05 Feb 2018 | 04.49 pm
Interview: Garrett Bridgeman, An Post
Parcel service is all shook up
05 Feb 2018 | 04.49 pm
With a new chief executive in charge, An Post has shaken up its approach to parcels. Garrett Bridgeman (pictured) explains the transformation process
The arrival of David McRedmond as the new chief executive of An Post in September 2016 heralded a shake-up in the way the organisation approaches the parcels business. One of McRedmond’s first moves was to put in place a ‘Mr Parcels’, with a brief to provide internal focus for the company’s parcels operation.
That person is Garret Bridgeman, who joined as a marketing executive in 1997 after graduating from the Marketing Institute of Ireland. “David spotted quite quickly that parcels is the way forward for the business,” says Bridgeman. “People are sending fewer letters and they are buying more online. We are perfectly positioned not only to be market leader but also to be world class.
“The chief executive said, Garrett, this is simple stuff, go out and find out what the customers want and give it to them. You need to completely relaunch our parcels service or else you are going to lose all this business that you have and potential new business too.”
Before McRedmond’s arrival, An Post was well aware that future growth was dependent on packages and parcels. However, the company had no one person responsible for parcels. There was sales and marketing on one side and operations on the other.
“So you’d have sales people out selling parcels services and then coming back and talking to the operations people around we need to do this for the customer,” Bridgeman explains. “That was quite difficult because there was an element of bureaucracy in the way we were set up. The chief executive decided there should be one person with P&L responsibility to drive the business forward.”
There are two aspects to the parcel delivery business in Ireland. One is handling the huge volume of incoming parcels from e-commerce retailers in the UK, the US, Europe and Asia. The other opportunity is catering for domestic retailers and manufacturers who want to dispatch to customers in Ireland or abroad.
Outside of the incoming parcels arriving through the standard postal system, parcel delivery firms negotiate contracts with the volume e-tailers. When Bridgeman took on his role as general manager of parcels in October 2016, An Post was under pressure with those large parcel contracts.
Bridgeman explains: “We were under significant threat of losing huge accounts like Amazon on the inbounds. We weren’t offering the same levels of service as our competitors, such as evening and Saturday deliveries. The service offering we had was that we would come out to your house, try and deliver your item, and if you weren’t at home we’d stick a card in the door. Then you’d have to go down to the post office to collect the item. The market didn’t want that. The market wanted the item delivered on the day and for us to do everything in our power to deliver it.”
Shoulder To Shoulder
So a change in working practices was urgently required. The backdrop was an operating loss at An Post of €14m in 2016 on static turnover of €826m. Letters and parcels accounted for 62% of group turnover, down 2.1% year-on-year. To stem the revenue decline, in 2017 An Post raised the price of a standard letter to €1 and discussed with staff unions how to improve the parcels service.
By Bridgeman’s count, there were 120 negotiation meetings on the issue. “Since 2008 our letter volumes have dropped by 50% and the postmen and postwomen are very aware of this as they are the ones going around with lighter bags. When we talked about implementing changes to grow our parcels business, the unions were shoulder to shoulder with us.”
Ahead of a formal relaunch of the An Post parcels offering in June 2017, there were 300 project meetings, 1,000 work streams analysed, 5,400 scanners reprogrammed and 450 truck runs analysed and altered.
The upshot was that Bridgeman was able to go to Amazon and other large customers with the promise of evening deliveries and Saturday delivery nationwide in urban areas. For next day delivery, it used to be the case that parcels had to be in the depot by 5.30pm. Now customers such as Arnotts and Easons can ensure next day delivery in Ireland if they get their consignments to the An Post parcel hub in Clondalkin before 1.00am — effectively same day delivery.
AddressPal and ReturnPal
For the large consignors such as fashion e-tailer Vavavoom, speed of delivery matters but so does scale. “I met Amazon for the first time last January and they wanted to talk about Christmas 2017,” says Bridgeman. “If Amazon give me a 100 parcels every day for 48 weeks of the year, that goes to 400 a day in November and December. We can handle any capacity, so that’s a huge advantage for us in terms of our offer.”
To build parcels volume, An Post has also developed its own postal service initiatives outside the bulk contracts. The AddressPal service, with 120,000 registered users, enables people in Ireland to shop on UK websites and pay a UK shipping cost plus a small fee. Orders are sent to a warehouse in England from where An Post collects them and ships them back to Ireland. In 2017, An Post added the US to the AddressPal offering, operating out of a facility in Englishtown, New Jersey.
Also new in 2017 is ReturnPal, an app service whereby shoppers can request An Post to collect their returns for dispatch to the vendor. “Some of the fashion retailers have 25% to 30% of orders returned, so it’s a big issue for them,” says Bridgeman. “The way contracts are negotiated in online retail is that the main part is taking the item from their depot and delivering to the shopper. How the returns are handled depends on the retailer.
“If we’re handling the inbound, we can talk to the retailer about giving them a good rate on the outbound. That’s a huge product for us and our competitive advantage is that we drive down every street every day. We want people to say, do you see what An Post are like on parcels, they are absolutely amazing.”
Bridgeman says that An Post parcel volume in has increased by 12% year-on-year, and the company claims 25% market share. That has been helped by a deal with DHL that sees An Post take charge of delivery of non-express items. While that’s pleasing for the organisation, as a state-owned company An Post is occasionally criticised on the basis that facilitating all the inbound e-commerce is damaging indigenous retailers.
Bridgeman’s response is that without revenue from the inbound parcels, An Post’s national network would be unsustainable. “We pick up parcels and letters from over 5,000 different locations every day. Phase one of our new parcels strategy was to look at the UK market and win some of those big accounts. In Ireland we have beefed up our regional sales team considerably. Their objective is to go around to the SMEs and let them know about what we can offer them.
“In 2018 we’re piloting e-local in small towns. The idea here is to go around to all the local businesses and help them to start selling online. This year we ran a TV campaign on the theme of World Wide Open. I see it as a confident new positioning of An Post, reinforcing our leadership role in the Irish parcels market and our intention to grow this business to be very core of our company.”