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My Parcel Delivery Blog

Small businesses could incur 50% unnecessary parcel delivery spend after Royal Mail price hike

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Added costs with privatised Royal Mail means UK small businesses need to seek parcel delivery alternatives

Small businesses dependent on parcel delivery to UK customers could be spending on average *50% more than necessary on delivery charges in the wake of Royal Mail’s price increases taking effect today (31 March 2014). In addition, businesses sending parcels overseas via the recently privatised post and parcel company will be paying on average 40% more than necessary.

Based on the annual, average number and weight of “next-day” parcels delivered for business customers by parcel comparison site, My Parcel Delivery (19 parcels at 9kg each), the equivalent annual cost for businesses using Royal Mail will be £397.10 from today. But, rival services available to small businesses could achieve like-for-like savings of at least £190**.

David Grimes, managing director at My Parcel Delivery, says: “Royal Mail’s monopoly on UK parcel delivery and its ability now to raise prices is good for investors but not so good for the country’s small businesses trying to manage overheads as they recover from the recession.”

“Based on the UK and international parcel delivery services and prices we know are available to small businesses, there are savings of at least 36% and as much as 69% to be made sending parcels in the UK and abroad.

“Companies like ours can provide these prices because we aggregate volume across our whole customer base, channel it through a single account with the couriers and gain large discounts that we then pass back to our customers who benefit from lower prices and, indeed, heightened customer service.

“And I speak from experience – as a former SME owner who stood in Post Office queues waiting to send products to customers – when I say that small businesses can avoid wasting valuable business time by using courier companies that collect from their premises and still cost less than Royal Mail.”

“But while businesses can definitely save money on Royal Mail’s prices, it’s not just about getting the cheapest price in parcel delivery. Customer service is more important than ever, which includes being able to track the progress of your parcel and ensure its security by obtaining a signature at its destination.”

Example comparative parcel delivery prices from today (31 March 2014) include:

Service

Destination

Weight

New Royal Mail Price

My Parcel Delivery best price

% saving

Next day delivery with signature

UK

5kg

£16.95

£10.79

36%

2-3 day delivery with signature

UK

2kg

£9.10

£3.78

59%

Next day delivery with signature

UK

20kg

£34.50

£10.79

69%

International with tracking and signature

New Zealand

3kg

£77.65

£45.72

41%

Ditto

Australia

5kg

£92.33

£53.28

42%

Ditto

USA

3kg

£67.09

£43.92

36%

 

Calculations and sources:

*Based on the average saving offered by My Parcel Delivery versus Royal Mail across two different services and three weight categories of parcel delivery in the UK from 31 March 2014.

** Based on new Royal Mail price to send each 9kg parcel on a next day service=£20.90; comparative My Parcel Delivery price=£10.79.

***Based on sending 20 x 9kg “next day” parcels per working day from 31 March 2014 until the end of the 2014-15 financial year (5,120 parcels over 256 days) at £20.90 via Royal Mail (total cost £107,008) and £10.79 via My Parcel Delivery (total cost £55,245).