‘The worst it’s ever been’: Reno-Sparks direct mail, sorting companies forge ahead
RENO, Nev. — Through 35 years, Don Jassel, owner of Nevada Presort, had seen just about everything in the mailing industry.
And then 2020 happened.
Since the coronavirus pandemic rocked the U.S. economy in March, companies across all sectors have been working — often day and night — to right the ship and stay afloat through the rest of the year.
Nevada Presort, a Reno-based direct mail and sorting business, is no exception.
“I don’t think I’ve ever been in a situation like this one,” Jassel said in a phone interview with the NNBW. “I’ve gone through some light recessions, and through what I’d almost call a depression back in ’07-’08, but this is probably the worst it’s ever been because of the virus.”
The pandemic has accelerated the severity of the already struggling finances at the U.S. Postal Service as first-class mail and direct mail (also known as advertising mail) volumes have plunged.
Should economic slowdowns continue, USPS warned Congress in April it could run out of cash by September if it fails to receive emergency funding, according to the New York Times.
VOLATILE REVENUE STREAMS
Since March, Jassel said Nevada Presort’s volume of daily first-class mail that it picks up, sorts and manages with the USPS has sometimes been down 35%.
Prior to pandemic, he said the company had 130 to 150 clients it scooped up mail from every day of the workweek. Due to the COVID recession, however, some have dropped their frequency down to two or three days.
“It gets to be a struggle when you lose that kind of volume per day,” said Jassel, who’s kept his 15-person staff employed throughout the COVID crisis. “It’s harder to get sales right now for existing clients — to get more out of them or to stay with them and help them with their marketing — and it’s harder to get new business because nobody’s there (in office buildings).
“And the people going back, they don’t want to see anybody.”
Indeed, companies are pulling back on their marketing spend, leading to a negative impact on the direct mail market, which contributed 23% of USPS revenue in 2019, according to the USPS.
While Nevada Presort’s Q1 revenue was “even” compared to last year, Jassel said revenue has been down roughly 20% for Q2. The company did more than $1 million in revenue in 2019, with monthly averages of 250,000 pieces of daily mail and 1 million pieces of direct mail.
“We believe it’s all going to come back and we’re probably going to grow another 30% to 40% over the next year,” Jassel said. “Having enough steady work to keep my entire staff busy, that’s the biggest challenge. I worry about my employees. I worry about my clients.
“And I worry about the business last. If you take care of those first two, the business will survive. Could we be busier? Sure. But that will come in time.”
With it being an election year, political flyers, brochures, postcards and letters will frequently be filling mailboxes.
Jassel said the company could see an influx anywhere from $50,000 to $100,000 in revenue — “it depends on how brutal the battle is, let’s put it that way” — from sorting and managing political mail.
‘NOBODY WANTS TO SPEND MONEY’
Digiprint, a Reno-based printing service company that also does direct mail, saw its revenue stream for direct mail completely cut off in mid-March once the state shut down, said owner David Spillers.
“We had stuff sitting in the back ready to go, but as soon as this all happened people called and said, ‘wait! Don’t mail it out now, we’ve got to wait until we get open again,’” Spillers said. “So, we had to sit on a lot of mail.”
Phase 2 of the state’s reopening, however, put Digiprint’s volume back up to normal in May, stemming from direct mail for clients advertising that they are reopening. In June, however, the company’s volume dipped back down to just above 50% of normal, Spillers said.
“It’s still slow because people don’t want to spend the money,” he continued. “It’s so uncertain — nobody wants to spend any money. It’s a big hit because you lose half your business like that and your revenue gets cut in half.”
As the state gradually reopens, Spillers feels the direct mail market will “make somewhat of a comeback,” before adding: “I don’t know if it will ever be what it once was.”
Jassel feels companies will become “more focused” and “targeted” in their direct mail messaging.
KEEPING UP WITH TECH
With the economy in a lull, both Jassel and Spillers said investing in new technology to become more efficient as an operation is especially important.
To streamline its automated sorting process, for example, Nevada Presort uses Optical Character Recognition (OCR), a software program that reads all character types and determines how to route mail. Jassel said the company just ordered a flat sorter — used for automatic sorting of lightweight and flat items — that will arrive in August.
“A lot of people keep using the same old equipment, which it works, don’t get me wrong,” Jassel said. “But when you start competing, you need to have the technology. If it’s more efficient and it runs better and runs faster that means we can maintain our cost so we don’t have to charge the clients more.”
Spillers echoed Jassel’s sentiment.
“You have to constantly invest in the newest technology or someone else will and they’ll pass you buy,” said Spillers, noting Digiprint uses state-of-the-art technology for its printing and mailing services. “Every year we’re getting something new. With 10 people we’re doing what we used to do with 15 people.”
‘THE POST OFFICE WILL NEVER DIE’
As for the future of the USPS, the two Reno business owners are optimistic the post office will survive and carry on through the pandemic.
This comes despite the fact the agency has not yet been bailed out and is anticipating a loss of $13 billion in revenue for the fiscal year due to the crisis and another $54 billion over 10 years.
“Everybody’s a little scared with what’s going to happen because they’ve been losing money for a lot of years,” Spillers said. “But the government has to do something because they need a bailout and we have to have the post office.”
“No matter what happens with the country, the post office will never die, in my opinion,” Jassel added. “Maybe in 30 years when we go paperless and everything’s electronic it might really phase out. But, there’s a lot of people working there and I think mail has relevance — there’s a good ROI on mail.”
“We did a lot of very, very difficult evaluation over a very, very short amount of time and just concluded that this was the right thing for the company at large.”