Why postal privatisation delivers
Who would have though that this time last year, it was predicted that Royal Mail would lose over £600m worth of business by 2008, as a result of the postal market opening to competition on January 1 2005.
The claim, which could almost have come out of Royal Mail chairman Allan Leighton’s very own spin-machine, was actually made in an independent study by Corporate Mailing Matters.
The research, in which 300 top UK business mailers were quizzed on how they expected volumes to shift after deregulation, claimed 17 per cent of the market would to move to alternative providers, with corporate mailers shifting swathes of business to force price reductions and service benefits.
It stated: “Our observations show an increasingly savvy mail services buyer, with great growth in demand for consolidation services under the existing rules. Royal Mail will need to fight hard to maintain its strengths in the light of the strategic shift that business mailers envisage from 2006 onwards.”
Maybe it’s still early days, but the predicted mass exodus to private operators has yet to materialise despite the fact there are now 18 companies in the market. Then again, Royal Mail’s careful negotiation over ‘final mile’ deliveries also means that it is still making plenty of money from the new operators who, conversely are also among its biggest customers.
Royal Mail still has more than 96 per cent of the addressed letters market, but Postcomm claims competition has prompted the UK’s top brands to look more closely at their mailing costs and to take advantage of the choices now available to them.
Obviously it was always going to take more than 12 months to make a significant dent in Royal Mail’s 350-year monopoly, although some of the company’s recent moves – pricing in proportion and the proposed zonal pricing – have irked many.
The real point is that the opening up of the market seems to have had a positive effect on Royal Mail, with the organisation improving its performance and exceeding targets. And who could argue against that?
Charlie McKelvey – editor, Precision Marketing
