stores and will only shop remotely, forcing merchants to adapt accordingly. Some consumers who have gotten into the habit of searching online for the lowest-priced masks, hand sanitizers and other COVID essentials may become less loyal to specific brands.

Given decades of well-above-inflation postal cost increases, many catalog executives are concerned the mail may not be viable over the long term. For more than a decade, mail-based merchants have sought alternatives, but time and again have been unable to replace the effectiveness of catalogs and other direct mail pieces. Traditional catalog and direct mail customers remain far more loyal than online-only customers. But as the USPS’s health continues to deteriorate, merchants’ confidence in mail as a reliable advertising medium will continue to diminish while their efforts (and budgets) to make non-mail marketing alternatives will keep increasing.

Resolving the financial crisis for the Postal Service is critical to restoring executive confidence in the mail. With new leadership just taking over and a nearly full board of governors with deep business and political experience, such a thing may finally be possible.

Perversely, the pandemic has acquainted many more consumers with ordering from home and this might be of long-term benefit for Postal Service revenues. While it’s too soon to determine which direction new Postmaster General Louis DeJoy will take the USPS, clearly the President’s influence is there. Depending on how the current situation resolves, it could further impact the extent to which business mailers use the Postal Service going forward.

Survey Highlights: COVID-19’S Economic Impact on The Catalog Mailing Industry

In the second half of April 2020, ndp | analytics, on behalf of the American Catalog Mailers Association (ACMA), conducted an online survey of catalog mailers and suppliers to quantify the impact of COVID-19 on employment, financial viability and business outlook. Here are some highlights from that survey.

Outlook

About 40% of catalog mailers and suppliers believe their businesses will contract and be smaller than pre-COVID-19 levels after the pandemic passes. This outlook is more prevalent among larger companies (at least $20 million annual revenues) where 46% believe their business will contract.

Company outlook after COVID-19 passes