Tuesday, 20 October 2009

Accelerating the Death of the Post Office

I really think the CWU (Communication Workers Union) are making a massive misjudgement with this industrial dispute – the post office strikes.

In the old days (pre Mrs T), unions representing workers in large scale or monopoly industries could flex their muscles at the government in this way and governments would have to cow-tow to their demands or risk the country collapsing into chaos.

It ain’t like that anymore.

Businesses are far smarter and quicker now and of course we have the Internet also.

Courier companies with nationwide networks are using this dispute as a golden opportunity to start converting businesses like mine (an on-line business) away from using the post office parcels service to using their own services. And they are making it worthwhile.

As a service to their Sellers, ebay are helping to publicise these services - see example here.

You might assume that there is a premium for these services. But no. They are cheaper! Considerably cheaper!

Even given the Post Offices inbuilt advantage (not having to charge VAT), commercial companies are able to sell the same or better service at least 10% cheaper, absorb a 15% commercial disadvantage (the VAT) AND make a decent profit - just illustrates how utterly uncompetitive the Post Office has become.

But that just covers small parcels - what about letters?

Well the strike has just prompted the last of my suppliers, who don't already do it, to start sending me invoices by email and asking me to pay invoices on-line or by phoning with a bank debit card to make payments.

Will they go back to the old methods after the dispute? No chance..

And will the courier firms lose all the business they are gaining from this dispute when it ends? No chance either - thanks to the CWU that business has gone for ever.

They offer a better service and they are cheaper. No doubt the Post Office will bleat that they offer a better service but frankly it's not true. The Post Office regularly lose lots of stuff, 'forget' to put delivery cards thro people's doors (so stuff sits in depots for weeks or months before people realise) and the staff in many of the post offices are about as dedicated to customer service as BT was in 1970s. Service is so poor in my local post office I drive to another village to use the post office there - If I used the local Post Office I would need a course of anti-depressants - the people in there are just so miserable and unfriendly.

So I wonder, after the dispute will the Post Office have any business left?

There will be some - there is no reason for the parcels business to come back, and the vast majority of business post will stay electronic - not to mention all the direct mail campaign budgets for this Xmas that will have switched their spend to on-inline campaigns.

Some will come back. But will it be enough to make the Post Office viable? I doubt it. I reckon the Management have done their Market Research well. They know that the post office cannot change fast enough with the CWU holding on to their ankles at every step - so they have allowed things to come to a head now.

The CWU are making a total mess of it. The fact that I have no idea exactly what the Postal Workers are demanding illustrates the point. If I did know what they wanted, and why, and it was entirely reasonable then perhaps I might support them. But I don't so the CWU are losing the PR battle (if they were winning I would know) - and therefore will probably lose the entire war.

I doubt that Postal home delivery services are really viable in the mid-long term. Just like grocery and butcher deliveries I suspect they are not going to last.

Perhaps I should be doing the same thing as the Courier companies - taking advantage of the situation?

Let's get creative...

When I set up a small business in 1996 a very nice man called Trevor gave me some very cheap office space in his large offices in Farnborough - a place called Federation House. Trevor ran an organisation called the Association of Convenience Stores. He became a bit of a mentor and I remember his warmth and generous spirit - always happy to help any entrepreneur.

Today it's run by a nice looking fella called James Lowman and represents a network of around 33,500 convenience stores across the nation.

So why I don't I:

Speak to James and suggest the idea of setting up a rival to the Post Office using his network of stores: A countrywide postal system using the stores as drop-off and collection points (using stamps probably).

It would be brilliant for his members. They are constantly fighting a battle against the Superstores for customers - imagine all the extra business they would get with people dropping into their shops to send their post and pick it up at 'convenient' times. They wouldn't just benefit from the postal revenue, but like cigarette sales, they would be a lure for increased sales of everything..

Speak to DHL or TNT or Hermes or anyone of the large courier firms about partnering to provide 3 or 4 times daily collection and delivery services from the stores. (They have a huge network passing them every day anyway).

Find 10 or so big empty warehouses (a trivial problem in the current climate) to act as regional sorting centres.

Find a bunch of un-employed people (thanks Labour - no shortage here either) to sort mail - whilst the automation systems are ordered and installed.

Get nationwide publicity - No problem there - this is a big news story and I know enough PR people to get it rolling super-quick.

That's the main issues dealt with and anticipated. Lots of small details to think of, but should all be do-able in plenty of time to take advantage of all the Xmas card business. I even think we should be able to do exactly the courier guys are doing, substantially undercut the post office - so there's no reason why anyone should want to go back to them.

Why shouldn't I do it?

I think I will drop an email to James directing him to this blog post and ask him what he thinks. And I will send it to my MP for his comments. And I will also email Billy Hayes at the CWU and see if he can give me just one good reason why I shouldn't do it...

I will keep you 'posted'.


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