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It is widely known that franking machine users save around a third on regular letters. Many businesses these days, particularly e-commerce companies, no longer need to post that volume of letters. For anyone sending out a regular amount of parcels, especially in the light of the recent changes introduced by Royal Mail, franking can be a serious cost-saving activity with savings ranging from approximately 9% to 16% on both signed for and standard deliveries.
Changes to the Marketplace
Royal Mail has been making quite a few changes to its pricing and packaging criteria over the past couple of years in order to make the business more competitive. There will likely be many more changes to come in the future as the company prepares itself to be sold off later this year in what will be the biggest privatisation in nearly three decades.
Of course there are arguments for both sides. The unions, naturally, aren’t happy but the fact is that most commercial activities are better off being privately owned. Royal Mail has been operating for the longest time in an environment of its own creation: the very nature of post has been changing for a while and delivering a letter from London to the far reaches of the Highlands the very next day, for 40-something pence, can’t be sustainable.
The recent changes to parcel pricing are a continuation of Royal Mail’s competitiveness drive as more parcels are being delivered due to rapid online retail growth, with online predicted to account for 21.5% of retail sales in the UK by 2018. Just being “Royal Mail” isn’t protection from the changing market conditions. That being said, the stamp prices were raised in 2014.
What Has Changed in Parcel Pricing?
The Royal Mail has introduced new size criteria - small, medium and large - as well as slightly changed weight criteria in 2013. This means that some small parcels have actually dropped in price, but to account for the fact that other sizes are slightly more cumbersome, and might require van deliveries, some other prices have jumped by approximately 50%.
It is the definition of 'small parcel' that might cause problems, however, as at 45cm x 35cm x 8cm – roughly the size of a regular cereal box – there is not much room for the padding of fragile items; going over this size limit for the lightest weight bracket will see you paying £5.65, which is a whopping 109% increase on the previous price.
*This table is based on our own independent research. All amounts represent first class prices.
Other changes include the reduction in compensation for unrecorded deliveries from £46 to £20, an increase in compensation for signed deliveries to £50, 2nd class is now offered with signature and additional new services called “24” and “48” which offer discounts to heavy-use businesses.
Royal Mail has also made a number of adjustments to its service, such as including a 2.5% fuel surcharge for contract parcel products, which the company claims is standard practice in the market and brings it in line with other delivery companies, but which some small businesses believe impacts disproportionately on online businesses.
From the size of some of these price differences it can be inferred that the adjustments have been long overdue. It is not in Royal Mail’s interests to take on losses by enabling retailers’ promises of cheap, next day delivery. Despite the initial shock of the increases and the slightly confusing new size/weight banding, Royal Mail has been upfront about the reasons behind its pricing.
What Options are Available for Businesses?
The solution then, as a business, is to adapt your own behaviour:
- You could pass on the price increases to your customers, or you could adjust the delivery options available to them to be cheaper and slower;
- You could search around for an alternative courier;
- Or, you could invest in a franking machine, which is still the cheapest way to access the Royal Mail’s Universal Service with reductions of between 9% and 16% available across all parcel categories.
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