The Office of Inspector General is conducting an audit on Full Service -

10YG019DA000 Intelligent Mail: Realizing Revenue Assurance Benefits

“The objective of this self-initiated audit is to identify barriers to mailer participation in the full service Intelligent Mail program. In addition, we will determine if the Intelligent Mail system is able to ensure the accuracy of mailer postage statements.”

USPS OIG – Audit.

“Our audit scope will cover the period from May 1, 2009 to April 30, 2010. A survey will be conducted to determine ways to increase mailer participation in the Full Service Intelligent Mail program. We will obtain data from the SASP and PostalOne systems, and with the assistance from consultants, reconcile Postal Manifests to mail processing equipment scans.”

The OIG wants feedback and comments. The industry needs to provide them!  Go to the Audit Project page here.  And let the OIG know what you think of Full Service Intelligent Mail.

IG: Former postal marketing exec misused staff, contractors – FederalTimes.com.

The steady increase of Asian manufacturers – Looking for New Markets

Last week the Wall Street Journal posted a really interesting graph on the front page that shows the size of the China manufacturing sector.  WSJ subscribers can read the entire article here.  The graph speaks a thousand words.

I don’t think it comes as any big surprise that Chinese manufacturing is increasing at such a huge rate. A walk down a Walmart aisle or a trip to the Apple store is about all the proof that you need.  Add to that the ongoing TV, blog and news commentary related to China’s recent moves to allow the Yuan to appreciate against the dollar.  Will it lead to a surge in U.S. manufacturing or a decrease in the trade deficit with China?  (Yuan is a unit of the Chinese currency the Renminbi) Only time will tell.

Being a a global e-commerce and global logistics blog, I’m less interested in discussing the trade deficit and more interested at looking at the major trends for trade routes and where all these Chinese manufactured goods are going, who is buying them and where are they being sold.  I also think there are a few new trends developing that people should be aware of.

• Asia to LA/Long-beach trade route will continue to grow.
• Asian manufacturers will enter the U.S. market.
• The middleman will be redefined.
• The difference between International shipping and cross-border e-commerce.

The Asian marketplace has been steadily opening up since 2005.

Asia to U.S. Trade Route Growth

The silk road was a trade route.  Columbus was looking for a new trade route to Far East spices when he crash landed into the Dominican Republic.  As with everything, Wikipedia is the gospel of great definitions even for trade routes.

If you move goods along a trade route, you will rapidly find that your costs for container shipping will be much lower and you will have more container shipping options (increased frequency) if you are shipping along a well established trade route.  More volume of goods means lower costs for everybody because more ships are moving more frequently and the container companies want those ships full.  Just go down to the Long Beach port on any given day and you will see loads of ships and containers coming in from Asian ports; but, probably not too many from West Africa.

When it comes to consumer e-commerce (b2c), and international e-commerce, the trade route is still a factor.  I realize that there is air freight and consolidated shipping and express parcel.  All those still are driven by the most general rules of trade – The more goods that move, the cheaper you can get the transport.  (I’m going to have to come up with a snappier way to say that…comments welcome).  Trade Routes are an interesting thing when you apply it to e-commerce and especially consumer e-commerce.

When you look at the Port of Long Beach and Port of Los Angeles container volume as a whole, you get the number one port in America and its container volume is increasing (making up from low inventory in 2008-2009).  It’s no big surprise that it’s the closest port to the major Asian export markets.

Asian Manufacturers will enter new markets – Redefining the Middleman.

2010 has seen a large uptick in deal making for the major Asian marketplaces.  Particularly interesting is the interest in direct to consumer (B2c) e-commerce tools and deals that bring sales tools and marketplaces to the front door of Asian manufacturers.  Here are just a few deals that you may have noticed:

• There are new wholesale marketplaces popping up to make it easier for Asian manufacturers to sell goods in small wholesale amounts to U.S. buyers and importers.  AliExpress appears to be the most well backed and accelerating quickly.  Others include Light in a Box and DH Gate.  These are transaction platforms (like Amazon) and not just sourcing connection platforms.  All aim to simplify the process of buying from an overseas manufacture.
• Yahoo Japan and Alibaba’s Chinese auction site TaoBao tie the knot.
• Alibaba just bought Vendio – a U.S. Auction tool and e-commerce shopping cart provider.  Alibaba’s first U.S. acquisition to support their AliExpress marketplace.
• Rakuten, one of the largest Japanese marketplaces is on a global acquisition spree that started with the Buy.com purchase.

This is just a small sampling of a steady increase in deals in the E-commerce space.  Most point to a desire to help Asian manufacturers understand how to sell directly into online marketplaces and to help match-make Asian manufacturers with more importers and retailers and facilitate transactions of smaller amounts of wholesale goods.

What does this mean for the importer, retailer or middleman?  Today, it may just mean a new transaction platform to help source goods and understand what is being purchased.  However, as manufactures learn how to enter foreign markets more effectively, this may put the squeeze on importers and retailers who don’t offer a value add or it may simply offer retailers with skills at merchandising a more savvy manufacturer/supplier who can offer tools like drop ship and factory direct pricing.  At the current pace, this will take a while.  Read on to understand more why.

Cross-Border E-commerce is not defined as “International Shipping”

Take one look at any of the wholesale goods marketplaces above and you will quickly notice that while the product prices are low; in many cases the cost to ship the product may be more than the price of the goods.  Many products offer free shipping; but, its pretty obvious that the price of the good was rightly increased to cover the shipping cost.  Most of the shipments appear to be international parcel or air-freight shipments that will take over two weeks to get to their buyers if they clear customs quickly.

This is pretty typical for most small and mid-sized overseas manufacturers today.  Put the product up for sale in a U.S. marketplace; but, keep the inventory in the home country until it is purchased.  This is overseas selling using International shipping.  This is not scalable cross-border e-commerce!

Why?  Because, asking a buyer to pay more than the cost of the goods in shipping, having to wait multiple weeks for a shipment and pushing the customs/duties and tax problem onto the buyer is just a new face on sourcing overseas.  The buyers that understand this process and know how to import will continue to import; but, new buyers will be slow to adopt.  None of the problems have really been solved for the buyer in a way that makes the buyer want to buy more product, more frequently.  There was a recent article in the E-commerce Times that didn’t separate “International shipping” from “cross-border e-commerce” and did a fantastic job of describing all the hassles and risks of international shipping.

Being able to ship a parcel Internationally will help close a few transactions; but, cross-border e-commerce, as practiced by the largest companies, is not International shipping.  Cross-border e-commerce is all about the supply chain and the location of inventory closer to buyers.  A manufacturer that takes a small amount of inventory and imports it into the U.S. (or any major market), stores it in a warehouse in the U.S. close to buyers has many more sales options available than the manufacturer that keeps all inventory in Asia.  Some sales options that open up:

• Truly enter a new market and be able to automate your sales growth
• Sell the product wholesale or retail in more online marketplaces (retail and wholesale marketplaces).
• Automate order fulfillment using a service like Shipwire
• Offer local buyers same day shipping, free shipping promotions and other proven conversion increasing offers
• Increase sales by removing the hassles of importing and clearing customs
• Be able to handle returns locally
• Offer the goods to retailers and give them drop ship terms

Please see our Global Growth micro-site for more information on entering an overseas market.

Clearly, cross-border e-commerce takes more time than shipping international; but, the benefits are huge for the companies that find partners that can help them do this.  Clearly Shipwire is one such cross border e-commerce partner I hope people consider and recommend to any seller that is wishing to enter into new markets and accelerate sales.

This blog post is getting way too long so expect me to flush out cross-border much more in upcoming blog posts.

The need for packing peanuts is steadily increasing.

According to an article on PackagingDigest.com, a new report by Bharatbook, “World Protective Packaging to 2014,” states that world demand for packaging and shipping supplies is expected to increase 7.8 percent per year to $22.2 billion in 2014. The increase will be stimulated by higher manufacturing activity and increased number of Internet shoppers.

The article states that overall, foam plastic protective packaging, such as packaging peanuts will remain the largest product type by wide margin. Foam plastic materials are light weight and provide excellent cushioning when compared to paperboard and other related materials. However, environmental regulations may put a strain on the foam plastic packaging industry in some areas.

Protective mailers, such as bubble mailers, and other products like bubble wrap and other protective mailers have been and will continue to experience the fastest gains within the industry. Increases in the amount of electronic supplies that are being purchased online and in stores are fueling the popularity of these products.

Looks like good news for PackagingSupplies.com! For more information, read the full article on PackagingDigest.com.

Mailing groups across a wide spectrum of the industry are forming a coalition to fight the Postal Service’s first-ever exigent price increase

Mailers plan coalition to fight postal rate increase – DMNews.

"Source" "Wholesale Sales" "Consumer Sales"

Yesterday some big news was announced by Alibaba.com an Asian B2B Supplier sourcing platform and its wholesale marketplace arm (AliExpress).  They bought U.S. company Vendio.  (Personal note, congrats to our Bay Area friends at Vendio, looks like we’ll be seeing some interesting things from you guys in the future). Vendio is has been around in one form or another since the go-go Internet craze of the dot.com.  Today Vendio is a merchandising and online store platform that includes auction management tools that they picked up when they bought Andale (formerly Auction Watch) in 2006.

Auctionbytes covered the Vendio acquisition yesterday, as did the Wall Street Journal, Bloomberg and bloggers of all shapes and sizes.  The Auctionbytes article by Ina Steiner is a great read and has some back of the envelope calculations on how much Vendio raised and how much was previously raised by Andale.  While most of the industry analysts and  many commentators are focusing on Alibaba’s core business as the rationale for the acquisition – Get Vendio merchants to source product on Alibaba or close the transaction for wholesale buying on AliExpress – Ina’s article looks at eBay data as one of the main points of the acquision.  Alibaba stated it was all about driving more transactions off Alibaba and AliExpress in the Alibaba press release.  I for one, think it’s part eBay data, part opportunity to drive transactions to AliExpress and mostly to help their core customer base of manufacturers and suppliers learn how to sell in major marketplaces in the U.S.

Some of the interesting tidbits I’ve gathered from various sourced: (see trackbacks)

• AliExpress/Alibaba team is armed with a $100M war chest for acquisitions to beachhead AliExpress and make it a force in the Wholesale e-commerce transaction space.  Note, you can’t actually close the transactions on Alibaba.com, it’s a communication platform between wholesale sellers and interested buyers.  AliExpress is the transaction platform that includes an escrow service for buyer/seller protection during the complexity of a cross-border wholesale inventory purchase.
• Vendio mentioned they have 80K SMB sellers on their platform.  It looks like the bulk of the sellers are eBay auction sellers; although the Vendio store platform was very well positioned as price competitive and they had a pretty slick looking mobile e-commerce application.
• Rumblings on the internet are that Vendio was shopping for a buyer for a few months so I’m betting this is not secret to insiders.  I wonder if eBay was at the table given the amount of data that Vendio was holding from the Andale platform.  Perhaps Amazon had a seat too as Vendio was trying to grow their off e-bay business.  If so (I have no clue), this probably helped the Vendio team in their purchase price.  I’m wondering who is shaking their heads this am.
• Alibaba just picked up a pretty interesting merchandising software.  Vendio is all about selling and getting inventory in front of buyers and managing the complexity of the auction process.  Heck, even their name has the root of “sell” in the latin based languages.  So the branding specialists that masterminded the Alibaba brand are probably excited to get their hands on Vendio if they have Latin American intentions.  Is there an AliVend in the future (sorry couldn’t help but go there)?

A few other editorial opinions:

• The cross-border e-commerce trends are accelerating.  Few weeks we blogged that Buy.com got picked up by a Japanese firm that promptly went and bought another major European marketplace PriceMinister in a clear move to scale. The U.S. e-commerce market is one of the most mature in the world and the companies that have pushed the maturity envelope are sitting on a lot of expertise and merchant data that is looking pretty tasty to overseas buyers armed with large acquisition checkbooks.  Is this the harbinger of a big M&A summer?  Probably.
• Alibaba wanted 80,000 eBay merchants to pay attention to their sourcing platform and they wanted to give their millions of Alibaba Gold Suppliers access to sales tools to make them more powerful 3rd party sellers.  I’ve blogged about the attractiveness of 3rd party sellers to the big marketplaces and AliExpress is gearing up to be a big marketplace (why else would they direct $100M in investment at it).
• I’m loving my 2010 e-commerce predictions right about now.  The value of third-party sellers increases.  Cross-border e-commerce is going to be the big driver in 2011 too.  Shipwire released our Export Index that makes the point that overseas selling is accelerating.
• Has anybody seen a Vendio API that will plug into the Shipwire order notification, shipping rate and inventory API’s?  I surfed over to the Vendio Developers Corner; but, the focus is on web site templates and designs for their store front.  I’m betting we start seeing more requests for this integration soon.

Other links:

• Free eBay order fulfillment shipping tools by Shipwire
• Channel Advisor order fulfillment shipping
• Shipwire Order Fulfillment, real time shipping rate, real time inventory API

It’s summer time.  Time to get out of the warehouse.   If you find yourself stuck in a warehouse on the longest day of the year  it’s a great time to consider ways to get out of the warehouse and get outside or get back to growing your business.  Perhaps Shipwire can help you get your life back.

In one of the last rainstorms that passed through a few weeks past we had a rainbow over Shipwire.  Our VP of Products, Phil,  snapped an awesome camera phone image and put n a few Shipwire additions.  You may find the graphics familiar if you are a visitor to the Shipwire shipping blog.

Thanks Phil for the image.

Nine Groups Testified; One Solution Presented

Being the last person to testify had its disadvantages, but at least it kept me in that hot room next to Chicago’s ruling Mayor Richard Daley’s office to listen to all the other testimonies and a political speech by Danny Davis.

With the muffled sound of unrelated protesters down the hall, appearing before the Postal Regulatory Commission concerning the USPS request to go to a five-day delivery schedule were seven organizations that had something to lose should this decision go forward with the PRC’s blessing, the Chicago Postmaster with non-committal comments, and one organization with a suggestion for a solution.

• Direct Marketing Business Director – Crate and Barrel needs his catalogs to arrive for consumers to shop and return goods on weekends, but could live with five-day if the increase in rates flattened out
• Senior VP Caremark Mail Pharmacies needs to get prescriptions to people on Saturday when they forget to order them in time
• RR Donnelley prints so many magazines that they do not have room to store a day’s worth of skids to be mailed
• Murray McMurray Hatchery has a delicate life cycle of baby chicks in his supply chain
• Calmark produces direct mail pieces whose customers need them to be there on Tuesday, mailed on Saturday
• Cadillac News has Saturday newspaper customers who would be confused if their paper was not delivered into their mail boxes

AMPC, the lone presenter with a possible solution was willing to accept five-day delivery if six-day delivery could be handled on a limited basis.  As long as PO Boxes were being serviced, Private Mail Boxes have to be serviced too, according to AMPC.  Serving Private Mail Boxes means delivery to up to 10,000 Commercial Mail Receiving Agents with the potential to deliver to 10,000,000 or more residential and business addresses at 0.1% of the cost.

Mailers and union representatives are one-by-one marching before the PRC claiming the inability to adapt, yet unwilling to accept a significantly higher postal rate.  As with all government programs, once we get them, they become so embedded in our activities that we cannot do without them (or so it seems).

• eBay is concerned about rural “disadvantaged sellers” losing a day of delivery forcing them to use FedEx or UPS
• A consumer rights organization is concerned about the late fees that low-income people of California would incur because they would not be able to pay at the last minute and have it move through the mail on Saturday
• A newspaper in Dallas needs Saturday delivery because that issue “includes the football scores.” Without the USPS it could not be delivered
• The postal worker’s unions see this as “the first step in the destruction of the Postal Service”
• Now that we can vote by mail, election officials are worried that voters will not get their ballots returned in time

It appears that the Postal Service, by delivering and picking up mail on Saturday has taken away America’s ability to plan ahead and adapt.

But will this proposal be an all-or-nothing five-day delivery or will it be something less than six-day universal delivery?

With the comments from the public saying it is OK with them if they don’t increase the price of a stamp, comments from the mailers saying that six-day delivery is significantly embedded in America’s commerce, with newspaper’s inability to find an alternate delivery method, with advocates worried that procrastinators will be disenfranchised,  and the Post Office saying that they need an emergency rate increase on January 1^st that will reduce the Market Dominate CPI-U related pricing formula to another shallow political promise, I believe that there is no way that five-day delivery will stand in its present form.

I doubt that getting this through a pro-union Congress in an anti-incumbent atmosphere is going to happen this year.

Joe Davidson – A chance for Congress to acknowledge its role in postal crisis.

Interesting item in the most recent Standard Mail Quarterly Performance report posted at USPS.com.  Start the Clock is one of the benefits touted for Full Service Intelligent Mail.  More than a year after Full Service started, there are still issues with Start the Clock information…the same information on Start the Clock limitations is included in the First Class Quarterly Performance Report as well.

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In Quarter 2, a pilot system captured the information from a limited number of Standard Mail® mailings testing aspects of Full-Service Intelligent Mail®. Systems were not in place to fully measure end-to-end service performance as is intended when the Full-Service Intelligent Mail® system is implemented. Validity of the start-the-clock event and the scope of system coverage had not met intended rigor.

Processes and systems were not in place to support the intended start-the-clock business rules defined in the Service Performance Measurement plan published in June 2008. For this quarter, the start-the-clock event was based on the very first read on mail processing equipment for a piece of mail within a mailing. To be valid, the first read must have occurred at the expected origin processing facility. No critical entry time comparisons were applied to the data. In cases where the mailing was not processed on mail processing equipment, no data existed upon which to start the clock.

Quarterly Performance for Standard Mail® – FY10 Q2.

Interesting item in the most recent Standard Mail Quarterly Performance report posted at USPS.com.  Start the Clock is one of the benefits touted for Full Service Intelligent Mail.  More than a year after Full Service started, there are still issues with Start the Clock information…the same information on Start the Clock limitations is included in the First Class Quarterly Performance Report as well.

————————————

In Quarter 2, a pilot system captured the information from a limited number of Standard Mail® mailings testing aspects of Full-Service Intelligent Mail®. Systems were not in place to fully measure end-to-end service performance as is intended when the Full-Service Intelligent Mail® system is implemented. Validity of the start-the-clock event and the scope of system coverage had not met intended rigor.

Processes and systems were not in place to support the intended start-the-clock business rules defined in the Service Performance Measurement plan published in June 2008. For this quarter, the start-the-clock event was based on the very first read on mail processing equipment for a piece of mail within a mailing. To be valid, the first read must have occurred at the expected origin processing facility. No critical entry time comparisons were applied to the data. In cases where the mailing was not processed on mail processing equipment, no data existed upon which to start the clock.

Quarterly Performance for Standard Mail® – FY10 Q2.

This huge packing tape spider web is strong enough for people to sit in! Photo compliments of FastCompany.com.

According to Fast Company magazine, Viennese/Croatian design team for Use/Numen use nothing but packing tape to create massive, self-supporting spider webs and cocoons that visitors can actually climb inside.

The team has installed four webs in the past year, the latest one was installed June 9-13 at the DMY Berlin’s International Design Fair. The first web was created inside a small Croatian gallery and as the year moved forward, the installations grew larger. After the gallery installation, the team moved on to an abandoned attic, then to a larger venue, the Odeon, a former stock exchange building in Vienna. For the Odeon installation, the team used about 117,000 feet and 100 pounds of packing tape.

The inspiration for the giant webs come from an idea for a dance performance. The next web installation will be in September in a public space in the center of Frankfurt. For more information, read the whole article.

House and Senate Joint Hearing to Discuss USPS Future Financial Viability | Postal Employee Network.

Risky, and without Reward | Articles & Archives | Mailing Systems Technology.

Opinion piece on Full Service from my MTAC colleague Wanda Senne.

I can understand her frustration.

It’s always great when you can find new uses for old things. So why throw away old heart-shaped or rectangular candy boxes when you can get crafty and use them to create some unique jewelry boxes? Here are some ideas, courtesy of eHow:

First, clean out the box so that no chocolate bits remain. Using a hot glue gun, glue batting on the parts of the box that you wish to cover in fabric. Cut away any excess batting. Next, cover the batting with fabric of your choosing. Velvet, satin, silk, and brocade are all good choices for the heart-shaped boxes, sticking with the romantic theme. For rectangular boxes, any fabric will do. You can use white craft glue to attach the fabric. Cut away any excess material. Cover the bottom section of the box the same way, but make sure that the fabric isn’t so thick that you can’t close the box.

If you want different compartments in your box, you’ll have to create dividers. Figure out how many sections you want, and create dividers using heavy cardboard. Measure them so that they are 1/8 shorter to make a little room for the felt. Choose a color of felt that goes well with the fabric you chose for the top of the box. Using white craft glue, glue felt to the dividers and set them aside to dry. They will be added later.

Next you’ll want to line the inside of the box with felt. Use white craft glue, since hot glue will leave ridges or lumps in the inside of the box. Cut away the excess felt. When the glue is dry, add the divider sections you made earlier, and glue them into place.

You can trim the box using a variety of embellishments, like ribbon or lace. This is not just for decoration, but also to cover up the fabric and felt edges.

Use whatever you like to decorate the top. Buttons, lace, ribbons, silk flowers, charms, and appliques are all great options. Use your imagination! Whether the jewelry box is for you or for a friend, it will be something unique made to suit your own personal style.