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.”
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