German Post Makes Splashy
US Market Entry at DMA
"Market entry has a limited window of opportunity so over the next year you'll see us being very public, very out there and very aggressive so that industry knows we are here and willing to compete.
"Our market is the kind of people who come here and to similar conferences in this and other industries - to DM Days in New York and the Catalog conference, for example."
Deutsche Post began its campaign to become a player on the US market a year ago when it purchased Global Mail, Sterling, VA, and followed up with acquisition of Yellowstone International and the opening of a corporate office in Fairfax, VA.
"We came into this market with both feet. We are going to grow as Deutsche Post, organically and otherwise, and we will have a permanent presence here and we are going to be a player. We are a player today."
Hengst talked to DM News International at the Deutsche Post's stand in the exhibition hall that featured a two-seater Mercedes convertible painted in the Post's trademark yellow. The winner of a drawing got a two year lease on the car.
The day before the Germans had given one of the most lavish parties ever seen at DMA conferences, featuring groaning boards of smoked salmon, German Sekt, jazz, rock and a recital by an opera singer flown in for the occasion.
Hengst saw the extravaganza as an investment. "Next year's party in New Orleans will bring substantially more people at less cost. We are investing in this market and in ourselves."
He is a native German who spent 21 years with USPS before moving on to TNT Worldwide. His hiring by Deutsche Post was seen in the industry as something of a coup, given his intimate knowledge of US and foreign postal operations.
The Germans, he said, are looking at four market segments, which they either have covered or are about to. Global Mail, he explained, specializes in corporate mail, "the classical first class mail."
Yellowstone is a specialist in mailing publications internationally. "They really take care of those mailings. It's not just sort and distribute and send on, but getting all the information about mailings they can.
"They use electronics to work out good addressing. Most US addressing is four lines and that's how they are handled at most US mailing houses. But foreign addresses can have 9 lines. Yellowstone makes sure of delivery."
His own office will get deeply involved in direct mail and parcel delivery. "This isn't just about mail but about being in a market to help companies find customers wherever they may want to look for them," Hengst said.
Too many Americans, he said, still go to Canada first under the mistaken beliefs that "Canadians are just like us, and so they don't treat them differently, don't do their homework and don't provide what we call local color."
The UK is usually the second choice, again, he said, "for all the wrong reasons. 'We think we're kind of alike because we speak the same language.' Well, you know the Churchill quote -two nations divided by the same language."
"Now, we're not out to discourage people from going to the UK, but to make them understand that each of these varied markets has to be treated on its own terms."
Germans, for example, like to buy American goods but they don't want to go to "downtown Peoria" to resolve any problems they have, but to do it at home.
He also cited lack of mailbox clutter in most European countries compared to the US. Germans only receive 80 pieces of direct mail a year, the Swiss 110. Combine the right marketing strategy with less clutter and you will get far higher response rates, he said.
"That's where we come in. I can help somebody get into Germany like nobody else. But we also have direct arrangements all over Europe. We have two offices in Austria and a new one in Switzerland. We're in Singapore."
Hengst, who took up his new job on March 1, said Deutsche Post has grown on the US market in the past year, both through buying market share via acquisitions and through making the acquisitions grow.
"We will grow by building a substantial business and applying economies of scale - the larger you get the more efficiently you can run it. On the operational side this is all about scale, so you have to work from a base.
"We're not going to be the low price provider, and we won't compete that way. We will be the right solution for somebody who needs to get his stuff from here to there."
The larger issues driving Deutsche Post's global expansion, Hengst said, were next year's IPO and the loss of the domestic monopoly under EU rules in 2003.
"What we are doing here is part of corporate diversification as the company seeks to protect its future and derive more revenues from global enterprise than from our domestic business. It's a challenge."