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32
Mailing
One striking statistic from Royal Mail
Group’s preliminary results for the year
ending March 31, 2013 is that its parcel
business now accounts for almost half
(48%) of total revenue – £4,477 million
out of £9,279 million.With growth of
9% last year, it won’t be long before
parcels generate the lion’s share of
Group turnover.
Striking, but not surprising. Parcel
deliveries to householders, neighbours,
the workplace and town centre collection
points have become a feature of daily life
in the twenty-first century as consumers at
last let their fingers do the walking, albeit
not in the way Yellow Pages envisaged
when it coined the slogan in 1964.
Today, it is not the telephone but
the internet that is driving retail sales.
In 2012, online sales grew by 14.9% to
£31.1bn or 10.6% of total retail sales. By
2017, e-commerce is predicted to make
up 15% of all retail expenditure (source:
Verdict UK Retail Review and Sector
Forecasts to 2017
).
The rise of the eBayer
The rise of internet shopping has been
mirrored by a boom in parcels. Figures
from IMRG, the e-retail industry body,
show that last year 1.3 billion parcels
and packages were generated by online
purchases, excluding groceries and large
items that require two men to deliver
(
IMRG Metapack UK Delivery Index
).
A new report by IMRG and Manhattan
Associates forecasts that by 2017, this
figure will have risen by 70% to 2.2 billion.
Online retail isn’t just the preserve of
Amazon and its ilk. A growing army of
small businesses are participating in the
boom, often selling exclusively online.
A Royal Mail study by the Centre for
Economics and Business Research (CEBR)
estimates that between 2008 and 2012,
the number of online-only retailers more
than doubled from 6,700 to 14,400.
Take into account the army of kitchen
table entrepreneurs using eBay and other
online marketplaces and the true number
selling online is considerably larger. The
informal nature of such enterprises makes
them hard to quantify, but Direct Line for
Business recently suggested that as many
as 8 million people in the UK effectively
operate as ‘online businesses from home’,
either purchasing goods to resell or
making their own products to sell online.
The top 5% of these HomeWebtailers
generate an average turnover of £18,094.
Competition for parcels
Small enterprises of this nature don’t
send enough parcels to interest business-
oriented providers like TNT, UK Mail and
Interlink. However, many other providers
have sprung up to meet their needs and
companies like ParcelMonkey, Parcel2Go,
Interparcel, MyHermes and Collect Plus
have been successful at taking business
away from Royal Mail.
Historically, these operators have won
market share by offering lower prices. This
is still the case for some types of parcel,
but by no means all. Following recent
changes to Royal Mail tariffs and price rises
by its competitors, small businesses may
be surprised how much they can save with
Royal Mail. Research by Neopost shows
that in the case of small parcels weighing
less than 1kg, Royal Mail is more than 50%
cheaper than some alternative providers.
Big savings
In April, Royal Mail made two important
changes to its parcels business:
1)
It brought greater clarity to tariffs by
replacing separate Packets and Parcels
categories with two parcel formats:
Small and Medium. Parcels that exceed
allowed dimensions or the maximum
parcel weight of 20kg now have to be
sent with ParcelforceWorldwide; and
2)
It extended Pricing in Proportion to
parcels so that they are now priced by
a combination of size and weight. As
a result, small parcels are now much
cheaper to send.
Today, it costs £2.60 to buy a Royal Mail
second class stamp for a small parcel
weighing less than 1kg (with delivery in
2-3 days). The same parcel costs £4.89
to send Economy with Collect Plus (3-5
day delivery) and £4.20 to send with My
Hermes (2-3 day delivery)*.
This represents a big saving for eBayers
and small businesses that sell soap,
jewellery, ornaments, USB sticks, contact
Small parcels,
big savings
Thanks to new Royal Mail parcel tariffs and discounts for
franked mail, e-tailers can cut the cost of parcel deliveries
by as much as 50%.
lenses and other small items.
Even greater savings can be made
by using a franking machine instead of
stamps. A second class frank for the same
parcel costs just £2.25, a 35p reduction on
the price of a stamp – and a 53% reduction
on the CollectPlus Economy tariff.
Franking for all
Home webtailers, eBayers and small
businesses, such as opticians, dental labs
and electronic retailers, may not have
considered using a franking machine
before. But with the discounts available,
it is worthwhile for those spending £20
per month on sending parcels. Savings on
postage will more than offset the cost of
franking machine rental and consumables
(ink and labels).
And the benefits don’t stop there.
Franking machine users also enjoy:
n
discounted rates for letters, with
savings of 13p for First Class and 17p
for Second Class;
n
the convenience of not having to queue
at a Post Office counter to buy stamps;
n
improved cash-flow if you pay for
postage in arrears with a neoFunds
account; and
n
the eradication of over- or under-
stamping – all Neopost franking
machines have built-in scales and are
automatically updated with new tariffs
to ensure the right postage is applied.
Acquiring a franking machine from
Neopost could not be simpler, no matter
how small your business. Neopost runs a
basic credit check and then licenses you
to use a franking machine. Postage can be
added to the machine at any time, so you
will never again run out of stamps, and
consumables can be ordered online for
next day delivery.
As businesses increasingly go
online to drive sales, many more small
enterprises will be able to take advantage
of competitive Royal Mail tariffs and
discounts for franked mail to save money
on parcel deliveries.
For more information or to request a
free franking machine trial, please
call 0800 731 1334 or visit
www.neopost.co.uk.
In 2012, online
sale grew
by 14.9% to
£31.1 bn or
10.6% of total
retail sales.
* Publicly available
prices correct at
June 17, 2013.