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Print and Post

Once the preserve of large corporates, hybrid mail is now available to smaller users in the UK. Michael Herson examines the opportunities and the efficiency and environmental benefits

REMOTELY PRINTED (HYBRID) MAIL is not a new concept. It has been marketed by document services companies for many years, but previously it has only been available to a restricted corporate customer base seeking a BPO (business process outsourcing) type solution. These DPO (document process outsource) suppliers target major customers with significant volumes of transactional or direct mail.

The 'father' of the new breed of hybrid mail technology is Australia Post which developed the concept for its domestic market and then acquired international print software vendor 'PrintSoft', specifically to extend the concept internationally. As Mark Worsley, Global CEO for PrintSoft explains, "We originally developed a desktop mail solution called 'Post E Letter' for National Australia Bank. Our new vision is to take a wide range of desktop mail documents and bring them into a central process, electronically."

What this new breed of hybrid mail technology achieves is that it brings the whole concept of hybrid mail within reach of a range of much smaller users - specifically SME's and branches of corporates. PrintSoft feels that potential lies in "event triggered documents". Worsley explains "We've found a strong market with debt collection agencies, typically for reminder letters....the type of document doesn't change too much but the person you're writing to does change."

Many feel it is an idea whose time has arrived, not only due to accessible new (free) software, but also because the dynamics in physical mail are still very much determined by the cost of collection. For most SME's it is just not cost effective to use an alternative supplier because collection costs are prohibitive. This view is confirmed by to Bob van Ierlan, Director of E2E development for TNT Post. He said, “The dynamics in physical mail are still very much determined by the cost of collection."

SME mail

Indeed the 100 - 200 per night letter market still remains 'business as usual' for the vast majority of SME's, despite the opening up of the market to full competition. With the standard DSA product rapidly becoming homogeneous and dominated by two operators - TNT Post and UK Mail - it leaves these SME's as a potentially attractive target. "With hybrid mail, you can differentiate yourself upstream more than you can do with traditional physical mail," according to van Ierland.

Another market driver which has really only achieved B2B prominence in 2007, is the environmental forces which mitigate against carbon emission hungry collections and herald the advantages of printing the mail closest to its final destination. The intelligent hybrid mail software facilitates this process.

Alongside PrintSoft, four other companies have now entered the UK hybrid mail market almost simultaneously: PDQit (a 2005 start-up); TNT-it (divison of TNT Post); ViaPost (a 2007 start-up) and i-mail (a division of UK Mail).

A number of these hybrid mail companies have global ambitions. The cross border advantages of hybrid mail are even more compelling, particularly on in-bound international mail.

All entrants rely on a network of printer partners to deliver the business model, unless they install digital printers into their own facilities. PDQit has a dual strategy having built SME mail its own print facility in Warrington, but it also plans to set up a regional network and build rcontributive partnerships to expand their print capability.

Printers who have been historically focussed on direct mail are attracted by the proposition because they are losing business to transactional mailers due to convergence. So for them it is a form of revenue protection. Examples of alliances announced to date include Inkfish and DOL (Document Outsourcing Limited) (by Print Soft) and Polestar and FormProMM (by ViaPost). ViaPost is seeking an initial network of seven locations expanding to 35 across the UK.

PrintSoft is taking its printer network partners' involvement a step further "They'll be able to function as a member of the network and also to be able to sell the service in their own right." explains Worsley. This empowerment effectively creates additional sales resource for PrintSoft.

New entrants are mostly offering free downloadable software models and using that proposition to target SMR's, or branches of corporates, with a 'pay as you go' cost model. It is clearly expected that this model will encourage trial and take-up. Joes Sykes, marketing director of PDQit explains that "The software is intelligent enough to work out the nearest RMC (Royal Mail Centre); the closest facility that we have to it and fire the job down to that area. It can take one file which might have 10,000 records and split it into 50 different sorting centres.It works especially well with Sage"

The environmental benefits are not lost on Sykes either "What we're trying to do is to eliminate all the unnecessary trunking of lots of documents from source to main sorting offices."

An important feature of all the software packages on offer is the ability to personalise the documents.

The TNT-it software can be downloaded free of charge from the TNT Post website. Clearly this mail will be consolidated with other TNT Post mail volumes. Van Ierland regards that as major point of difference between TNT Post and other, non-affiliated competitors. He said, "The client will benefit since you can eliminate mark-ups between parties when you control the full postal chain". The TNT-it product adds value to the core product by ensuring the accuracy of the address is verified before it is printed, which van Ierland feels helps in terms of service levels to clients.

ViaPost has the lowest cost model on the market at a projected 24p for a printed delivered document in what is described as a "first class service for a second class post" according to Simon Campbell CEO of ViaPost. It has recruited a high profile management team and raised finance. It believes its print-on-demand model is the 'future of postage' as it brings SME's with below 250 items into the loop and allows then to access potential savings. "For the price of their second class stampe at the moment, they get everything included," adds Campbell. But there is also the convenience factor and time saving, a point also endorsed by van Ierland of TNT Post.

However unlike some of the hybrid mail operator, ViaPost is not interested in bypassing Royal Mail, but prefers instead to work closely with Royal Mail Wholesale. To ensure uniform print quality across the network ViaPost is working with Publicis Dialog who Campbell describes as "experts in production and maintaining brand control."

PrintSoft is forecasting customers' savings of up to 40 per cent based on Australian experience to date. PDQit are estimating similar savings to the end user.

UK Mail's i-Mail product will be launched in January 2008. It is claimed to be the first hybrid mail product to offer a 'next day service' - in effect competing directly with full priced first class mail. This has been made possible by a late night access agreement negotiated with Royal Mail Wholesale.

Equipment Integration

Pitney Bowes has moved into the hybrid mail market as part of a suite of offerings according to Jo Kenny, Operations Director UK for Pitney Bowes Management Services. "We prepare, create, fulfil and insert into the mailstream at the closest point to delivery", he claimed.

Significantly three of the new hybrid mail operators - Viapost, PDQit and Esker (France)- use Pitney Bowes' mail fulfilment equipment. Both UK Mail and TNT Post have expressed the view that hybrid mail represents a competitive threat to traditional postal metering, but Pitney Bowes has responded swiftly not only as a major supplier of equipment, but also as an operator (in France) through the acquisition of Asterion's 10 print sites which are enabled with a 'white label' version of Esker's 'Clic Doc' hybrid mail technology. This compliments the three print facilities Pitney Bowes has built in the UK to give the company a full downstream capability.

Kenny also recognises the environmental benefits of hybrid mail "If you look at the carbon footprint of trucking this mail back and forth, the more mail that we can move digitally closer to the last mile, we believe will greatly reduce the carbon footprint."

The last to announce its launch is UK Mail with its 'i-mail' product, due to be test marketed in January. The point of difference, according to Guy Buswell CEO of UK Mail's parent Business Post, is that it will be a 'next day' product, due to its agreement with Royal Mail Wholesale in negotiating late night access into the network. "Royal Mail has given us a wholesale equivalent to a first class product" states Buswell.

The other major difference between UK Mail and its rivals is that it will not be relying on a printer partner network; instead Buswell explains that UK Mail plan to add digital printers to its existing regional sortation centres. It feels this will give it an advantage because of the difficulties associated with different printers and IT interfaces. Buswell admits however, that this investment will be gradual and in line with post launch customer demand. UK Mail will also be targeting the 200 letter per night SME segment estimated to be worth £1.5bn by Buswell.

Worsley sums up the hybrid mail concept neatly "In my view of the world, there are only two key stakeholders in mail, that's the mail originator and the mail recipient. Everybody else is just an actor on the stage. So we can match the needs of the mail originator with the needs of the mail recipient and that's where hybrid mail fits in"

Buswell agrees that hybrid mail is an evolving product designed to match customers' needs. He said, "I am absolutely convinced that whatever we come up with as a product it will change over time... the business model will not look the same 3 - 6 months after launch, as it will appear at the outset."