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UK postage: saving money through competition

The open market and innovations allow small businesses to reduce total mail cost from over 80p per letter to 43p (see case study), with a printed letter starting from 25p+VAT for print, paper, envelopes, labour and postage.

Competition for the mail market is making low cost postage available to everyone; without being tied to contracts, or minimum volumes. Alternative mail services are saving businesses time, money & with combined print and mail, and professional colour print for less than the previous cost, while improved presentation can see mail marketing response rates improved by 5% (see case study).

Introduction

You may be aware the Postal Market in the UK, has been developing a range of new ideas since the market was opened up to competition through deregulation in 2006.

To begin with, most of the offerings were very much business oriented, offering lower prices, some additional features and integration options, but requiring a high volume of mail. In the last year or so, providers like ourselves have been able to create services that don't require large volumes of mail to take advantage of the better prices innovations in the open market are creating.

Let's face it people send mail. Whether that's consumer feedback, financial letters, greeting cards, complaints to regulators, postcards, competition entries, or letters to your MP. All of these are catered for in some form through emerging competition in the Postal Market, enabling normal members of the public to get a better deal for postal services.

With our mailing service, the approach was simple; open up the lower prices and product innovations we'd been providing for Corporate customers to everyone. So small business, sole traders and the general public can benefit from increased competition in the postal market.

Mail savings case study:

Fraser Robertson, Financial Director, Eyetech Group

"We used to collect the data for our reminder system and one person would spend one whole day (approx cost £150) opening the Word docs, mail-merging and then printing the result in monochrome on pre-printed headed paper, then using a folder/inserter (unreliable) costing £150 pm to rent (used for little else other than this).

We estimate the paper, envelope and laser printer consumables and folding costs to be at least 30p per letter, with labour at about another 20p per letter. Add to this the cost of postage and we would expect a cost per letter (conservative!) to be 80p. Remember this is monochrome, and we have to buy the headed paper in fantastic quantities to get the unit price low enough (I can't estimate the stock holding cost of 20,000 A4 sheets for 20 months, plus the cost of the storage space used).

With Docmail, we can do the same job in about 1 hour, duplexed, in colour, onto a headed paper template. We avoid all stock and handling costs, and actually spend a lot more time being creative with our comms, rather than actually physically doing them. This for a cost of about 43p per letter. So it costs us about half the price for probably three times the value (it is in colour for a start!) in terms of effectiveness.

For example, an Eyeplan optician can phone us in the morning with a marketing idea, we can design it, approve the copy, and mail it to all their customers before the day is out.

"We have realized the power of being able to communicate messages on the back of our client recall letters ... we have seen a 5% increase in responses ...it is VERY impressive, before Docmail this quality and mailing capability is something that small businesses could only dream of - or spend a fortune on!"

www.eyeplan.co.uk

Innovations

Hybrid Mail is an industry term for mail that travels at least part of it's journey electronically, and is delivered as real mail to the end address. In practice, this means the Hybrid Mail provider takes on the printing, enveloping and delivery of the mail.

Many of the new mail providers in the Hybrid Mail market have sprung from the IT services and professional Printing sectors, and with them they bring experience and ideas for new modes of communication, using tradition mail to deliver.

For clubs and businesses who send out small mailings on a regular basis, Hybrid Mail can remove the need to hold stocks of envelopes and letterheads, with stationary being held online, ready to be selected and printed digitally at the same time as the letter. Similarly address lists can be stored online and enable complex mail-merges to be handled by the mail provider, rather than the customer.

Companies are offering a range of mail types, many of them are new concepts, offering new and innovative modes of communication. For example, creating and mailing your own photograph on postcard from abroad using a smart phone, and having it printed and mailed from your home country means. This means a personalised postcard can be created and sent cheaply, and that your postcards might actually make it home before you do!

Personalised greetings cards are also set to become more affordable, with experienced print houses providing Hybrid Mail solutions to reduce the cost to the consumer.

The software technology involved means small businesses and software providers now have a way of integrating directly with a centralised professional printing facility on a pay-per-use basis, without the need for contracts, or high volumes. Documents generated from business software can easily be transmitted to the Hybrid Mail provider for mailing, enabling the introduction of automated mailing of individual documents, saving time as well as money.

I'm aware there are new ideas and business models in the package delivery market, which should be represented in it’s their own right too, but I'll have to defer providing details on this market area to those with more knowledge.

Environment

With paper being a prime resource for mail, some companies have strong arrangements with conservation groups to reduce the impact of the process and help improve the environment. In the case of CFH Docmail, a long standing arrangement with the Woodland Trust has allowed over 80,000 new trees to be planted in the UK (http://www.toptree.com).

Additionally a partnership set up between CFH and the University of the West of England, aimed at making the business self-sufficient on energy use has recently begun. Through partnerships like this, new technologies promoting waste reduction, recycling, energy conservation and renewable energy generation should grow, and help make the industry more environmentally responsible.

Environmental management and approval schemes for paper and business practices as provided by the Forest Stewardship Council (FSC), Programme for the Endorsement of Forest Certification (PEFC) and BSI accreditations for environmental management systems (ISO 14001:2004), all move to improve environmental awareness and reduce the impact of print and mail.

Market operation

In the liberalised postal market, there is provision for companies to be set up to carry out complete end-to-end mail delivery. This level of service is however, still generally confined to business use, due to the enormity of achieving a complete nationwide coverage.

As such, the Royal Mail, due to their unique ability and network, are still responsible for the vast majority of "Final Mile" letter deliveries for business and household mail. Hence the majority of competition is concentrated on providing efficiency and adding value in the production/delivery chain before the Royal Mail regional Mail Centres under "Downstream Access" (DSA) licenses.

Efficiencies can be gained by providers who own their entire process, and can minimise both overheads and additional mark-ups giving the customer the best price possible: from Websites and software, to printing, enclosing, mail sortation, despatch, and delivery as a licensed postal operator under their own DSA agreement.

Summary

Centralised print has been saving equipment, time and energy costs for large business for years. Hybrid Mail is opening up the benefits of both centralised print, and savings [previously reserved for high-volume mail] to SME's, clubs, charities and home users.

The cost saving with Hybrid Mail can be huge, with prices for home users and small businesses starting from 25p per letter, for a single letter, no contract, no minimum volume, no commitment. With prices for print, paper and postage starting at less than the cost of a Stamp, with added convenient and new ways of using mail developing all the time, alternative postal services are enabling competition to flourish in the newly opened mail market.

So you see, buying a stamp is not the only option.

People can save money by shopping around for postal services, and even communicate through mail in ways previously reserved for large corporations.

As one Docmail customer put it "Hybrid Mail is the future. It's just nobody knows about it.".

A comparison tool for the UK mail market is well overdue!

Useful Links:

http://www.psc.gov.uk/licensed-postal-operators.html (PostComm: licensed UK postal operators )
http://www.hellmail.co.uk/ (in-depth postal industry news)

 

© 2010 Dave Broadway. All Rights Reserved.

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