It won’t have escaped the attention of anyone in the print, publishing and mail industries that Australia Post is undergoing an ‘adjustment’ of its business model, which includes several price rises for mail in the next year.

Last month, Printing Industries launched a campaign to garner government support for a review of Australia Post’s actions. Printing Industries’ CEO, Jason Allen, said Australia Post is ignoring recommendations of the Senate Inquiry, Performance, Importance and Role of Australia Post, which pointed to the divide between Australia Post and its client groups.

“The price increase issues are a major concern and they are the tip of an iceberg threatening the future viability of the entire mailing industry and all the associated sectors whose economic livelihoods are under threat by Post’s blindsiding tactics,” says Allen.

If those price rises go ahead, director at D&D Mailing, David Docherty, told ProPrint that he foresees a decline in mail volumes as a result, and a corresponding decline in business revenues.

“For a lot of publishers we deal with, the impact is likely to be a 12 to 15 per cent drop in magazine volumes. So that will mean about a 14-15 per cent decrease in volume, because the two are tied. There are no easy solutions. My biggest concern in all this is jobs. There are a lot of associated industries that hang onto the mailing industry.”

In July 2015, the Australia Post Consumer Survey of over 2,000 people, taken each quarter, found that mail volumes remained much the same year on year. Australians received, on average, 6.3 personally addressed mail pieces and 8.6 unaddressed mail items each week. Almost all (99 per cent) opened their mail, while 60 per cent read it thoroughly and 53 per cent kept it for later reference.

Australians are most likely to read mail from financial institutions, utilities, government and clubs or interest groups. They are also happy to receive magazines, brochures and catalogues, vouchers and coupons as physical mail. Bills and statements are preferred as mail by 37 per cent, while 36 per cent prefer email statements. We generally prefer to receive brief information, newsletters, company requests for information and invitations as emails.

What does this sector offer printers looking to take advantage of vertical market opportunities?

Pitney Bowes

Pitney Bowes recently launched its Relay multi-channel communications suite, an integrated solution designed for small and medium businesses to build their transactional communications, provide privacy for client data and meet growing regulatory requirements.

At the heart of the suite is the Relay communications hub, a cloud-based digital document hub that helps businesses create more accurate communications, direct in-house or off-site production and deliver communications through physical or digital channels that can include email, post to web, and digital archiving.

The Relay communications hub is the first and only cloud-based document production software that offers document enhancement and multi-channel output capabilities.

“Our small and medium business clients are seeking a simple to use and easy to deploy platform that integrates hardware, software and services to connect more efficiently and effectively with their customers,” says Jean-Pierre Deruddere, managing director ANZ for Pitney Bowes. “The Relay suite features the new Relay inserter series, which offers the latest barcode technology to optimise accuracy and document integrity. The new Relay inserters offer three privacy grades, including 2D Direct Scan, 2D Exit Scanning and 2D File Base Processing.

“Commercial and retail printers looking for new revenue streams could consider mail fulfilment. It makes sense that if a significant proportion of what is printed ends up in the mail, why not consider vertically integrating. The first step in determining if you should get involved is to understand your customer base,” he says, then suggesting that printers:

• analyse what customers are printing and determine what percentage is being sent in the mail. Ask the question on every work order – “Is your printed collateral going to be mailed in full or in part?”
• survey customers on how they currently go to market via mail.
• ask whom clients use to mail and gauge their satisfaction, and their desire for a one-stop print-to-mail agent.
• quantify the likely volume that can realistically be attracted from the market.
• determine the type of mail fulfilment technology needed and run the numbers.

Neopost

Karen Kavanagh, marketing director at Neopost, is confident that while mail volumes are sliding, direct mail offers a lucrative avenue for creative printers to spread their client offerings.

“Direct mail is actually undergoing a resurgence,” she says. “Email is becoming like wallpaper, especially for the youth market, and this is starting to affect indirect mail as a leading channel to sales. Overall, mail may be narrowing but there is definitely a resurrection in direct mail, and that is where the printer needs to invest. The printer who can offer clever print and fulfilment is the printer who can capture that market growth in direct mail.

“The 18 to 25 year-old market has been exposed to the online channel since birth but direct marketing done cleverly with the right message to the right person at the right place at the right time can actually receive more of an impact.”

Kavanagh also believes that print customers are demanding personalisation in direct mail pieces, which can be the deciding factor in whether direct mail works or not. The piece has to be eye catching and unique, and printers have to be fully prepared for creative print coming through the door.

Printers should also be able to respond to quick requests and have the resources in place to make the print job a success. Her suggestions for winning more direct mail work include:

Having the resources in-house to effectively clean, manage, merge and manipulate clients’ databases. Register as a data processor and make sure you are comfortable digitally printing highly personalised direct mail pieces;

Moving upstream to help clients create their campaigns. Offer clients affordable ways to create eye-catching mailers and start getting a bigger slice of their direct mail budgets;

• Ensuring that their digital print capabilities can cope with volume and high image quality;
• Finishing is important. Outsourcing intricate cuts, folds and flaps eats into margins, so look at keeping it in-house;
• Using exciting media or substrates that cut through the clutter;
• Adding value by packing and dispatching.

“Printers need to understand that direct mail hasn’t gone away. It has just changed. Volumes are lower but margins can be much higher. If you are willing to raise your game there is plenty of highly creative DM work there for the winning,” says Kavanagh.

D&D Mailing

David Docherty is concerned by changing price structures at Australia Post, but does see a rainbow in fulfilment, which plays to Australia Post’s push to boost its parcel business.

“I think fulfilment is where it’s at. That’s what Australia Post is pushing. They want the parcels. If you’re into pick and pack, logistics, fulfilment and warehousing, those areas are still bright. There has to be a levelling off — it’s not like mail is going to disappear. It’s just a matter of when that levelling off is going to happen. I reckon there’s another 10 to 15 per cent before it reaches its level. These price increases are going to bring that sooner than everyone was expecting it.”

As mail changes, so too must mailing houses, said Docherty.

“Direct mail is one thing, but direct marketing will adapt online. It can be on TV, online, on the phone. Direct mail will go south. It used to be the affordable medium, but now it’s not the cheap medium.

“We realised years ago that we had to adapt. That’s why we went into fulfilment, and why we also deal with magazine returns for Gordon & Gotch, but to be frank there’s not a bright future.”

And his advice to aspiring mailing houses?

“Go into another industry. Go into building. There will always be a mailing house industry, but those who overcapitalised with lots of machines will need to adapt to the environment around them, and a lot will get caught out. When something goes wrong they’ll be the ones to fall by the wayside.”

OCA Group

OCA Group, a business services group, acquired Melbourne offset firm Print Bound early last year and merged it with its primarily digital subsidiary, BPO Print.

Director Naresh Gulati told ProPrint at the time, “Even though people think it is a bad time for the industry, there is plenty of opportunity. You just have to be innovative to take advantage of it.”

OCA Group hasn’t stood still. It provides print management, warehousing and logistics services through BPO Intelligence. OCA formed BPO Print with its acquisition of Big Print Typo, and last October it acquired The Bindery in Melbourne. The Bindery moved into trade mail services by installing a polywrapper early this year, with further investments planned in the near future.

Naresh Gulati said expanding The Bindery into mailing was a logical step in completing OCA’s chain of end-to-end trade services. That is about to be expanded with a major investment, according to Gulati.

“We’ll be making an announcement in Ocotber about a massive mailing equipment investment. It’s to bring more efficiencies to our mailing and bring it into a state of high technology.

“We are actually an end-to-end solution provider, so mailing is a key component of our strategy. Gulati sees a wholesale shift in the mailing sector’s future, and warns of consolidation.

“The key question is, are printers going to be mailers or are mailing houses going to be printers? Each side wants to go to the other, and that will further erode the situation. Consolidation is the future. I’ve been saying that for a very long time, since I joined this industry, that mailing houses won’t be untouched by consolidation.

“With the exception of the leading mailing houses, my forecast is that in the next 12 to 24 months we’ll see one-third of them disappear.

“My viewpoint is this sector needs a complete overhaul,” he said. “The current volume of mail is declining and the need should be in direct marketing campaigns. People [printers] have to be more creative. They have to be more than just a mailing house.”

Gulati warns against equipment investments without a clear plan for future development.

“It’s about the value they share. You can’t just have a mail inserting machine – it becomes a commodity. That’s no good. That’s why we’ve seen a lot of mailing houses closing down in recent times. And in my view there are going to be more to follow.”

The focus, he said, should be the end customer, and what they require.

“The question to ask is, is the end consumer interested in mail or is he interested in communication? Mail happens to be one of the most effective communication tools.

“Be careful before you invest in anything, whether in mailing or on the digital side. Work with partners, have a sustainable business, and then you might consider in-sourcing. The moment you in-source you enter the world of fixed costs. The moment you outsource you are living with variable costs, which is a beautiful world. I welcome printers and other mailing houses to partner with us.”

Dashing Print

Dashing Print has been in business for nearly 30 years, and specialises in complete solutions for, among others, the retail and franchise sectors.

Director Chad Jankz told ProPrint that the company had installed a high-end fulfilment machine from Neopost to drive fulfilment as another service.

“We’d always been into mailing but it was more the variable data area and being able to use specialised pieces that differentiated us from some other companies in the market,” he said. “While we don’t do a huge volume of letter drops we’ve always done addressed mail and also a lot of variable data mail matching and specialised pieces.

“We’ve always had Neopost machines, and they guided us over the past few years through their smaller, medium and larger machines.”

Jankz suggested that mail needs to be adapted to suit the occasion and the customer. It still has a strong role to play in the communications mix.

“People aren’t sending as many pieces, so that’s why you’ve got to have specialty pieces that you can cross-market with online and other media, so it’s not just a written letter. It needs to be something that catches their eye and makes them respond to it. People don’t send as many pieces now but they spend more on each piece,’” he says.

Dashing Print’s strategy has always been to augment its digital expertise with added value services to improve the customer experience.

“Mailing’s never been our core business; it’s an add-on to everything else we do,” Jankz points out. “While it’s had its ups and downs it’s always steady over the year, and it’s a valuable add-on to customers. Some clients do large formats to brochures, and we deal with a lot more variable data using XMPie, and with that we’ve been able to grow that part of the business.

“We’ve never been statement and invoice driven — our strength is direct marketing, and that’s a different market.”

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