Banks, insurers, retailers hit by Post Office strike

Direct marketing takes a knock.

Direct marketing relies heavily on the Post Office for deliveries of letters, catalogues and parcels to targeted end-users and it is seriously impacted by the on-going Post Office strike, says Alastair Tempest, Chief Operating Officer of the Direct Marketing Association of South Africa.

This affects especially campaigns by banks, insurance companies and retailers, says Rafiq Sallie, managing director of Tunleys Mail and Print, one of four major bulk mailing houses that print, label and sort such material on behalf of clients and to Post Office specifications.

Sallie says at the moment the Post Office cannot accept all envelopes and packages - which results in delays in sending out the material and in the responses from the target market. That disrupts the marketing campaigns of Tunley’s clients and creates problems with storage space.

Tunleys dispatches more than three million letters per month on behalf of clients. The Post Office has representation at the Tunleys premises to ensure compliance with its specifications and smooth integration of the mailing process.

“At the moment the Post Office has asked us to bring our post as early as possible, before their staff members arrive, because that is when the problems start,” he says. As a result the company delivers as much as it can around 6am, but even so up to 90% of the material cannot be dispatched, Sally says.

“It is a double whammy for us as a mailing house and for our clients. Most clients cancel their campaigns until the problems have been sorted out,” he says. That is an opportunity lost and the revenue cannot be recovered later.

“One of our clients sends out 200 000 envelopes per week. He does weekly campaigns and these are his bread and butter. He has now asked us to split the envelopes he usually sends out from Johannesburg (where postal workers are striking), between KwaZulu-Natal and Cape Town where there is no strike action. That means extra cost to transport the mail to those regions.” Sally estimates the cost increase at up to 20% and says that can wipe out the client’s margin.

He says there is no viable alternative to the Post Office. “They have the monopoly. Using couriers would be too expensive.”

He says the end-result is that the Post Office forces clients to stop mailing and convert to electronic communication.

Tempest says many e-commerce companies are also reliant on the Post Office for deliveries of purchased products. This is evident from the following notice on the Kalahari.com website:

“Post Office Strike

We've been informed that there could be some delays on post office deliveries at the moment.”

One client complained on the Post Office facebook page about the delay in the delivery of her prescription medication from a pharmacy.

A source within the Post Office told Moneyweb that many small businesses, including e-commerce enterprises, are complaining bitterly about the effect of the strike on them, including an e-commerce site distributing seed to clients.

Tempest says people move to other carriers, but none have the same reach as the Post Office in rural areas. “One can plug the hole temporarily, but not in the long run.”

He says the Post Office has a very strong brand and has strong support from direct mailers. Strike action however raises doubt about the reliability of its service and damages the brand.

He says in other countries postal services have been able to buck the trend of dwindling mail by moving into the delivery of e-commerce products. “If the South African Post Office is unreliable due to losses and strikes, it won’t be able to do the same.”

The Post Office said on its facebook page on Friday afternoon operations were back to normal at the Durban mail centre. “Witspos mail centre is operating at roughly 40% capacity. Germiston mail centre was also operational, but again not at full capacity. Tshwane Mail is unfortunately not accessible and remains closed. Operations in Cape Town have resumed but again, the mail centre is not yet working at full capacity.”

It also posted a long list of post offices closed in the Johannesburg area for the safety of customers and employees after threats of violence. They are Alrode, Bergvlei, Boipatong, Boitumelo, Booysens, Crown Mines, Delarey, Doornfontein, Dowerglen, Ebonypark, Edenpark, Eldoradopark, Evaton, Florida, Fordsburg, Germiston, Halfway House, Ironside, Johannesburg, Joubert Park, Kaalfontein, Kelvin, Kemptonpark, Khumalo, KwaXuma, Kwenzekile, Kyalami, Mafatsana, Masoheng, Morningside, Moroka, Phomolong, Pimville, Ridgeway, Robertsham, Southdale, Southgate, Tarlton, Tembisa North, Tembisa South, Vorna Valley, Witspos and Zuurfontein.