Amazon blamed for Royal Mail revenue dive

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Royal Mail Share PriceAmazon is such a behemoth that it is now negatively impacting Royal Mail, so much so that just two days before Royal Mail’s first ever shareholder meeting they’re warning parcels business is down.

In an Interim Management Statement issued today, Royal Mail say that “Changes to Amazon’s minimum order level for free delivery and expansion of its own delivery network have reduced addressable market volumes. Competition in account and consumer/SME parcels has intensified more than expected as other carriers seek to fill capacity in their networks by aggressively reducing prices“.

Amazon Shopping Cart smIt’s pretty amazing that just one company can impact the postal service so greatly, although competition was also a factor. We know many Tamebay readers were negatively impacted by Amazon’s minimum £10 FBA order value, but it’s potential impact on the postal service passed us by. It would appear that Amazon’s sub £10 order volumes must have been costing them millions in delivery charges for it to have such a significant impact on Royal Mail.

Amazon FBAIn addition to the minimum order value, Amazon’s own courier Amazon Logistics are delivering an ever increasing number of Amazon parcels to our houses, further lowering volumes to Royal Mail.

Adding to Royal Mail’s woes is the price of the pound lowering the attractiveness of UK goods to overseas customes. Royal Mail said “Export parcel volumes were lower than expected due to the impact of stronger Sterling and increasing competition in the export market“.

However the surprise news is that letters may save the day as they’re performing better than expected. Although addressed letter (i.e. excluding “to the householder” junk mail) volumes were down 3%, revenues were up 3% “benefitting from the impact of price increases and the uplift from the elections traffic”.

Royal Mail also say that the Universal Service is under threat caused by “unfettered cherry-picking of high density urban areas” by competitors.

It doesn’t look like Royal Mail’s first shareholder meeting will be a happy one. From a high of over £6.00, the share price has plummeted in the last six weeks hitting a low of £4.50 (which is still well above the vastly undervalued £3.30 that the government flogged our postal service for a year ago).

25 Responses

  1. I am sorry I JUST DONT BELIEVE IT!!!!
    Our postie and our post office have noticed LACK of ebay deliveries!!!! so it is not only Amazon who are affecting results. It stands to reason if I, a seller is paying £300 PER MONTH less fees then not only is my business down £3000 PER MONTH…..I am not getting the orders and therefore not taking so many letters to the post office. It is lying and hogwash that it is only the password fiasco which has damaged the ebay selling platform. I and no doubt tens of thousands of sellers have been telling ebay for A YEAR that sales were dropping like a stone……………if there is no decent search, no functioning shopping basket and flatlined on Omniture…….we sellers post less out. If big companies ie ebay and Amazon fix their various issues the Post Office would be busy again.

  2. myhermes deliver to me more regularly than royal mail these days; they have the amazon contract – the guy who delivers (Sat at 5pm by the way) says they have to deliver next day at the latest for amazon. They also seem to deliver small packages, with working tracking, at less cost than Royal Mail

    Royal Mail only need to stand in the queue at any Post Office to watch the confusion caused by thier parcel sizing and constant gotcha pricing to see how much bad pulicity they are getting.

  3. For me it’s Royal Mail’s lack of service and contact, we are their largest user at our local depot, yet I never hear from them, get a visit to check everything’s OK, when there is a problem I have to just call a helpline that every other bugger has to call and wait for a stupid answer.

    Spending the amount I do with them I want more service and contact, hence why we have started to look at moving to someone else.

  4. the first thing we do if we stop selling our product we consider lowering the price

  5. I would imagine that ebays impact of recent changes to fees for Private sellers has perhaps had more of an impact on royal mail than anything else.

  6. it’s not rocket science anyone can see royal mails failings,
    as soon as they were sold they put all the prices up for the sthird consecutive year and competitors(hermes )put them down.
    ebay have constantly squeezed more and more out of the seller and to make any kind of profit the ebay seller has to put these costs on to the goods or sell at a loss, so ebay has become more and more expensive so less sells and therfore royal mail lose out
    I love how hermes have made the small packet market more competitive and in turn lowered prices. All we need now is some real competition to Amazon and Ebay ….come on google we are waiting!

  7. I am surprised that no one has mentioned ‘click & collect’ or Amazon lockers… If an increasing percentage of online orders are being collected by the customer (with delivery bypassing the Postal network), then this was bound to have an impact on the Royal Mail- as well as couriers… I have said it many times before, but if the Royal Mail had introduced ‘Packstations’ as the German post office did, they could have prevented ‘click & collect’ & Amazon lockers getting a foothold in the marketplace….. The other thing to remember (given Ebay’s customer base), is the continuing expansion of Poundland. (I think that 100 more stores were announced today).. This allows buyers to purchase many of the smaller items on that high street, that in the past they used Ebay for.

  8. Royal mail over 1kg 2nd class orb1kg recorded.
    What a total rip off price.

    Thank god for competition!

  9. increased competition in the export market’…. like sending anything from UK anywhere seems to be vastly more expensive than goods coming in.

    The cost of shipping via royal mail to eu and non eu has been pumped up, and seems to be a free profit grab. The price is plainly ‘as much as we can get away with’ and doesn’t seem care about volumes or fairness.

    I’m not surprised volumes are low, who wants to pay the best part of £8 us vat for a 500gram cheap item, plus ebay share and buy from the UK?…..

  10. I have recently been looking for a tracked service for a new deal I am setting up. Royal Mail were 75% more expensive. I am a lazy so and so and would so much prefer use Royal Mail as have everything set up and a convenient daily collection but at those prices just cant do it.

    I even get Amazon to fulfill most day to day parcels now as they are pennies more pricey than Royal Mail but saves me the hassle of storage and picking / packing etc.

    Oh and if a parcel goes missing they refund you without fuss.

    I really like all Royal Mail employees I deal with but its run by clowns

  11. This has been brewing for years. Royal Mail have been steadily increasing their parcel prices year after year until they price themselves out of the market. It was only a matter of time until their prices would be the same or more than that of a UK courier, and now that they are their business is suffering. If it is cheaper to send by Hermes or Yodell or any of the other UK courier companies then what incentive would I have to send it by Royal Mail? I would say that the vast majority of customers are driven purely by the price, not by service or familiarity with a courier.

    I also believe that part of the problem is Amazon and their £10 minimum for free postage. I recently went to place an order for a product which costs £9.50 and was expected to pay something around £5.70 for postage on top. I simply purchased it on Ebay for £9.95 inc free postage and received it 2 days later by Hermes Courier.

  12. Like all above, it’s not the big, bad Amazon boogeyman, its poor ebay sales, simple as that! Our OBA account bill is now down to £800 a month through lack of sales. It used to be £2000+ per month. We actually run more listings now than before. The resulting fees to ebay are halfed aswell; ebay can shuffle figures round to hide this from Wall Street for only so long before the proverbial hits the fan which will be likely just after many of the big ebay bagholders dump their stock (apparently this is in progress now….) and Johnny boy steps down….. (just my small, uninformed opinion)

  13. Of all the companies who could open up a new marketplace Royal Mail is in the box seat.

    Trouble is whilst you can privatise a company within a few weeks it often takes a full generation to change a culture.

  14. Anyone else noticed how dire Amazon Logistics are?

    I just had a delivery here a few moments ago where the driver was incapable of controlling his vehicle. Drove across my front lawn to get out and still made a hash of it.

    This on top of their driver last year who drove into and smashed my gate.

    Their outsourcing to small courier providers with low quality standards affects the brand. That driver is literally the only Amazon representative I’ll see for months.

  15. Note the RM comment about the USO and the whinge about competition.
    RM will be back with the begging bowel to Ofcom asking for yet more tens of millions of public money to shore up the USO and insulate them from making more tough decisions.
    Remember part of the deal was that in return for getting privatised and access to new investment capital RM were to reduce costs in their core network infrastructure to become more efficient and hence reduce dependence on the public purse.
    Time that ‘Lady Moya’ started earning her extremely high salary & benefits package perhaps.


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