Glass says he believes that a message delivered by post in the right manner can compete with email
Ian Glass seems to be betting the house on the belief that success in business comes from chasing opportunities in the most unlikely places.
His company, CityPost, is making a bold play to become a postal operator, a business that has reduced the state-owned incumbent to its knees.
An Post lost €45m last year on its core mail business, as the displacement of letters by email and social media gathers pace. On present trends, mail volumes by 2019 will be half what they were in 2007, while the fixed costs of operating the national delivery network continues to grow.
This looks like the type of bad hand that might cause Glass to fold if it was dealt in the poker games he enjoys during his spare time. He insists, however, that postal deliveries are worth the gamble.
“We don’t believe the industry is dead”
“We don’t believe the industry is dead,” he says. “Perhaps we can’t stem all of the digital displacement but we can certainly slow it down.
“I believe we’re about to go through a renaissance period for post. If I said we could grow the post market by three or four times, people would say I’m crazy. But I say I’m not crazy.”
Market liberalisation allows CityPost to piggyback on An Post’s national infrastructure while cherry-picking the most profitable parts of the business, such as bulk post by big corporate clients.
Glass sees the relationship with An Post as “symbiotic” rather than adversarial, with CityPost helping to grow the market to the advantage of all.
“This is not about taking volumes away from An Post,” he says. “CityPost is not the competitor; the competitor is digital. Choice in the market will increase volumes and make companies and individuals think differently about post.”
An Post’s existential crisis is having knock-on consequences, however. When CityPost entered the postal market in January, its iPost service promised to print and deliver business correspondence for 66c a letter compared with the 72c cost of a stamp from An Post. Just two months later, CityPost has had to revise its offer after An Post obtained government approval to increase the price of postage to €1 from April 13 as part of its survival strategy. “We are a customer of An Post,” says Glass. “We rely on its network for delivering part of our volumes. When An Post has a new tariff, we have to respond accordingly. Part of our cost is part of their cost.”
He refuses to be drawn on whether such a chunky price hike will only serve to accelerate the demise of post. “It’s difficult for me to comment on An Post and how it runs its business. It provides a very good service. It has a universal service obligation.”
This obligation, requiring An Post to provide next-day delivery to every address in the country five days a week even as volumes shrink, is a big part of its problems. Glass believes regular national postal deliveries are essential for the economy and society, although CityPost is unlikely to be among the contenders when An Post’s current contract expires in 2023.
“An Post is best placed to carry out this role,” he says. “I don’t think the universal service obligation could be provided commercially.”
Would it make sense to relax the requirement so that, instead of post every weekday, An Post might be allowed to deliver less frequently? “That’s a political question to be decided between An Post, the government and the regulator.”
Glass believes CityPost has learned the lessons from a previous unsuccessful attempt to crack the postal market in 2012, which had to be abandoned after only six months. “We misunderstood the complexity involved,” he says. “We had to tell our customers we weren’t ready.”
Postal deliveries were a big step up for a company whose roots lay in door-to-door distribution of leaflets and other promotional material, a business established 30 years ago by Glass’s father, Sydney.
Glass Sr’s first big job was an order to deliver 100,000 free samples of a chocolate bar called Balisto through people’s letter boxes. “It turned out to be a messy job because there was a heatwave that week and the bars began to melt in the delivery bags,” said Glass.
When Ian came on board in 1998, the business had stagnated. “Very quickly I saw that we needed to get into the value-added end of the business, which was distributing phone books. It took me three attempts to get a foot in the door.”
Winning the contract for phone directories and the Yellow Pages required CityPost to scale up from being solely an urban-based distributor to having a national network, including the capacity to deliver on the offshore islands.
Glass instructed his delivery teams to leave the directories standing upright on the hinge side of the door frame to avoid having them topple over when householders opened their doors.
This type of attention to detail got him noticed internationally and CityPost was invited to tender for a similar contract in Portugal. Glass got an inkling of the scale of the challenge involved on his first visit to Lisbon. Streets that appeared to intersect on a tourist’s map would in fact be on different levels because of the city’s hilly topography. It was not promising ground for a newcomer to begin plotting efficient delivery routes.
“I remember coming out with a three-year contract under my arm and thinking, what have I done?”
Portugal paid off, however. Having found its feet on the mainland, CityPost’s contract was extended to include Portugal’s far-flung islands of Madeira and the Azores. It has also become a player in the country’s postal market, where it pioneered many of the technologies that have now been installed at its Irish postal centre in Rathcoole, Co Dublin.
Having turned 50 last year, Glass seems to have lost his appetite for more overseas adventures. Instead, his attention is focused on making a success of the Irish postal business. CityPost has invested more than €1m in Rathcoole, installing a sorting machine that can process 38,000 letters an hour and pioneering the use of biometrics and other advanced security precautions. Management has been beefed up with the recruitment of Bob Phillips, former head of operations at Britain’s Royal Mail, as director for postal regulation and strategy.
The workforce is also being transformed. CityPost traditionally relied on independent contractors when its business involved only the distribution of leaflets and other unaddressed material.
Those involved in its new postal business will have to be on the payroll, however, for security reasons. CityPost is recruiting 200-300 post delivery operatives, many of whom will work part-time.
The expansion is being financed from CityPost’s own resources, without recourse to outside investors or bank debt.
The business is spread over a cluster of five companies, which have a combined net asset base of €10m-€12m. “Broadly speaking, we’ve been profitable every year — even in bad years,” according to Glass.
People are becoming kind of immune to digital messaging
He is messianic in his belief that a message, delivered by post in the correct manner, has the power to claw back ground lost to email. “People are becoming kind of immune to digital messaging,” he believes. “A high-quality relevant message delivered to your letter box addressed to you has much more of an impact than the millions of digital messages that everybody gets.”
To recover lost ground, however, postal operators will have to be willing to undertake more of the work. The days of expecting customers to buy stamps in a post office and then deliver their mail to a postbox are over.
CityPost has two tricks up its sleeve. For business customers, it offers a collection service from next month that could be free of charge depending on volumes.
For personal customers, it believes it has found a way to lure them back to sending the greeting cards that used to help fill the postman’s sack.
An app to be launched in the next six to eight weeks — WowCard — will allow users to send selfies to CityPost for incorporation into a greeting card, which the company will send with a personalised message.
Unlike rival apps, CityPost will provide the card and postage for less than the price of a stamp. “The reason huge numbers of people don’t use the postal service is because it hasn’t evolved in terms of access,” says Glass. “There hasn’t been much innovation or energy. We are going to alter access, we are going to alter behaviour, we are going to make post habit-forming because it’s going to be easy.”
It sounds like a tall order, given the popular perception that post is a business in terminal decline. It will take a man who describes himself as having “a passion for paper and post” to pull it off.
The life of Ian Glass
Vital statisticsAge: 50
Home: Co Wicklow
Family: Married with two sons and two daughters
Education: Marian College, Ballsbridge, Dublin; Chartered Institute of Management Accountants
Favourite book: Enigma by Robert Harris
Favourite film: The Longest Day
Working dayI normally start work at 8.30am and finish at about 8.30pm, alternating between the home office and our base in Rathcoole, Co Dublin. Mornings are for project/development work, when there are fewer distractions.
I play Texas hold’em, €10 in, with a group of nine guys. We’re a mixed bunch — an ex-guard, a director of Ryanair, the owner of a retail chain, a teacher. They’re all good pals. I go to Normandy every year for the D-day commemorations. I love history.
This interview appeared in the Sunday Times on 26 March 2017.