eBay warns removing Royal Mail parcel price cap to damage business

Category: Operations
eBay warns removing Royal Mail parcel price cap to damage business

Last week, Ofcom announced that they would retain the Price Cap for 2nd Class letters, but saw no need to retain it for parcels. This comes as Royal Mail reported an adjusted operating loss of £419 million for the last financial year, compared to £416 million profit the previous year.

Unlike with letters, competition in the parcel market has grown since our 2019 review, and we expect that it will continue to grow. Competition in this market limits Royal Mail’s ability to raise prices, and has actually led to its prices reducing in real terms.

As a result, it’s our current view that Royal Mail’s parcel services should no longer be subject to a safeguard cap. Royal Mail would, however, continue to be required to set a single price for these services across the UK.

These parcel services will also remain subject to the general requirement for universal services to be affordable. If during this five-year period we have material concerns regarding affordability, we can step in to protect consumers.

– Ofcom

Speaking in the Telegraph, eBay UK General Manager, Eve Williams says this could pile further pressures on small businesses, who we are all well aware are already struggling to balance the books with increased costs from suppliers and a slow down in consumer spending.

We urge Ofcom to closely monitor the situation, so that prices can be kept as low and stable as possible for the many hundreds of thousands of small businesses who sell their products online, and for the millions of buyers who rely on these businesses for their shopping needs.

– Eve Williams, UK General Manager, eBay via Telegraph

Currently Royal Mail are still struggling to delivery the post, and as you might expect the CWU are calling for action and a new CEO to replace outgoing Simon Thompson saying:

There has not been a day of strike action for almost 7 months now. For Royal Mail to still be using this is a reason for quality failures is frankly embarrassing. In addition, the company points to high sick absence, once again without any self-reflection. 

The treatment of frontline workers has been appalling and has led to record amounts of postal workers leaving the industry and a crisis of morale.  The culture of imposition and fear sees workplaces across the UK stripped to the bone and incapable of fulfilling anywhere near the service the public deserve. 

Royal Mail is at a crossroads. It is a company without leadership or direction. The appointment of a new CEO is the most crucial in Royal Mail’s history. It must be someone with a completely different vision. They must also be willing to work with the union and end the failed command and control culture – or the company will not survive.

– CWU

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