Royal Mail to be flogged for peanuts

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Royal Mail featThe Royal Mail is set for flotation on the stock market this Autumn in a cut price deal of around £2.5 billion according to The Times. Far from the earlier valuations that priced Royal Mail’s value at nearer to £4 billion it looks like the Government is to rush through the sale of one of the countries assets regardless of price.

It’s quite normal for Government expectations to be pitched unrealistically high – just look at the recent 4G mobile network auctions in June which only raised £2.3 billion, £1.2 billion short of what the Treasury were forecasting.

The big question of course is whether the government should be selling Royal Mail in the first place. Having been a loss maker for many years, Royal Mail has had to pull itself towards profitability but the chances are high the government will end up holding a stake anyway.

Dan and I have a very different view of the Royal Mail and where it should be headed. It’s a public service, albeit one that we pay for, but a bit like the NHS (which we also pay for) everyone benefits from a national postal service.

Do we really want Royal Mail to be sold off? Is it a problem if the government have to dig into the national coffers each year to support the service? Letter business is dying and today’s postal service is all about parcels and ecommerce. If we were to rely on letters only then Royal Mail’s future wouldn’t a bright one but with ecommerce growing ever faster, delivery services aren’t going to become redundant any time soon and Royal Mail should be the crown jewel in UK deliveries.

With a flotation on the stock market pressures on Royal Mail will see more price rises and format changes in the future and that doesn’t support one of the only sectors of the economy that has grown throughout the recession. The country needs ecommerce and ecommerce needs deliveries. If the government really wanted to support ecommerce they’d make sure the postal service functioned with it’s enviable delivery reputation of visiting every doorstep in the country six days a week and focus less on offloading one of our public services when it can’t even achieve a decent price.

13 Responses

  1. I am on the fence about the sale.

    But I think Royal Mail have missed massive opportunities with regards to ecommerce and still missing them now! With the huge network of delivery offices and post offices they have, they should of made it so easy for companies to have collection points at these places. There are some many things Royal Mail could of done to be an early and good adopter of ecommerce but they have missed the boat.

    I as an ecommerce company I feel I receive ZERO customer service from Royal Mail and I am about to move my business elsewhere loosing them around 200k a year…..

  2. Agree completely Chris. This is going to end in a disaster and I for one would be happy to see a few £££’s of taxpayer’s money pumped in every year to keep it from being privatised…

  3. .
    I suppose the way to go, is buy alot of shares when the float happens.

    As a shareholder it should carry some influence when you end up shouting at RM’s customer support when they loose your parcels.

    If everyone that sells online, bought a big chunk, we would all own our own delivery Co.
    Thinking about it though, maybe not a good idea, as we could not blame RM then, just ourselves!!…..

  4. Ive no doubt there are both pros and cons to such a decision and just how the sell off will directly impact online sellers remains to be seen.
    As a third party fulfilment house we are an extensive user of Royal Mail services and i have to say that RM really have failed to adapt to the evolution of e commerce.
    Whilst most of us will have a good relationship with our local postman the front end of RM is severely lacking customer focus and is pretty faceless.
    From rigid collection times through to a lack of space on vehicles RM simply refuse to realign to demand.
    The dinosaur that is RM is predominantly governed by the union hence it easier to turn the other cheek rather than embrace the necessary changes.
    Order by 9pm and its there next day ! – sadly not with RM
    After all a change may be as good as a rest and a little competition never did anyone any harm.

  5. I have a job offer from royal mail to be a postman, to take the job it would mean a slight loss in wage from my current job, im unsure whether the long term prospects are there to take a hit in wage?

  6. Over the weekend I have emailed Moya Greene CEO of Royal mail, I have to admit I was very surprised that she does answer mere mortal’s questions personally, which I guess is very unique for leaders of her seniority.

    The answers I received were pretty standard cut and paste type replies on how Royal Mail is in so much debt, how Government cannot afford to give the investment capital needed to move forward leaving privatisation as the only way to raise capital needed.

    I’m not sure but I am positive that I have read, since tax payers have taken the burden of pensions and after 2012 previous record price increases made record profits one must assume that this year’s extortionate rises must all be about greed and bumping up share prices at the expense of small – medium businesses.

    The 2 questions that were conveniently not answered:
    • Why are Amazon already playing such a big role in distribution centre organisation?
    • Why is there such a variation in what you charge the likes of Amazon and myself for deliveries when the time/energy cost per parcel will be fairly standard? This smacks of the tail wagging the dog!

    After reading this article there will be no surprises who the overseas owners are likely to be all be it under another name.

    Stand by people soon Royal Mail will be run by Amazon for Amazon they played their part in clearing the high streets online retailers are next with the help of our Government.

    Yes I am very bitter about this extortionate price increase but I fear the worst is yet to come, please fellow traders make some noise as I am sure laws are being broken but at the very least the morality of the whole issue is in question.


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