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Amazon blamed for Royal Mail revenue dive

By Chris Dawson July 22, 2014 - 10:10 am

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).

  • 3 years ago

    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.

    • YVONNE RONALDSON
      3 years ago

      I totally agree with this . My one person Ebay micro business is dead . I’me now a stranger at the P.O when I was there everyday. Previously a dozen sales on Monday, several per day and worried if no sales in a single day . Now I rarely get a sale!Postage increases last April were the first nail in the coffin followed by the many changes that Ebay made that are beyond our control. Broke my heart. I’me now into my 8th week of a new Etsy business and sales have been good so far. Not the answer for everyone but fine for me.

    • Ian A
      3 years ago

      Agree, eBay seller here – I was posting 3-5 a day until April, 10-15 on a Monday after a good weekend. Then whatever happened eBay changes, then google downgrade etc. I spent £800 on postage one month earlier this year , last month it was about £280 so surely it’s not all Amazon. Just look at the eBay business seller forum for slow sales threads !

    • mw
      3 years ago

      Let’s not forget that ebay & Royal Mail have entered some sort of deal over managed returns. Royal Mail are hardly going to say anything that is going to harm that deal are they? Politically it’s easier to blame the business that is working directly against Royal Mail…. Amazon.

  • Steve
    3 years ago

    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.

  • Stuart
    3 years ago

    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.

    • fusion
      3 years ago

      Yeah, I agree with this. Out of the services we have, Royal Mail is the one we pay the most too them yet they are the least we get contacted by. Normally it is once a year about trying to add more services on around the annual price increase.

  • tinker
    3 years ago

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

  • Robert Mansell
    3 years ago

    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.

  • philblue
    3 years ago

    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!

  • Mukesh
    3 years ago

    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.

    • Dan
      3 years ago

      that packstation looks like a great idea – just had to wiki it!

    • Gerry007
      3 years ago

      .
      I totally agree with Mukesh..

      RM had it all in place in their sorting office network way before click etc, & Amazon lockers but simply did not exploit their premises.

      Many sorting offices have large areas called corridors at entrances where they could have (and could still) start a self collect service of locked lockers when the office is closed.
      Customers would register (Like packstation) and have access to this area to collect your parcel 24/7.
      This would be a similar area like some banks have where their ATMs are in the building not on the wall outside. Access is by swiping their debit/credit card to open the door & gain entrance.

      Good PR too, as RM could build a larger data base of registered users, just by registration & issuing a RM access swipe card.

      Mind you a service that RM/PO already have is now little used where the customer asks the sorting office to drop off at the local Post office, but this was expensive in the past.

  • davelovesebay
    3 years ago

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

    Thank god for competition!

  • davelovesebay
    3 years ago

    ‘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?…..

    • Lynne
      3 years ago

      I agree with Andrea it is more likely the drop is due to the lack of sales on Ebay . My fees this month were £129.00 I usually pay fees of over £500 per month , sales are at an all time low and I believe like Andrea Ebay have messed up the search facility and adding the 10% postage fee makes a more expensive shopping experience on Ebay for buyers. I take my parcels to the sorting office and the two guys there are twiddling their thumbs with very little to do. My supplier asked me if I had found a cheaper supplier, my sales are down so it goes down the line . The trouble is Ebay take no notice of the hundreds of posts about the search facility and slow sales. Perhaps Royal Mail should have a word with them lol,.

    • Gerry007
      3 years ago

      .
      Why?, RM say it is Amazon……..

    • PayPalUser
      3 years ago

      If you believe everything RM, eBay and Amazon say you’re deluded.

  • 3 years ago

    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

  • L
    3 years ago

    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.

  • john
    3 years ago

    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)

  • JD
    3 years ago

    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.

  • David Brackin
    3 years ago

    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.

  • Cambridge_Blue
    3 years ago

    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.

    • Gerry007
      3 years ago

      .
      The Government’s privatisation is going to cost us (the taxpayer) a great deal over the next few years when they took the RM pensions into the public domain..

      A person I know has just accepted voluntary redundancy with RM. He was a all working life employee & received over £35K cash PLUS a nice little weekly pension of £300..

      I sometime wonder to myself (more so recently) why on earth I have spent my whole working life working for myself & supporting many others as employees/staff.
      Seems the employees regularly end up far better off!!..

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