Prices have risen in the three years to 2014 due to increased demand resulting in part from stronger corporate profit and higher postage costs, which make outsourcing mailroom functions an attractive alternative to buyers.
Los Angeles, CA (PRWEB) August 10, 2014
Mailing services have a buyer power score of 3.6 out of 5, signifying a moderately high degree of buyer negotiating power. “Factors aiding buyer power include the availability of substitutes, a lack of specialization, very low switching costs, a stable supply chain and low price volatility,” according to IBISWorld business research analyst Michelle Hovanetz. There are some factors, however, that hamper buyer power, including rising prices, a medium level of market share concentration and a moderate degree of vendor financial risk.
Prices have risen moderately over the past three years, negatively impacting buyers. Price increases have been due to a rise in demand for mailing services stemming from increasing postage costs. “Rising costs force businesses dependent on paper mail to seek out lower-cost alternatives. Through their use of presorting and bundling discounts, mailing service providers are able to cut postage costs for buyers,” Hovanetz says. Service price increases are moderated, however, by some businesses' shift to digital alternatives to paper mail, such as online account management and billing, as well as e-mail marketing. The high availability of substitutes available to buyers, including digital alternatives and the creation of an in-house mailroom, benefits buyer power by boosting competition.
A lack of service specialization and low switching costs are positive for buyers, as they allow for price comparison across suppliers without regard for special capacities or high costs associated with changing vendors. However, the positive effects of these factors are somewhat limited by a medium degree of market share concentration. Areas without a large population or high business mail volume generally have fewer suppliers, limiting the number of competitors and, thereby, the price-based competition that results.
Mailing service suppliers have a stable supply chain, making the risk of price spikes due to supply chain problems unlikely. Labor and overhead are the primary input costs to suppliers, and both are anticipated to fall as a percentage of revenue. A stable supply chain helps to keep price volatility low, benefiting buyers by allowing for accurate budget planning.
The larger the amount of mail a buyer provides, the lower the per-piece rate a vendor will offer. Many suppliers have volume minimums; suppliers rely on large quantities of mail from their customers. Without a certain amount of mail, providers are unable to achieve a profit. They offer lower rates for larger quantities as a means of ensuring a suitable daily volume of mail to receive United States Postal Service (USPS) discounts. Buyers can generally count on larger providers with a large capacity and a wide customer base to offer lower rates, as they are better able to take advantage of economies of scale. Four of the top vendors in the mailing services market are Pitnet Bowes Inc., Automated Mailing Systems Inc., Midwest Presort and Zip Mail Services Inc. For more information, visit IBISWorld’s Mailing Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of mailing services. Mailing services aid business productivity by reducing time spent on mailing activities such as labeling, inserting, sorting and metering. Mailing service providers are most often known as presorters, though they commonly offer additional mail services beyond sorting. Presorters must be certified by the United States Postal Service. This report encompasses mailing activities leading up to submission into the postal system, but excludes postal services themselves.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.