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While the government presents Royal Mail as an economic black hole, constraint by inefficiency and lack of modernisation. The war of words, industrial action and now an uneasy ceasefire has seen a wave of Mail Order companies move to alternative services.
Is this the beginning of the end for Royal Mail? We ask our experts for their views
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Ecommerce Expert
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Is this the beginning of the end for Royal Mail? |
James Scott
Managing Director |
| ChannelAdvisor UK Ltd |
| channeladvisor.co.uk |
The Royal Mail, much like the BBC and the NHS, is a peculiarly British phenomenon. Far from perfect, it is a much-maligned and yet equally loved and incredibly necessary part of everyday life. No other delivery company has the infrastructure or commitment (regardless of commercial pressures) to fulfill the task entrusted to them – that is to deliver and collect the mail to or from any UK postal address at standard price regardless of location or distance. Ironically, we must also remember whilst the Royal Mail faces stiff competition from alternative delivery services – it is often the Royal Mail that carries its competitors’ mail (small packets and letters) over “the final mile” of its journey to the customer.
The recent industrial action at the Royal Mail has had a serious knock-on effect for many of our online retail customers. Many have chosen to absorb the additional costs of using alternative delivery companies or reported a decline in orders at what should be the start of the busiest trading period of the year. However, others have taken the opportunity to invest in technology to help them better manage their delivery options and perhaps even turn the use of alternative couriers to a competitive advantage. We’ve suggested that our customers take this opportunity to renegotiate delivery options with alternative delivery services, to ensure that future strikes will not affect the delivery of packages to their customers.
There is no doubt the Royal Mail is in a difficult position. It must modernise, it must become more efficient and yet it must maintain its universal service and keep its customers and workforce happy. Increased competition will make it harder for the Royal Mail to operate profitably and achieve its aims, and yet it’s necessary for its competition to complete deliveries.
Is this the beginning of the end for the Royal Mail? I believe it is the beginning of a great deal of change for the Royal Mail and I suspect this will have more to do with party politics than it will with profitability and competitive business. However, it is hard to imagine how any alternative could truly replace this great British service. One thing is for sure, if UK shoppers match last December’s online spend of £4.67 billion, our customers will need every parcel service to be running at full capacity.” |
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Strategy, creative and production services |
Is this the beginning of the end for Royal Mail? |
Paul Crabtree
Marketing Director |
| FMG |
| wearefmg.com |
The problems at Royal Mail have simply accelerated a trend away from using their services. On the carrier front, there are many alternatives and they’re now picking up a lot of business. According to a Maginus survey, 44% of retailers said that the strikes led them to switch from Royal Mail to another carrier, and IMRG found that 60% of those who switched found that their new arrangements were more efficient than working with Royal Mail. Two-thirds of those merchants were considering not returning to Royal Mail.
But, this masks wider trends that are affecting Royal Mail, primarily an increasing amount of spend on digital media. I think there are two of particular note.
Smarter email marketing making new revenues.
Email campaigns are more personalised and effective than ever before – the DMA’s Q3 2008 email marketing benchmarking report shows an increase in click through rate to a record 10% (acquisition mailings) and 18.2% (retention mailings). This is being driven primarily by online marketers using ‘remarketing’ campaigns such as targeting customers who abandon baskets and more uses of dynamic content. These are typical of the trend to be as targeted as possible. These results justify further investment.
Interactive Catalogues are taking off.
Retailers are launching interactive catalogues. They engage, entertain and encourage purchasing by using animation, rich media and online video. The Ceros platform alone hosts catalogues for Sears, Comet, Ikea and GIve and all the UK’s major supermarkets publish interactive magazines. Sears are pioneering in this area launching a world first which really shows what can be achieved. It had an in catalogue basket tool and was fully integrated with the eCommerce system on the Sears site. Perhaps more importantly, this makes it easier to track revenue to evaluate investments.
But complimenting by mailed print marketing
As an agency working in print, digital and video we’re uniquely positioned to see how home shopping companies are altering their strategy in the current climate. One trend is clear – traditional print catalogues are here to stay. We’ve worked on over 10 different catalogue projects in the last 6 weeks alone.
But what does this mean for Royal Mail?
Simple, recent events have simply accelerated existing trends. What is certain is that without a reliable service, the rate of change will change will increase its pace. |
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Multichannel software expert |
Is this the beginning of the end for Royal Mail? |
Brendan Considine
Sales Director
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| Mailsolve |
| mailsolve.co.uk |
It goes without saying that there are serious questions that need to be answered over the performance of Royal Mail’s management and it is predictable that most mail order companies are going to be watching Royal Mail closely over the next 3 to 5 years but there is still no doubt that no matter how bad the service may be there is a significant number of older mail order companies and their clientele who will be true to the Royal Mail to the bitter end.
Any industrial action is going to hit mail order companies hard, particularly coming into their busiest trading period. The recent strikes have had some disruption but not as massive as the newspapers would have us believe. A recent survey of our mail order clients has shown that impact has been felt not only in the delayed delivery of items ordered but also in the delayed delivery of brochures and catalogues, and for those in the rag trade the inability to get their returns back to the warehouse has had an adverse impact on their stock control. Still, none of these companies have indicated a ‘jump ship’ attitude but it is clear that while some of them have given other carriers a ‘bite at the cherry ‘ there are still those that feel that their customers have got used to a changed Royal Mail service over the years and that another couple of days isn’t going to make that much difference to their lives.
Royal Mail has it place. It still has the ability to reach the outlying areas that other carriers battle to reach or are reluctant to consider in the first place. To this end it’s still guaranteed an existence until such time as another competitor can achieve this more successfully.
There is no doubt that change in the form of modernisation needs to be affected and if mail order companies and e-tailers want to continue the present trend of stealing sales away from the high street stores year on year then they need band together and force Royal Mail to step up to the mark. |
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Coalface Entrepreneur |
Is this the beginning of the end for Royal Mail? |
Alex Pratt
Founder |
| Serious Brands Ltd |
| seriousreaders.com |
Every business is concerned with sharing out the value it adds. In most cases this added value is shared amongst the customers, the staff, the Government (through taxation), and finally, if a profit is made, the business owners. The only difference with the Royal Mail is that it is owned by the Government. When business conditions become more competitive, the share of this value needed to maintain customer loyalty goes up. When you add in, that taxes stay pretty fixed, there is a clear need for flexibility and a step change in efficiency in the workforce and operations.
Trouble is, the Post Office is an underfunded pension scheme masquerading as a business, and the rigidity it exhibits, results in industrial action, which reduces the value to customers further, which makes them leave, which then creates a downward spiral. The Management and Unions all know this. In this situation, using the nuclear weapon of a strike simply accelerates the demise of the company and the jobs it supports. Nobody owes anybody a living. In our business, we have all taken a 20% pay cut this year but worked through to be able to reverse it now. Royal Mail needs to wake up and smell the Napalm. |
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Catalogue Expert |
Is this the beginning of the end for Royal Mail? |
| Ian Simpson |
| Catalogues 4 Business |
| c4b.net |
For many years Royal Mail neglected its business customers, almost to the point of contempt, conveniently forgetting the millions of pounds of revenue they provided. Over the years I have had laughable conversations with Royal Mail reps, that have left me with absolute contempt for their attitudes. Happily things have changed - a bit - and this change has been brought on by competition. But remember, the ultimate aim of competition is to eradicate all opposition – the management and workers at Royal Mail should wake up and realise this.
The Royal Mail is a business, but it is still regarded by many as a public service, including some of its employees. The looming/prevailing pensions crisis is a legacy of the public service era. Post workers traditionally enjoyed excellent pensions, now only possible in the public sector or local government – there has to be reality check.
As an institution it is something we shall all miss if it does disappear – but I really doubt if it will. Its state-owned legacy has bred passion and loyalty amongst its users. And the sense of collective ownership is powerful brand collateral. The Royal Mail brand is simply too valuable to slip away.
As a high profile company in the communications industry – it didn’t communicate, very effectively, what the strike was all about. It’s clear there was a fair bit of political tinkering, but nobody came out of it as good guys. Now, most wonder what all the fuss was about – we got the mail, eventually.
Down stream access has given the benefit of choice and the universal delivery must be protected at all costs, but until a provider can close the loop and not just cherry-pick the lucrative bits, the Royal Mail will remain. Orange postmen? On the Isle of Skye? |
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