Is Royal Mail Killing Mail Order and Internet Business?

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Is Royal Mail Killing Mail Order and Internet Business?

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Is Royal Mail Killing Mail Order and Internet Business?

A controversial question perhaps but one aspect that is sure to affect mail order companies, internet based retailers and in fact anyone posting packets in the UK has been very much overlooked!

This being the removal of the 100g, 250g and 500g packet tiers. From the end of April there will be a single initial 750g packet threshold which is going to add heavily to the postage costs for small items. In many cases posting small and light packets using Royal Mail will become non-cost effective.

Campaigners across the UK have slammed Royal Mail price rises, which they agree will be bad for business. Industry regulator Ofcom announced it would relinquish the power to set stamp prices to Royal Mail, which immediately responded by hiking the price of first-class stamps by 30 per cent from 46p to 60p. Second-class stamps will rise 38 per cent, from 36p to 50p. The changes come into effect on April 30. However the impact on packet costs has been largely over-looked.

Currently (up until the end of April 2012) the Royal Mail Packet thresholds and costs are as follows:

Packets up to 100g – £1.58
Packets up to 250g – £1.96
Packets up to 500g – £2.48
Packets up to 750g – £3.05
From 3oth April the very first tier will be 750g at a cost of £2.70 and whilst the cost of a 750gram packet is reducing by 35p the increase for the smaller, lighter packets is very significant indeed.

Packets up to 100g – increase of £1.12 (71%)
Packets up to 250g - increase of 74p (38%)
Packets up to 500g - increase of 22p (9%)
Packets up to 750g – reduction of 35p
Whilst this will simplify matters for Royal Mail and reduce their workload in checking weights of packets this represents a significant increase on postage costs which unfortunately must be borne by small business and consumers alike. It puts the 14p increase in a first class stamp into perspective and whilst this increase is significant in itself, many will agree that for a manually intensive business the service and performance of Royal Mail is generally very good.
However, the treatment of packet costs has been hidden in the small print but this could have a massive impact on businesses already squeezed by reduced margins and the economic problems we all face.

Companies like the retail giant Amazon will certainly be able to accommodate the changes without a major problem as they attract the best postal discounts available. However, the small to medium sized company that posts large volumes of packets will have to address the impact on postal increases up to 71 percent!

Royal Mail, which the government plans to privatise, said the move was necessary because its core business was loss-making due to artificially low prices and less mail being delivered to an increasing number of addresses. Steve Leach, Royal Mail’s north west operations director, said: “We are not relying on price rises alone to restore Royal Mail’s financial viability. We’re modernising our operations as fast as we can.

However, John Walker, chairman of the Blackpool-based Federation of Small Businesses, said: “Rapidly raising stamp prices now will be bad for business. ”With small businesses and consumers being hit by other rising costs, this has come in at a time when they can ill-afford it.”

We agree but lets not forget that the increases are as high as 71% - Shame on you Royal Mail!