Direct mail millionaire who wants to be UK postmaster

Nick Wells thinks his local postman is a "star". After his wife replaced their front door with one that had no letterbox, the postman prevented a spot of marital strife by finding another route into the house. "And he regularly feeds the dog biscuits," says the head of TNT Mail, the company that more than anything wants to take business away from his postman's employer.
TNT Mail, an arm of the Dutch postal group, is expected to be one of the main beneficiaries of the ending of the Royal Mail's 350-year monopoly on January 1. It is one of 14 operators to have won licences to compete against Royal Mail in a market worth more than £6bn a year. Since the beginning of this week, these companies have been able to deliver direct to Britain's 27m homes rather than pay the Royal Mail for the services of its postmen and women. Wells is wary of giving his competitors any details but says that the group hopes to "make moves" in the home delivery service in the second quarter.

The scale of the enterprise – 21bn items are sent through Britain's postal service each year – is at odds with the scale of TNT's headquarters, an ugly, squat building on the outskirts of suburban Maidenhead. With its low ceilings and felt room-dividers, the interior could have been the model for The Office, set in nearby Slough.
'Sortation'

And Wells is the sort of boss the series' anti-hero David Brent would love to be. He may use words like "sortation" to describe his business, but he drives a top-of-the-range Mercedes, has houses in Ascot and France and gave several broadcast interviews from Alpine ski lifts over the Christmas holidays. He only became chief executive of TNT in 2003 after making a multi-million-pound fortune selling his two direct mail businesses to the Dutch group.

He is also keen to point out that the 150 people working in Maidenhead are backed up by TNT's 18,000 mainly warehouse-based employees in the UK. TNT combines the financial stability of a large group with the entrepreneurial drive of a start-up, he says. "We're hungry and keen, customer-focused and entrepreneurial. All the things you need to take on a 350-year-old giant like Royal Mail."

One of the ironies of his position is that TNT is itself the former state-owned Royal Mail of the Netherlands. Although privatised in 1989, the group still has a monopoly over half of the Dutch postal service, although its home market is due to be fully liberalised next year.

Wells differentiates the British business from its parent. "My background and my heritage is running my own business," he says. Unlike the Royal Mail, TNT has benefited from years of greater efficiency and better investment in new technology. Four years ago, the company even held talks with the British government on a takeover of the Royal Mail – at the time going by the much-derided name of Consignia.

Wells credits the recent restructuring at Royal Mail for having made it a more formidable competitor since then. Despite continuing to sort much of our correspondence by hand, the former monopoly has lost only 3% of its market almost three years after it was first partially opened to competition.

So what can TNT offer that the incumbent cannot? Dutch technology, partly. Three handwriting-reading state-of-the-art sorting machines have been installed around the country and three more are planned this year.

Coy about the "millions" spent on this, Wells says by way of a hint that "the UK market is fundamental to TNT Mail's success, partly because we are losing volume in the Netherlands". The company's planned expansion also means it is moving to much bigger offices in Marlow, Buckinghamshire, in the coming months.

Analysts estimate that market entrants such as TNT, unburdened by antiquated infrastructure and working practices, could undercut Royal Mail prices by as much as 50%.

Supporters of Royal Mail – and there are many in parliament – argue that it is handicapped by its obligation to serve every small hamlet and unpronouncably named village in the country while operators such as TNT can cherry-pick the most profitable parts of the service.

Wells says this is a "charge propagated by Royal Mail" but goes on to say the company will have to "compete in certain sectors or geographical areas or products" in order to succeed. Is this not cherry-picking? He says this is a "question of semantics". "We would be silly to exactly replicate what Royal Mail do."

One thing is clear: new entrants are only interested in business mail, which makes up about 80% of the market. Wells admits he has no plans to enter the less profitable "social mail" market. There will be no orange postboxes on street corners and no obvious immediate change for the British consumer apart from, Wells hopes, more TNT letters from big businesses being delivered through their letterboxes.

So how does the British consumer benefit? Wells' response is to cite the general economic impact of corporate efficiency. "On a more general level, competition is good for the consumer. It's no coincidence, is it, that since competition was introduced, the Royal Mail's efficiency levels have risen to their highest for years?"

Wells is wary of overly criticising the Royal Mail, to which he pays millions of pounds as part of an "access agreement". When pushed, he says: "With any large organisation with that type of market share, the temptation is to become arrogant and not particularly client-friendly or responsive to client needs."

Those who know him have said that Wells is motivated by competition and that this is what has made him carry on after all the other directors of his previous company, Circular Distribution, have left TNT. A former CD employee says he simply enjoys the challenge.

'Tough cookie'

ING analyst Andrew Beh, who was treated to a bravura performance by Wells at an analysts' presentation, says he is typical of many executives in the cut-throat industry describing him as "ebullient" but "a very tough cookie".

His white hair may make him look older than his 46 years but on the first day of this brave new postal world this week, Wells is full of boyish enthusiasm, happily posing with his orange mailbags. "I like this challenge … I needn't do this and wouldn't if I wasn't 100% committed." This enthusiasm helped him make the relatively unusual switch back to salaried employee after 11 years as an owner. "One of my proudest things is that I've been able to make the transition from entrepreneur running his own business to a corporate environment where I report to a boss," he says.

Respect for his Netherlands-based bosses helps, as does the freedom they allow him. "I won't pretend there aren't occasions when it's frustrating, but there are times like that in any job," he says. "The most important thing when working hard is to have fun. You've got to laugh at it, take things not always 100% seriously."

Wells was the youngest, by seven years, of seven children: "And we weren't even Catholic," he says. His father, a journalist became a manager at local publisher Emap and his mother ran two toy shops. Privately educated, he studied sociology at Warwick University, which he says "helped him understand social behaviour". He regrets telling a joke to another journalist: "What do you say to a sociology graduate with a job? Big Mac and fries please." But the joke still makes him laugh.

He is even enthusiastic about the impact of the internet on the postal service. Yes, there has been "e-substitution", he says, but just think about all those eBay parcels.

Speak to Wells about the business that made his fortune – those irritating adverts that fall through your letterbox as well as Ikea catalogues – and his real enthusiasm shines out. "Everybody has an opinion on them," he says with some satisfaction. "And do you know why? It's more intrusive. One of the benefits is that it demands an action. If it's well targeted you pick it up and put it somewhere to act on. If not, you put it in the bin."

New mums also have him to thank for Emma's Diary, the mock musings of a supposedly pregnant women nestled amid adverts for nappies and nipple balm. The father of three secondary school-age children rushes to show off a new copy of the booklet he first thought of 15 years ago.

Direct mail is still an important part of TNT's business. It could be some time before Wells' local postman is reduced to pushing a few illegible postcards through his makeshift letterbox.

Wells on Wells

What are your tips for the top?
Always see through the customer's eyes. Avoid politics, be open and honest

What was your best decision?
Taking part in the management buyout of Circular Distribution in 1990

And your worst?
Buying Speedo swimming trunks a couple of years ago

What are your best and worst personality traits?
I get to the point quickly, but I'm impatient

Any new year's resolutions?
To get my golf handicap down from 10 into single figures