The bosses of Royal Mail and Whistl went for the jugular today in front of the Parliamentary inquiry into the postal market but managed a World War 1-style Christmas truce over the importance of direct mail to the industry.
Under tetchy cross-examination from MPs sitting on the Business, Innovation & Skills Select Committee, Nick Wells, chief executive of Whistl (formerly TNT Post) branded claims that his company was “cherry-picking” lucrative routes a “smokescreen”, and said Royal Mail’s outdated working practices were the real threat to its business.
Arguing that Whisl’s expansion into end-to-end delivery hardly scratches the surface of Royal Mail’s operation, Wells added: “As a start-up business we cannot cover every household in the UK. We are going to dense urban areas … It’s the only way you can develop effective end-to-end competition.”
He said the advantage was offset by the rates Whistl paid Royal Mail to deliver to other parts of the country. “If Royal Mail doesn’t change, and doesn’t modernise it will be like an iceberg crashing into the market.”
But Royal Mail chief executive Moya Greene slapped back, claiming the company was “unrecognisable” compared to five years ago, with 50,000 jobs gone and 20 mailing depots axed.
“If you allow cherry picking in the urban areas you undermine the economics. It siphons off very quickly a lot of revenue – more revenue than can be offset by even very vigorous efficiency measures and it makes the Universal Service unfinanceable and uneconomic.”
Greene urged regulator Ofcom to bring forward a review planned for next year 2015 into the impact of competition on the Universal Service, to prevent profits being lost forever.
However, there was one moment in the debate when the two chiefs appeared to actually agree, when the subject of direct mail – the one area of the postal business which is highly profitable and shores up both firm’s operations – was mentioned briefly.
Wells called on the industry to join forces to promote the effectiveness of direct mail, especially when combined with digital channels. And Greene even softened her stance against her arch-rival and admitted that advertising mail was a very important part of the industry.
With direct mail revenue on the up in Royal Mail’s latest results, there will be many in the wider direct marketing sector who will raise a glass to that. Whether they will be quite so happy if they are asked to fund a joint campaign to promote direct mail is another matter.
Royal Mail hails return of direct mail
Royal Mail ratchets up Mailmark bllitz
Govt starts postal market probe
MPs told to slash Universal Service
TNT Post UK unveils Whistl rebrand
Half of mail handled by private firms
Ex-Ofcom chief joins postal battle
Royal Mail blasts £200m TNT threat
Royal Mail takes £24m DM hit
Royal Mail boosts parcel service
Royal Mail woe as parcels stall
Marketers face chop at Royal Mail
Royal Mail ad blitz targets e-sellers
Royal Mail hunts big data experts
Royal Mail starts click and collect
Catalogues ‘driving online sales’
SME e-tailers predict boom times