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With each rate hike, says Rosen, “alternate delivery becomes that much more viable.” Mitchell Newman, president of Mitchell’s Newspaper Delivery Inc. of New York and a member of the Nationwide alliance, says that since the rate boost, his firm has been “flooded with calls.”
During past rate hikes, publishers frequently threatened to use alternate delivery systems, yet they seldom did more than dabble in a few pilot demonstrations. This time, mailers say they are serious, and they’re putting up the money to prove it. If Publishers Express is merely a bluff, “it’s a very costly one,” notes George Gross of the Magazine Publishers Association.
Despite all the excitement, alternate delivery is not without its pitfalls. The Postal Service enjoys a number of powerful advantages. It offers universal delivery six days a week, through 40,000 post offices. It enjoys sole access to its patrons’ mailboxes. It retains its monopoly on all addressed letters, leaving most third-class mailers-who, as the most profitable category of customers, subsidize first-class service-firmly in its clutches.
So far, alternate delivery is available in only a handful of cities. Even in those areas, coverage can be spotty. Private delivery is too costly in many low-density rural areas, and it is sometimes difficult to gain access to urban apartment buildings. Almost no one expects that mailers will ever achieve 100-percent alternate distribution. Moreover, not all the pilot projects have been unalloyed successes, at least at first. “It clearly isn’t as easy as it sounds, just to go out there and deliver magazines outside the post office,” says Campbell of Times Mirror Magazines. “There’s a definite learning curve out there.”
Cashing in on concerns raised by the recent rate hike, APD is racing to expand nationwide to achieve a critical mass, so that wider geographical distribution will in turn draw heavier mail volume. “This will be the best window of opportunity private mail deliverers will ever get to show to the marketplace that they’re up to the task,” says Gene DelPolito, executive director of the Third Class Mailers Association. But he warns, “If you can’t deliver me my marketplace, then you’re of no use to me whatever.”
APD’s Miller agrees that he has about 36 months to establish a network, but he sees things a little differently. “Either the third-class and magazine mailers jump on board and participate in alternate delivery,” he says, “or they’ll lose the opportunity forever to have a true, viable competitor against the Postal Service.” He is confident that mailer participation “will be there, and we don’t think there’s any chance we’ll miss the window of opportunity.”
Private deliverers must make alternate delivery painless, DelPolito contends, offering mailers the same “one-stop shopping” and standard specifications available at the Postal Service. At the moment, APD and Publishers Express emphasize that they are not competing against each other and do not plan to invade each other’s markets. Mailers want one nationwide network, says Rosen of Publishers Express, “and if there are competing forces, I don’t see alternate delivery working.”
It might be preferable to have more than one or two nationwide companies; after the Postal Service raised its rates in February, UPS followed suit. Still, mailers believe even one alternative to the Postal Service would be a big improvement, if the two systems compete against each other.
Duplicating the capacity of the Postal Service is too costly, as Publishers Express has discovered. The company now is copying the APD strategy of using local companies for distribution. Newspapers seem especially well-suited for the work. The Sacramento Bee and the Orange County Register in California were among the first to set up alternate-delivery systems for their own solicitations and promotional mailings, mainly to defend themselves against rising postal costs and uncertain deliveries.
Both papers discovered, however, that alternate delivery is a profit maker; the Bee is negotiating a contract with APD. Newspapers “already have the means in place to become ... not just a newspaper company, but a delivery company,” says Jim Spivack, alternate distribution manager for the Bee. Newspapers have customer service and circulation departments, he notes. “We have existing carriers. We have distribution trucks. I can only see an unlimited expansion.”
Although Postmaster General Frank claims that the postal monopoly is a “necessary public institution that serves an important social function as a binding, unifying force in our national life,” postal patrons seem to be bound together mostly by shared horror stories. Magazine circulation directors complain of convoluted, unnecessary rules capriciously administered. Navigating the U.S. Postal Service, says one, “is like trying to get an export visa for an automobile in Peru.”
Ken Bradstreet, president of the Association of Alternate Postal Systems and an executive at Advertisers Postal Service, a private deliverer of saturation mail in northern Michigan, recalls a local advertiser who had complained that Bradstreet’s operation did not reach as many potential customers as the post office could. The advertiser drew this conclusion from the fact that Advertisers Postal was asking for significantly fewer mailing pieces than the post office wanted for delivery to the same area.
So Bradstreet decided to visit the dumpster at the local post office. He pulled out a pile of the advertiser’s undelivered mailings and showed him what amounted to some 8 percent of the zip code he was trying to reach. “That picture was worth a thousand words,” Bradstreet recalls. The Postal Service was routinely asking for more pieces than it needed and dumping the rest, even though the mailer had paid postage for it as well as printing costs.
The local postmaster, riled by the affair, wanted to call in a postal inspector to determine for certain who had been rooting in the postal garbage, “so that I could be arrested properly,” says Bradstreet. No arrests were made, and the advertiser subsequently switched to Advertisers Postal. “The Postal Service is quite good at—I don’t want to say covering up—but disposing of excess materials,” Bradstreet says. “The mailers never see it and never suspect it.”
Alternate deliverers are confident they can deliver superior service. As Newman of Mitchell’s Newspaper Delivery puts it, try calling the U.S. Postal Service to find out why Mrs. Jones of Ann Arbor failed to get her People magazine last Thursday. Newman boasts that on the rare occasion his company doesn’t deliver, he’ll find out why and have it fixed within an hour.
The Postal Service is frequently compared to a battleship, but Thompson, publisher of Optimum Delivery, says the behemoth is not merely slow to respond. “I think it’s far beyond that,” he says. “I just don’t see how the Postal Service is ever going to be able to accomplish what private industry can accomplish.” The emergence of alternate delivery could help convince people of that. “If alternate deliverers play their cards right, you’re looking at something which is going to be a permanent fixture in the postal market, and something which has tremendous potential to grow,” says DelPolito of the Third Class Mailers Association. “Every day that alternate delivery shows it is up to the test of satisfying the market’s needs is one day less that you will find for the future of the private express statutes.” Who knows? Someday, even Cub Scouts may get to deliver Christmas cards.
Carolyn Lochhead is a writer for Insight magazine.