16 October 2009 | Allie Anderson
Purchasers feeling let down by the disruptions in the postal service are sending their own message to Royal Mail by switching providers. Allie Anderson reports
Royal Mail's planned industrial action has left consumers and businesses fast losing faith - and patience - in its services.
Analysts from the Centre for Economics and Business Research predict a national strike - which staff have voted in favour of - could cost the UK economy £1.5 billion in the run-up to Christmas. Meanwhile, independent delivery service broker Post-Switch forecasts the organization itself could lose close to £118.9 million of business in the same period.
Retailers including John Lewis, Argos, and Amazon are all turning to contingency plans, while many buyers are looking to shelve Royal Mail as a vendor altogether.
Further damaging news for Royal Mail came in a study by the British Chambers of Commerce and Sky News, which found 75 per cent of 250 UK companies are considering ditching it as their postal services supplier. And more than a third of respondents in our own survey, the latest SM100 poll, say they are considering switching post supplier.
Some have already implemented alternatives because of uncompetitive pricing and poor service.
Others point out that postal services contracts should be awarded and withdrawn on the same grounds as any other. Where performance falls short of expectations, buyers should look elsewhere, they argue.
Adam Smith, purchasing manager at Morgan Advanced Ceramics, says: "We will treat post like any other service. However, recent headlines don't do Royal Mail any favours and we have worked to remove our reliance on the postal system. Royal Mail needs to understand it is no longer a state-run monopoly."
Gary Moore, procurement performance manager at BAE Systems Insyte, believes all organizations should have reviewed contracts to cover the risk of disruption to deliveries. "I hope companies will learn a lesson and assess their exposure, putting in a place a strategy to cover the risk in future."
Procurement consultant Meryl Bushell has "no choice but to take my business elsewhere".
She adds: "My business depends on its ability to communicate with customers and suppliers, so reliability, timeliness and quality are imperative."
Many of the 63 per cent of SM100 respondents who are not considering an alternative say they have minima dependence on postal services.
"I send all invoices by email and they are paid by [processing organisations] Bacs or CHAPS. So we shouldn't suffer from 'cheques are in the post' syndrome," says Joanne Barton, procurement adviser at J J Barton Consultancy.
This is little comfort to some small suppliers, who according to the Forum of Private Business, are concerned any walkout will cause lengthy payment delays and damage trade.
Many buyers agreed that, with so many competitors, Royal Mail is shooting itself in the foot.
One purchaser, who wished to remain anonymous, argues: "If the [Communication Workers] Union continues to disrupt the service, they ultimately threaten the business that pays their salaries in the first place."