Direct Mail Providers Stretch Out – October 2022 M&A Activity

Postage rate increases now occur with a regularity that many wish would apply to the delivery service itself. Concurrent with rate increases, the US Postal Service issued new service standards a year ago that effectively made the reality of slower mail delivery its new goal. Nonetheless, even with the longer delivery time standards, the latest USPS Service Performance chart indicates that the overall performance of the postal system is just now at the level achieved in 2020 when the pandemic shut-down was at its most restrictive. In the alternate reality that exists at the US Postal Service, its ten-year goal is to deliver mail on time 95 percent of the time. For now, any postal region that achieves a rating of 90.25 percent or greater of on-time delivery, in accordance with the new lower standards, gets an “Above Target” rating. For those readers of The Target Report in the direct mail segment, just imagine telling your customers that ten percent of their orders will be late, but that is your company’s standard, so it's ok.

Despite the increased postage costs and degradation of postal delivery standards in effect for the past year, marketers continue to utilize direct mail as an effective communication channel. As a response to the relaxed delivery time standards for mail traveling any significant distance, direct mail providers have responded by acquiring companies or establishing new facilities distant from their home base.