January
usually brings with it a number of retail companies in trouble calling in the
receivers or administrators, particularly in the retail industry.
Typically,
retail firms have the quarterly rent bills to pay and have been totally
dependent on the success or failure of the pre-Christmas sales period.
And these
days we all like a bargain. More and
more of us wait for the January Sales and more and more of us search the
Internet for the best deals. Price comparison
is now easy and less time-consuming.
The Internet
has diminished the importance of traditional December sales periods with the
introduction of “Black Friday” and “Manic Monday” after the Thanksgiving US
holiday – extending the pre-Christmas selling period.
However, it
is not only retailers who are vulnerable.
Many printing businesses are dependent on retail activity and there is
another industry that has a direct strategic impact on the online digital and
document print industry – the parcel business.
With such a
growth in volumes you would think that most parcels businesses would be
booming. But margins are pretty
thin. We have just received a letter
informing us of an increase in our contract rates from March this year.
The
universal rate for parcels from Royal Mail means it is still economical for us
to use Special Delivery for the very small print orders. However, their costs also seem to be becoming
uncompetitive.
This week I
went to the local Post Office with four small packages. I sent two small jiffy bag orders that were
cheaper than my courier costs. The two
others I held onto – because the cost had now increased to £11 each.
Sadly, paper
is a heavy commodity and if the weight is in excess of 1kilo then there is
usually quite a price premium.
So I went
back and sent them with our other courier parcels.
Within a
couple of hours our reliable courier driver - “Parcel Pete” according to the
side of his UK Mail van (although his name is Martin!) – turned up as usual and
took them away for me at a fraction of the Royal Mail cost.
Later that
day – after I had been home, changed, had an evening meal and was walking to
the pub; I noticed “Parcel Pete” trying a very dangerous three point turn in
the main road outside my house.
A couple of
cars that nearly collided with him made their displeasure known with their
horns – even though it was later than the 7pm deadline recommended in the
Highway Code.
I couldn’t
help thinking what a long day it must have been for “Parcel Pete” – there are
no tachographs or driving hour restrictions for vans below 7.5 tons. He has probably been working for more than
twelve hours in pretty miserable weather conditions. And I can’t remember more than a week in the
last few years when he has had a holiday.
The same day
we had a new client who pulled out of an order at the Shopping Cart stage of
our order process system because a delivery charge was applied on a “small
order”.
He emailed
me the screen capture with the £15 delivery charge circled in red and said this
was “Bad Business” and claimed this cost was exorbitant and he would not be
placing any more orders with Direct2Print.
The order
was for a 34 page wire-bound booklet printed full colour on 150gsm gloss paper
with colour covers on 350gsm card – and the print cost (with his 50% first time
order discount) was £4.45 including VAT.
However, a £15 delivery charge was applied because the order was below
our minimum cost for free delivery.
Incidentally
his location was within Zone C and would have cost nearly £40 for next day
courier delivery.
I have been
caught out with this before sending some printed prayer books to a monastery in
the Highlands & Islands of Scotland.
Even with
Royal Mail it would have been at least £11 cost for carriage – let alone the
cost of the packaging!
So the whole
job next working day would have cost this potential client £19.45 including VAT
(£16.20 nett in my account!).
Rather than
email back - I picked up the phone to explain that the courier cost alone would
be more than the value of the order and regretfully the only option was to rely
on second class Royal Mail post to deliver sometime in the days ahead.
What options
were available that would have been cheaper – surely not the cost of driving to
a copy shop in the nearest city! I would
like to think by speaking directly to him his anger was placated but I’m not
sure.
Then I
thought of “Parcel Pete” and his attempts to forge an income with long
hours.
The TV News that
evening showed images of gale-force winds hitting Scotland and all trains being
cancelled north of Perth and I felt quite relieved we didn’t get this job.
At the same
time I also remembered that City Link had been pushed into receivership and
made staff redundant at the worst possible time between Christmas and the New
Year.
Some of
these people would put in long hours and often in a cold and uncomfortable
environment.
City Link
offered the lowest cost parcel service that I could ever find but somehow they
never offered reliability – which is far more important than cost.
But what can
you expect – they were once managed by the guy who caused the collapse of
Prontaprint and he had the same price-driven mentality to success.
About ten
years ago and the whole lot was sold “as a going concern” for £1 to a venture
capitalist some months before.
Yes, they
invested some money but they chased volume at unrealistic rates.
Commercial
pressures are forcing a reduction in costs in every part of every business.
But there
comes a time when we have to be realistic about this vital part of any business
– the actual price we charge.
When we
started our online document printing service in 2003 delivery was always free.
Now we have
to pass on costs rather than take on uneconomical orders.
Eventually
we may even see some of our other costs falling. Oil drifts to a price when petrol actually
seems like good value again. The
supermarkets are desperately fighting for market share are putting extra
pressure on their suppliers.
There aren’t
many costs that are going up and being accepted by customers.
However, we
all need to survive and grow in order that we can invest in our service and
innovate in a very competitive market.
And the
conclusion…
As a result,
we are not immune to the risks of business, but we have spread our risks and
have built up sufficient funds to weather most storms that will come our way in
2015.
Hopefully!
