Ostensibly, the reason for CWU’s action is to protect the future job security of its members. The union has expressed fears that the expansion of competitors’ commercial activities could ultimately pave the way to developing a whole ‘end-to-end’ competitor to Royal Mail. While competitors today collect and sort over 50% of national mail volumes, the suggestion that they could ever threaten to challenge Royal Mail’s dominance is unrealistic for the foreseeable future. Royal Mail is still responsible for delivering 99.9% of all mail. The huge cost of setting up the infrastructure required to mount an end-to-end challenge to its business would deter potential investors.
The CWU undoubtedly understands this, too. It also presumably understands that if it was to act on its threat, it would lead to a breach of the employment contracts of its employees, as well as a breach of the law. So, why is the CWU threatening this action? Well, it could be because the union is fully opposed to the privatisation of Royal Mail and is seeking ways to disrupt the process and deter would-be buyers.
The most immediate effect of threatened ballot action is to hit Royal Mail’s bottom line. DSAs are responsible for handling a significant portion of commercial, direct and transactional mail. As the number of letters being sent by people has dropped massively in the last 10 years, Royal Mail is developing new profitable revenue streams. Indeed, just three months ago in November Royal Mail’s chief executive Moya Greene announced that direct mail is now worth £1bn to the company and it is looking to increase this business. The threat of refusing to handle competitors’ mail could have the effect of driving down direct mail volumes as companies could shy away from using the medium for their marketing to mitigate potential risk. Furthermore, competitors could be prompted to look to alternative delivery options. Both outcomes would have the effect of driving down revenues.
While the CWU’s proposed action is unlikely, just maintaining the threat of balloting is sufficient to damage the direct mail industry. Uncertainty about what might or could happen will unsettle firms that use direct mail as part of their marketing mix, and potentially drive them from using the medium all together. This is another threat the industry could do without; rising costs and the rise of digital marketing have conspired to chip away at what was once the pre-eminent direct marketing channel.
There is too much to lose – to UK businesses, industry and the economy – if the immediate future of direct mail is put into jeopardy. The DMA will work with postal regulator Ofcom and Royal Mail to protect the industry and businesses that could stand to be the unintended victims of the CWU’s actions.
- Mike Lordan, chief of operations, Direct Marketing Association
