The latest recipients of mail licenses whose heritage, unlike their predecessors, is not directly related to the parcels sector. They include - household name Express Dairies and two smaller, private companies - Special Delivery Services and Speedmail, familiar to the FM arena for mailroom services and mail equipment.
Conceptually, Express have most in common with Special Delivery Services - both are 'last mile' operators targeting primarily B2C. Conversely Pitney Bowes and Speedmail are offering mail room management within the B2B arena, as part of their offering.
Malcolm Bruce, Head of Postal Business Development at Pitney Bowes welcomes competition, believing the combination of new entrants and a robust Royal Mail will grow the letters market - clearly in Pitney Bowes' interests. Pitney Bowes' total influence is far reaching from traditional postal meters, to new sortation equipment, financial services options and mail room management. Through its DMT (Document Messaging Technologies) high capacity inserting and sortation equipment is available. A neutral stance is maintained, with the technology available to all players on a non exclusive basis. It can help new entrants add value to their services - such as developing the 'intelligent envelope' - capturing who ultimately receives it internally - described as 'accountable mail'.
Express Dairies historical bulk and the doorstep milk delivery businesses provide, in terms of infrastructure, a sophisticated supply chain and delivery network. According to Matthew Robertson, Operations Director Home Delivery, Express intend to concentrate on packet traffic, but will also carry letters and bulk mail, their main target being large fulfilment organisations such as book/CD clubs and mailing houses. A recent alliance forged with Parcelnet adds their home delivery network of 4,000 private car couriers into the mix.
Focus groups conducted by Express demonstrate the virtues to the consumer of the postman and milkman are similar - both are respected and 'loved' by the community. The milk float is a cost efficient, environmentally friendly vehicle which can also carry heavy loads and be adapted to make it secure. Some 200-300 milk floats are taking part in the initial trial in the Liverpool area. With 70 per cent of milk rounds franchised, clearly the motivator is the additional revenue Express roundsmen will earn on a 'per delivery' basis.
Express will add value where possible. "We're going to provide some low level tracking including status reports on where things are, and a collections/returns service from the doorstep," Robertson explained.

Secure delivery
Special Delivery Services - a private company with £16m turnover - has built its reputation in the secure collection and delivery market within the banking sector. The business is described by managing director, Colin Woodland as "The prevention of fraud".
SDS hold 95 per cent share of this niche sector with their largely invisible activities, such as deploying unmarked vehicles and non-uniformed drivers in high risk postcode areas. "We undertake secure collection and delivery of credit and debit cards for almost every financial institution that you'd like to name in the high street, including Lloyds, RBS, Barclaycard, HSBC. We collect and process, around 900,000 items a month," Woodland claimed.
A USP offered by SDS is delivery at work. To fulfil this promise an 80 seat capacity call centre in Northampton takes 4,500 inbound calls a day on a 24/7 basis. The majority are to book re-deliveries via a network of 450 self employed drivers. Whereas before business largely came to them, SDS are adopting a proactive sales approach for new business streams and from this month will operate 14 branches, targeting niche sectors where secure delivery is an issue. These could include high value ticketing, vouchers and jewellery, and new clients include NEC, West Quay and Fairpack.
The smallest operator so far to enter the market is Speedmail - with a £7m turnover. It is owned by husband and wife team, Steve & Sue Stokes, together with Nick Manzi. Stokes confirms 80 per cent of their business is from the publishing sector and focused in London.
Speedmail are specifically targeting FMs. It runs a fleet of 60 transit vehicles- all with satellite tracking system - allowing the control room to monitor the position of every vehicle day and night.
Speedmail's concept of outsourced mail room management is based on physically moving customers' mail (both external/internal) to their own site -a 'shared hub' - and then amortising the costs of franking and sortation. Stokes claims customers can reduce mail room labour costs by two thirds. Already a Duet licensee for international mail, Speedmail's new license permits them to deliver business mail directly to 22 London postal districts. New products on offer will include guaranteed delivery on first class by 9.00 a.m.
Stokes, like many others, welcomes the advent of licensing as it sets standards for the whole industry. Malcolm Bruce equally is pragmatic about deregulation - echoing the sentiments of most of the new entrants - "We need to live with the fact that we both compete and partner with each other - there are new types of relationships to be formed". Express are not averse to new partners either. "We're looking to expand our coverage, through strategic partnerships" Robertson added.

Michael Herson is MD of The Strategy Works: 020 8868 0212
solutions@thestrategyworks.com. This first report was published in the February 2002 issue.

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