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Britain's Royal Mail Eyes U.S. to Expand Global Operations

Seeking to gain a stronghold in the United States and tap into the growing interest surrounding exporting by U.S. companies, Royal Mail recently launched a five-year plan to develop its presence here.

The plan centers on Royal Mail U.S. Inc. (RMUS), the division of Royal Mail that mails First-Class and advertising letter mail from the United States internationally. Initially, it will move the marketing, sales, operations, financial and human resources departments of RMUS out of the UK and into the United States. Even though RMUS has been in the U.S. marketplace since 1994 — and has a staff of 25 working in New York — RMUS is UK-based.

“Effectively, we are going to Americanize ourselves [and] establish a full management team over here,” said Adrian Cowan, director of world markets at Royal Mail, London. In addition, Royal Mail plans to spin off RMUS as a separate company based in the United States.

Plans also include investing in the operations side of RMUS significantly to expand product offerings, investing in research and setting up nine U.S. sales centers. However, its ultimate goal is to change customers' expectations of what an international mailing services provider should be.

“The history of this sector is that it's been regulated with a single company offering services,” Cowan said. “One of the effects of that can be that the single operator has a brochure of services that asks customers what they want to use. Our approach is 180 degrees different from that, where we actually talk about communications strategies for the future.”

Cowan said it first will be to find out what types of packages prospective and current customers need and then offer strategies relevant to that.

“It's important not to see postal as separate from all other communications,” he said.

Initially, RMUS will focus on the catalog, financial services, publishing and manufacturing industries.

“There's a lot that needs to be done here in terms of understanding sector-specific needs,” he said. “At the same time, we are going to be raising standards in terms of customer interface.”

Royal Mail also has signed with OgilvyOne, New York, to spread the word about its plans. While Cowan wasn't specific about the campaign, he said, “we have big plans for OgilvyOne. We are planning to work with them as strategic allies. What we don't want is someone who will be our agency on a project-by-project basis. We want a strategic relationship.”

Royal Mail should be concerned about growing its business to reach the U.S. marketplace, especially since there is so much competition today. For example, even though it is the No. 1 international letter carrier in Europe and the dominant player in the UK — with a strong presence in most major European countries — RMUS still is the No. 4 player in the U.S.-to-international marketplace.

The No. 1 player is the U.S. Postal Service, followed by the Dutch postal service — which recently acquired TNT, a world leader in Express distribution and logistics — and DHL, the worldwide private carrier. In addition, there is concern that the German post office Deutsch Post AG — which recently bought a 22.5 percent stake in DHL for an undisclosed sum — may creep into the U.S. marketplace as well. But RMUS said it can beat the competition.

“We know the French and Germans are coming into the marketplace, but it is going to take them some time to get down that road and discover whether it is a possible market for them,” Cowan said. “We're moving down that path now.”

In addition, he said, RMUS is suited logistically for this growth — currently it ships mail to 28 countries directly from U.S. hubs without touching UK land. RMUS is planning to increase the network.

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