The last delivery

Not surprisingly the postal workers have voted to strike in protest over the privatisation of the Royal Mail, though it’s hard to see what difference this will make now. The deal has already been done, with a significant number of shares sold. The government stands accused of having underpriced the shares to ensure they all sold, and certainly the issue was over-subscribed allowing the government to declare this a successful sale.
Equally certainly, the 330p share price was rather low, allowing many small investors to turn an instant profit. But it is arguable that if the unions had not threatened strike action then the government might have been confident of setting a higher price.
Then again, strikes and managerial cock-ups have long been the order of the day for Royal Mail. Just about everybody that I have interviewed who worked in the direct mail sector has told the same tale of poor management and wasted investment with those responsible being promoted out of harms way. It’s no wonder that the postal workers will strike at the drop of a hat, and yet every strike drives yet more customers to switch to electronic mail.
In todays world of high speed Internet, the Royal Mail has become increasingly irrelevant. Indeed, my morning delivery mostly brings junk mail, which goes straight to the recycling bin, and the occasional magazine.
This begs the question of what impact this privatisation will have on the printing and publishing industries where cost-effective delivery is often the biggest problem. Privatisation is going to open up more competition which should offer cheaper delivery in some areas, but not all.
I don’t see how the universal delivery service can last. Private firms are all about profit margin and clearly maintaining the infrastructure to deliver letters to far flung places is going to erode any profit. The politicians have claimed that it would need an act of Parliament to do away with that but it’s not hard to imagine a scenario where the head of the Royal Mail tells ministers that the company will fail if they don’t scrap the universal commitment.
Most likely privatisation will deliver the same sort of customer experience that other sell offs have, ie higher costs and increasing dissatisfaction aggravated by annual reports of high profits for those running the service. The delivery will be like the deregulated bus services – some service in most towns, but highly variable from one area to the next, and very little service in more rural areas.
So it seems to me that privatisation will put a lot of pressure on printing. Direct mailers will handle this with more precise targeting and more personalisation. No surprises here – the industry has been moving in this direction for some time, and more personalisation means more value and higher profit margins, with greater use of digital print technology.
But I suspect that magazine publishers will likely make greater use of web portals and tablet editions. Most publishers already have a mix of online and print content and it seems inevitable that if advertising rates stay low and delivery becomes more difficult than this will cause publishers to put more emphasis on their online content.
As for the rest of us, apart from the lucky few that have made a profit, I doubt that this sell-off will make much difference. It will almost certainly lead to a lesser, more expensive postal service, but who posts letters nowadays?

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