Mailing house sector cautious about postal liberalisation
Postcomm's commitment to complete postal liberalisation by 2006 was underlined this week with a public unveiling of its long-trumpeted plans (PM last week).
From the media owners put on red alert by Royal Mail's investment in Mail Marketing International (PM July 6, 2001), to those embroiled in the dispute over the Postal Preference Service (PPS), (PM January 18), almost everyone in the industry has been affected by Consignia's expansion strategies as it struggles to make up the #1m it is reportedly losing each day.
In the case of mailing houses, Consignia's aggressive efforts to enter the mailing industry (PM October 26, 2001) have enervated a sector already wrong-footed by the service's ongoing financial and managerial problems. This has resulted in furious calls to industry action (PM letters December 7, 2001).
Despite this, the acceptance of inevitable liberalisation does not mean everyone in the mailing house sector has complete confidence in Postcomm's new competitive deal. Fears of further disruptions and uncertainties about the future mean the industry remains cautious, to say the least.
"Postal liberalisation frightens me," states SR Communications chairman John Burbidge. "Compared with the rebate system we had in the Seventies, what we have now is much better. The postal service is currently going through a blip brought about by bad management, not by the industry itself.
"We began as a cottage industry, with the Post Office as partners, and they gave us respectability. With liberalisation, we won't know who is handling our mail. Will we be able to rely on them and trust them like we do Royal Mail? I know it has its problems, but surely it's 'better the devil you know'."
Part of Burbidge's fear is that liberalisation will give mailing houses the daunting responsibility of making decisions about the best service provider. When things go wrong, clients might blame mailing houses for a bad choice.
But Graham Cooper, divisional managing director of Mail Marketing International, (in which Consignia has a minority stake) believes it is likely to be the clients who decide who to place business with.
"Some large volume users will set up their own deals, probably with Consignia. I think we will benefit from looking at smaller projects and consolidating groups of smaller clients, and then possibly applying for licences to distribute mail ourselves," he comments.
For CCS Direct Mail general manager Lorraine Turner, liberalisation will offer a preferable choice to new, tougher penalties for mailings in imperfect conditions, imposed by Royal Mail last year.
Though Turner says the dispute is now resolved, the penalties provoked outrage among industry figures who called Royal Mail hypocritical for failing to raise its own service standards while simultaneously attacking others.
"We should be allowed freedom of choice," she says. "You only have to look at the international Post Office, which is fine, to see that it is a possibility over here too. Hayes and TNT will end up in the Royal Mail postal system, but Royal Mail will still deliver the mail in its final stage, ensuring consumers remain confident."
Turner warns that this may take longer than expected. She explains: "The other service providers aren't ready for it. Royal Mail has an understanding of mail houses and the client's objectives, but the others don't have that yet.
"Although they understand the postal business, and have identified Royal Mail's strengths and weaknesses, they don't yet have a full understanding of the direct marketing business."
Prolog commercial director Guy Smith agrees: "I can't see a viable alternative at the moment. No one has materialised to talk about handling our clients, but when they do, it will make Consignia hungrier and that will certainly be beneficial."
