Privatised Royal Mail will move faster into parcel market

The Government recently announced plans to float Royal Mail on the stock exchange in the coming weeks. 

The Communication Workers Union (CWU) opposes the move and will ballot its members on strike action in an attempt to scupper the deal.

As part of the deal around 150,000 Royal Mail employees will be eligible for Free Shares in the company.

If the strike goes ahead, DX has concerns about capacity in the run up to Christmas. 

James Timberlake, head of marketing at DX said: "Capacity is limited in the goods fulfilment market - especially in the run up to Christmas. Historically, Royal Mail has often been the dumping ground for deliveries that could not be met by other carriers, so the Christmas period is likely to be much more challenging this year if the CWU chooses to strike.

In strategic terns, privitisation would make Royal Mail more agile and more responsive to market changes such as the massive recent growth in eCommerce.

Timberlake continued: "Royal Mail has made its intention to move more towards a goods fulfilment business delivering packets and parcels very clear and, with mail volumes declining, this strategy is vital for its future.

"At DX, we are obviously interested to see how privatisation will affect Royal Mail’s downstream access services, especially as the home-shopping market continues to seek cost-effective ways of delivering parcels to consumers. This change in the market shows that consumers have really begun to value having different delivery options to choose from, and are happy to pay for more secure and reliable services. 

"Looking further ahead, it will also be interesting to see how the Royal Mail will walk the very difficult line between being a monopoly operator and a commercial enterprise.”

Opportunity to seize

Parcel2Go.com CEO James Greenbury thinks the privitisation of the Royal Mail will have a profound impact on the market and is an opportunity for other parcel companies to seize.

"Those in the parcels and packets goods fulfillments market on the other hand should be rubbing their hands together in anticipation: privatisation should level the playing field,” he said.

"Competition is good for the consumer in driving down prices as businesses attempt to increase market share. It’s now up to parcel delivery service providers to take advantage of this opportunity at a time when consumers could well be turning away from a much loved national institution and looking for cheaper alternatives.

James believes flexibility is key and highlights the importance of convenience based services such as Click and Collect and Collect+.

"All logistics businesses in the 21st century should seek to offer consumers flexibility and choice. The lustre of Royal Mail’s heritage will slowly fade along with the public’s loyalty. It’s now up to logistics providers to make the most of this rift and to formulate innovative and compelling offerings that meet changing consumer demand. We are currently undergoing one of the greatest periods of flux the industry has ever seen.”

Royal Mail to consult on parcel re-classification
Royal Mail is consulting on a change to its parcels format to allow more items to be classed as Small Parcels.

This would make more parcels cheaper to send. For example, at the moment a small parcel up to 1kg, first class costs £4.10, as opposed to a Medium Parcel (up to 1kg, first class) which costs £6.75.

If the change is introduced it means over 80% of parcels delivered by Royal Mail will be classed as Small Parcels.

The proposed change would mean that parcels up to 350 x 250 x 160mm, which are currently classified as Medium Parcels, would also now be classed as a Small Parcel. This would cover postings up to the size of a large shoebox.

The change is being proposed in response to customer feedback, said Royal Mail, including from eBay merchants.

Nick Landon, managing director of Royal Mail Parcels, said: "The postal market is changing with the UK parcels market continuing to grow as consumers increasingly shop and sell online.  Royal Mail is responding to these trends by updating its parcel services. We will consider further updates if customer feedback in the future indicates we should.”

The consultation will conclude on October 16 meaning the change could be introduced later in October.

Yodel enters consumer to consumer parcels market 
Yodel has launched YodelDirect - its first collection and delivery service that can be accessed directly by consumers.

YodelDirect is aimed at consumers and small business owners who can arrange for a Yodel driver to collect one or more parcels from their home or office for delivery to friends, family or businesses across the UK.

It comes in response to consumer demand for direct access to the collection services of the parcel company. Until now the service has only been available to businesses and been subject to a minimum annual parcel volume.

Collections can be booked online, without the need to set up an account, at yodeldirect.co.uk. Senders follow steps and the website generates an address label and barcode, to be printed off and attached to the parcel. Orders placed before 10pm will be collected the next working day and the pick-up confirmed by email.

Services include next day and two day delivery, Northern Ireland and ‘Highland and Islands’ delivery services all of which are trackable, including proof of delivery and insurance up to the value of £20 per parcel as standard.