Carrying on amid the postal strike

While just about everyone in the country was affected to some degree by the Communication Workers Union (CWU) strikes against Royal Mail, direct marketers were hurt on several fronts. There was the matter of ensuring that customers receive their orders in a timely fashion, of course. Those that rely on catalogues and other postal mailings as sales vehicles had to review drop dates and order curves, as well as consider alternative marketing tools. And those that still receive a significant proportion of orders and payments via post had to adjust their cash flows.

Yet the direct sellers contacted by Catalogue e-business did their best to buffer their customers from feeling the effects of the work stoppages. As Mark Reeves, commercial manager of equine supplier Derby House, puts it, “The postal strike has been an issue internally, but thankfully, as we planned for this type of scenario, it hasn’t affected our customers’ deliveries.”

Part and parcel

Forty-four percent of retailers surveyed by Maginus, a provider of multichannel software solutions, said that the strikes led them to switch from Royal Mail to another carrier, as Derby House did. “Without going into too much detail we managed to come to an arrangement that works for our business and our courier that means we haven’t had any financial impact on the business,” Reeves says.

Other cataloguers did take a financial hit, however. Multititle mailer Foot Shop, for instance, usually sends the majority of its orders by Royal Mail, but it switched to Parcelforce during the strikes, says marketing director Robin Beech. “But this causes big increases in fulfilment costs, and we’re not going to pass these on to the customers.” He estimates that a “prolonged strike” would have cost Foot Shop, whose brands include Cosyfeet and Walktall, about £17,000 in increased parcel delivery costs.

Nauticalia also paid more to have its packages delivered. “We negotiated rates at the beginning of our season with Royal Mail,” says Mark Wilby, operations director for the cataloguer/retailer of maritime-themed gifts. “As a result of this we incurred additional costs from a weak position of negotiation with alternative suppliers.” He estimates that during the weeks of intermittent strikes Nauticalia paid £1 more per parcel delivery than it had using Royal Mail.

Not every direct merchant could afford to switch to a more costly parcel courier. Nick Race, managing director of lingerie mailer Woods of Morecambe, says switching its parcel delivery to a courier would have cost three times what the company pays Royal Mail. What’s more, the courier companies “wanted to tie me down to a 12-month commitment—and who can blame them?” he says.

So Woods of Morecambe continued to ship most of its parcels by Royal Mail—except those to customers in the environs of the company’s North Lancashire headquarters. Race hand-delivered those orders himself. As for the parcels that Royal Mail was delivering, Race says his customers hadn’t reported any delays.

BrightMinds, a cataloguer of toys and games, also continued to use Royal Mail for its standard delivery, which is normally delivered in 7-10 days. As of late October, there were no complaints from customers, says founder and managing director Alison Quill. She notes that more customers paid to upgrade for 48-hour and next-day courier delivery, though.

Circulation uncertainty

Quill sent the latest edition of the BrightMinds catalogue using Royal Mail Mailsort 3 the evening of 26th October, and the company received its first order from the mailing three days later, she says. “So midway between two strikes [23rd October and 29th October], Mailsort was performing as well as I have known it to—three days to first drop.”

Even so, Quill plans to send later mailings of the BrightMinds catalogue via TNT. The company uses DHL to deliver catalogues of BrightMinds’ sister brand, T-shirt merchant Rosie Nieper, and “I have been really impressed by DHL and TNT,” Quill says. “The service of speed, controlled nature, and price means we probably will move all mailings away from Royal Mail next year.”

Nauticalia already switched most of its catalogue mailings from Royal Mail to TNT to avoid deliveries being delayed due to the backlog of volume. According to Royal Mail, as of 30th October an estimated 35 million pieces were still waiting to be delivered. In addition, says Wilby, the company planned to distribute 1 million inserts via the weekend papers, “to maintain sales and confidence”. He estimates the cost of this initiative at £90,000.

Some cataloguers were reexamining their overall circulation strategy for the holiday season. “The strike action does cause major disruption to our catalogue mailing plans in November and December,” Andy McDermott, director of home and garden merchant Coopers of Stortford, said prior to the 5th November announcement that the CWU had agreed not to strike for at least the rest of the year. “Consequently we do have a circulation Plan B and Plan C, which we’ll implement dependent upon the extent of the industrial action.”

Crisis of confidence

Outgoing parcels and post weren’t the only concerns. Customers who pay by cheque were especially hesitant to place an order, for fear of their payment going astray. “Due to the age of our customers we receive many cheque orders,” says Foot Shop’s Beech. His company’s core catalogue, Cosyfeet, which specialises in footwear for people with arthritis, diabetes, and other medical conditions, skews toward the oldest of the grey market. Foot Shop encouraged customers, via its websites and emails, to order by phone or web for the speediest service. As an added complication, “we also offer many products where customers are eligible for VAT relief if they return a signed declaration that they have a severe medical condition; Customs and Excise won’t allow telephone declarations,” Beech says.

At Woods of Morecambe, “business has been down considerably” since early October, says Race. “Once the elderly customers we deal with hear the words ‘post strike’ the orders start to dry up. Really it’s the perception of the order not getting to us or the parcel not getting to them. In reality delivery times haven’t been that affected so far.”
A survey by the Interactive Media in Retail Group (IMRG) indicates that two-thirds of online marketers suffered a decline in revenue since the CWU strikes began last month, with sales falling an average of 30 percent. At Flowercard, a direct seller of floral greetings, the revenue decline hasn’t been as drastic, though sales for the final two weeks of October were 20 percent below forecast, according to owner (and Catalogue Exchange board member) Graham Winn. Because the company sells live flowers, it switched to an expedited courier and increased delivery charges by £2.95, or 15 percent. Even so, Flowercard absorbed half of the additional courier costs. While the rate increase contributed to some of the sales decline, says Winn, “lack of confidence in the postal system” was also a factor.

The lack of confidence in Royal Mail isn’t limited to consumers, of course. Of the respondents to the IMRG survey, 60 percent of those who switched carriers because of 
the strike said that their new arrangements were more efficient than working with Royal Mail, and more than two-thirds of those merchants were considering not returning to Royal Mail.
Woods of Morecambe’s Race is one of those. “Having been loyal to Royal Mail, I now feel they haven’t looked after me, by not resolving this dispute, so it’s now a personal issue,” he says. “I have promised myself that I will look into having our 250,000-plus annual catalogue mailing in addition to 1,000 packets a week sent by an alternative method in the future. I know the last mile is done by Royal Mail, but some of the savings I can gain will make up some of the money that I feel the guilty parties are costing me because of this dispute.”