Fulfillment could be cheaper than Royal Mail

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We’ve had so many emails about the new Royal Mail pricing and size requirements that we’re looking at all the options. Whilst there are plenty of carriers out there it’s still a struggle to find competitive rates for the low value low weight items, so today we asked the question “Could third party fulfillment save money?” We’re pleased to welcome Scott McGinley of Dalepak Logistics as a guest on Tamebay to provide the answer:

The Royal Mail Changes!

Smoke & MirrorsSo they finally did it then, the Royal Mail decided to become a parcel carrier, after Months and Years of saying they were doing it – the 2nd April 2013 was the day the entered the ring to take on DPD, Hermes, UK Mail and the rest!

So how about small traders who have grown fine eBay businesses based around the Royal Mail? Did the Royal Mail actually think of this?

My personal opinion is no – there are thousands among thousands of you out there who actually fund your local post office, let’s not forget that in the grand scheme of things here. My local post office is in Hardingstone, Northants and they welcome eBay traders with open arms – well up until 2nd April 2013 they did, now they may struggle…..

So what does it mean? As many of you know I am the ex Head of Supply Chain for play.com (yes the ones in Jersey…) and now reside as Ecommerce Director at Dalepak Logistics in Northampton but enough about that – let’s have a look at the changes.

Well I did and yep it’s gone up for certain items and down for others, the Royal Mail is pushing for 38mm or below (38mm is the size of a British Letter box (don’t measure to prove me wrong!)) and a weight of around 700g to ensure Postie is efficient and revenue stays high, however – the Media market is still thriving especially on marketplace and eBay, Amazon and Play.com are the places to be for this. The Royal Mail still wants this traffic so Large Letter remains!

So what about other products? Well it’s difficult, there are plenty of Hermes around which offer a good service and Collect+ have started to move their pricing in the right direction so you do have options.

Obviously I work for a fulfilment house so I will always promote them but to be honest I want to show you the advantages of them and how we can help you in these difficult times.

Fulfillment House vs Royal Mail

So a good friend of mine has a small online Media company, based in his garage – this week’s top seller has been the book ‘Small Businesses for Dummies’ and this is how post 2nd April it looks (as he told me in a very grumpy mood)

Friend

New Royal Mail charge (it is 1.3kg) £7.08 (oh my days)

Fulfilment House (like mine)

Postage £2.12 – (tracked service)

Kerching

So my fulfilment house would be cheaper – this is something all traders need to keep in mind when looking at their fulfilment needs, I can guarantee that I can fulfil the above order for half the price it will cost through the Royal Mail, that’s handling, storing, picking, packing and despatch.

Some Fulfilment houses (like mine coincidentally) allow you to sell into the EU on their marketplaces, this again can be cheaper through a fulfilment house

Another example – Germany for the book £4.50 – the reduced despatch costs cover your handling so it does become a win win situation even in Europe.

Please fire questions at me and I will answer them as honest I can – otherwise fire me an email at [email protected]

7 Responses

  1. You’re absolutely right!

    I can already see huge business increase for Dalepak, FBA, Shipwire and other fulfilment houses.

    It will be really interesting to see how these changes will affect Royal Mail’s business – chances are they’ll end up in a bigger hole they already are! To double prices when companies like My Hermes lower theirs doesn’t sound like a good business decision to me.

    Scott, if you would like to get some publicity about what you can offer to eBay/eCommerce traders on my blog, feel free to get in touch!

  2. I agree, I’m only a tiny seller of books and videos on amazon but with the increases I’ve already started using my hermes for my heavy books, (I’ve had problems with collect+ which I won’t go into so I won’t use them) and I will also be doing so with any box sets of videos as they are now to large and Royal Mail want to charge me a ridiculous price for posting them.
    I am way to small to consider fulfillment by you guys but it may help others if you tell people the amount of items small businesses need to be sending out whereby it becomes worth using you.

  3. Hi Peter,
    At Dalepak we do not have any minimum volume requirements for fulfilment like others, we also do not charge any set up costs so it becomes ‘pay as you go’ – the handling charges are based on size/weight etc. if you would liek to contact me further so we can speak about your requirements that would be great.

    Scott

  4. In addition to the postage cost wouldn’t there also be the cost of sending pallets of stock to you, storage charge, packaging materials and pick and pack charges?

    Surely all these will add up and it will still be cheaper for a Royal Mail account holder to continue with RM, isn’t the £7.08 you quote for over the counter at the Post Office rather than an account customer?

  5. I have used Ahead Book Services for years, there prices have pretty much stayed pretty static but still a lot cheaper than what I was ever able to get from Royal Mail.
    Theres so little stress for myself using a fulfilment service, definitely recommend using a fulfilment service.

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