July 25 2006 10:32 AM

Desktop shipping systems that combine Stealth Indicia with U.S. Postal Service shipping tools (such as electronic Delivery Confirmation) have proven to be a popular and cost-effective means to take advantage of USPS package services without the limitations and hassles of manifesting. USPS package services offer shippers significant savings and other advantages in certain mail classes, package weights and destinations. Stealth Indicia are an approved form of USPS postage evidencing that hides the postage amount paid by the shipper from the shipping label (see Figure 1 on page 50). Stealth Indicia allow merchants to ship products to customers without drawing attention to the difference between the shipping & handling (S&H) fees paid by the customer and the postage paid by the merchant. This eliminates a serious customer satisfaction roadblock.


The Shipping and Handling Driver

What do catalog merchants, Internet retailers, online auction sellers, many department stores and other sellers have in common? They all need to ship their products to customers, and most charge their customers S&H fees. The S&H fees typically cover a variety of expenses, including postage fees, packaging material, insurance, labor, overhead and, often, a profit margin. The difference between S&H fees and postage charges can also be very significant. For instance, a lightweight package shipped with USPS First Class Mail and electronic Delivery Confirmation costs the merchant $1.19 in postage; however, in order to cover packaging, labor and overhead, the merchant may charge $7.99 for S&H.


Unfortunately, customers usually confuse S&H fees with postage charges. When a package bearing a stamp, a postage meter strip or a Post Office payment strip arrives at a customers doorstep, it plainly and boldly displays the postage amount paid by the shipper (see Figure 2 on page 51). This sidetracks the customer experience: instead of the joy of receiving an eagerly anticipated package, the customers attention is drawn to the cost of the package. This highlighted disparity between the postage fees and S&H charges gives the customer a perception of being overcharged. Ironically, the customer may perceive that the merchant charges excessive S&H fees, even if the merchant has the lowest such fees in the industry. This usually angers the customer and causes the merchant extra support cost, lost sales, poor customer satisfaction and lost customer goodwill.


A large number of customers who notice the disparity between the S&H charges and postage fees will tie up the merchants customer service phone line with complaints about the perceived overcharge. The merchants service representative will have to calm the customer down, explain the charges and potentially provide discounts or rebates to keep the customer happy. Customers who perceive that the merchant overcharges them for S&H fees will choose not to do business with the merchant again. Those customers may also demand a refund or a return of the sold items. Irritated customers will tell friends and acquaintances of the excessive fees charged by the merchant. In the case of online auctions (such as eBay), customers will use the online auction systems rating tools to leave negative feedback on the merchants account. This will lower the merchants overall rating and harm sales.


The Need for USPS Shipping

Merchants can frequently save on their shipping costs by taking advantage of low USPS rates in certain mail classes and destinations. For instance, merchants can get two- to three-day delivery of lightweight packages weighing up to 13 ounces by taking advantage of low First Class Mail rates. Priority Mail enjoys a price advantage for two- to three-day residential delivery of packages weighing less than three pounds, and the USPS offers free packaging for Priority Mail. Media Mail is an excellent value for ground shipping books, CDs and DVDs that are not time sensitive. Furthermore, the USPS does not charge shippers any hidden fees such as residential delivery charges, incorrect address charges, weekend delivery fees, fuel surcharges, etc. These fees, collected by some private carriers, can exceed 10% of a merchants overall shipping charges. Merchants also must use the USPS to deliver packages to PO Boxes, and frequently rely on the USPS to serve destinations in Alaska, Hawaii and the US territories.


Despite the advantages of USPS package services, many shippers continue to use private carriers for all their shipping because the private carriers do not display the shipping charges on the package label. Prior to Stealth Indicia, the only way to use USPS products without displaying the postage amount was using the expensive and cumbersome manifesting process. Manifesting requires shippers to undergo a lengthy certification process that can take more than two to three months. Furthermore, for shippers to use manifesting, · they must meet daily minimum package requirements. Shippers using manifesting must fill out or upload USPS forms with every shipment, and they are subject to inspections and audits by the USPS. To complicate matters further, manifested shipments must be delivered to a USPS Business Mail Entry center. The impracticality of manifesting for all but the most dedicated USPS customers created a void in USPS solutions for shipping; however, the advent of pre-paid shipping labels with stealth indicia delivered a cost-effective and far more convenient USPS solution for professional shippers.


The Solution

A new breed of desktop shipping systems integrate Stealth Indicia with the USPS Web-tools shipping API to provide electronic Delivery and Signature Confirmation, electronic Express Mail labels and the International Mail advisor. These tools use PC Postage to pre-pay shipping labels and integrate third-party insurance to complete the shipping solution. In many applications, the shipping labels are printed with verified and standardized destination addresses, and users can customize their shipping labels with logos, graphics and text. The resulting shipping labels contain all the features of manifested labels but eliminate any of the associated hassles. The manifesting permit imprints are replaced with pre-paid Stealth Indicia postage printed by the shipping software directly on the shipping label in a single pass. Because these shipping labels are pre-paid, they are not subject to any minimum or maximum restrictions, they do not require any manifesting forms, and they can be picked up by the USPS or dropped off at any Post Office or collection box. Moreover, these new desktop shipping systems have a much broader user base than manifesting, which has kept their prices significantly lower than some manifesting software packages.


Stealth Indicia have been in commercial use since July 2002, and they have shown phenomenal market acceptance. Stealth Indicia are Information Based Indicia (IBI) wherein the human-readable postage amount paid by the shipper is replaced by a key-line (see Figure 3) depicting the package weight, the class of mail, the rate zone and, in some cases, data for special services. These indicia also print the phrase US POSTAGE & FEES PAID in the human-readable information. Although the postage amount is removed from the human-readable part of the indicia, the postage amount remains encoded in the two-dimensional barcode. Stealth Indicia do not prevent the recipient from computing the actual postage paid by the shipper, and they are not intended to do so. Rather, these indicia simply de-emphasize and hide the postage paid. This has proven sufficient in practice to eliminate the negative customer experience caused by visible postage amounts, while maintaining and improving the USPS operational revenue protection needs. Stealth Indicia are approved for use with all USPS shipping labels that include an electronic tracking service such as Delivery Confirmation, Signature Confirmation or Express Mail.


Easier for the USPS

Stealth Indicia assist the USPS in operational revenue protection. It is simpler and easier for the USPS to identify short-paid packages with stealth postage because the weight of the package (as input by the customer) is clearly displayed on the human readable part of the postage barcode. This is the only postage evidencing system that does that, making it much easier for any employee of the USPS to check that the correct amount of postage is paid for packages. The USPS employee simply puts the package on a scale and checks the weight printed on the label. If the weight matches, the USPS can be assured the correct postage has been paid by rigorously-tested and USPS-certified software. This process is an improvement over checking the postage amount directly, because previously, a USPS employee would have to weigh the package, enter the originating and destination ZIP-Codes to find the rate zone and compare the postage due with the postage paid.


The old system dissuades USPS employees from checking too many packages and creates more opportunities for short-paid mail to go through. However, with Stealth Indicia, the employee just checks one number, which is easier and less time consuming. And most importantly, it helps contribute to customer satisfaction.


Steve Rifai is director of Marketing at Envelope Manager Software, makers of Endicia Internet Postage. For more information, visit www.endicia.com.