Royal Mail profits down, Amazon & Whistl blamed

By Dan Wilson November 20, 2014 - 5:46 pm

Royal Mail saw a drop in profits in the first half of 2014. Operating profits (excluding transformation costs) declined to £279m (21%) in the six months to 28th September.

Whilst parcel volumes grew by 2%, pricing pressure (remember they reduced some prices?) meant that Royal Mail’s UK parcels revenues declined 1% to £1.5bn in the period. UK letter revenues rose 1% to £2.2bn but volumes dropped 3%. Revenues were aided by price increases and election mailings (for the European Election and the Scottish Referendum).

The cause of the drop, according to Royal Mail was stiff competition. Amazon’s own efforts were cited as hampering growth and whistl (previously known as TNT) also called outs a key competitor.

Moya Greene, Royal Mail’s chief executive, said: “The UK parcels market remains challenging. As the pre-eminent UK parcels delivery company, we are targeting a number of new, growing areas, and delivered 2% volume growth in a competitive market. We had a better than expected performance in UK letters.”

Of course, one of the real problems has been Royal Mail’s slow innovation. Even a year into privatisation is hasn’t proved nimble in utilising its assets to respond to the new trends in delivery: same-day, convenient pick-up points, weekends.

I find it particularly absurd that the opening times at my local sorting office, so I can pick up parcels I’ve missed, only offer one time after 14:30 a week and are closed entirely on a Sunday.

Royal Mail also noted that the universal service was proving a burden to their competitiveness, Tamebay wrote about that earlier.

  • Bunchy
    3 years ago

    Royal Mail seems to be a business that can only get 1 thing right and that’s delivering mail. And that’s down to the individual people working as a chain together to get it done.

    Their list of account types for businesses is staggering, the names of services in almost contant flux.
    Their means of communication with account customers is laughable and must be a huge drain on profits and resources. There are not many months where I don’t received 3 peices of expansive looking fold-out information leaflets about services I don’t have, don’t want, don’t need, and becuase “they’ve changed the name again”, I haven’t heard of.

    Privatisation doesn’t seem to have done them any favours, they’re still blundering about like moths.

    It’s s shame really.

  • anniescats
    3 years ago

    They need to run things right and yes there is competition so they need to be competitive!

    They reduced the size of small parcels ridiculously, forcing lots of us to try out couriers instead. And given the push, we found the couriers also gave insurance! And were cheaper! And gave tracking! So then they increased the size of small parcels to 2 different shapes your parcel had to fit into. Then they realised this was just daft and have recently combined those into one bigger shape!! Too late Royal Mail, I am a only a small business, but mine has now gone elsewhere.

    They have also stopped collecting from my local post boxes after 7am! I sell lots of cards, and if I want to post same day instead of popping to the local box, I now have to go to the shops and find a place to park – not funny – or they don’t go until the next day. Not found a solution to this yet though.

    Come on Royal Mail you can do better. No wonder profits are down.

  • JD
    3 years ago

    As soon as we can ditch Royal Mail we will. They lose parcels and really do not care about it at all and we are a big account for them

  • Steve
    3 years ago

    What a load of Bollocks!

    RM profits are down because they whacked up prices to such a degree that its now cheaper to send ANYTHING above Large Letter by courier.

    I guess they thought it necessary to increase costs by about 30% in 2013 and a further 15% in 2014 in order to make Privatisation attractive.

    Add to that the price increases in 2011 and 2012 and RM have almost doubled prices in 4 years whilst at the same time service levels are been reduced.

    No suprise that couriers are doing well and RM revenues are falling.

    Personally, 4 years ago 95% of all my UK orders went RM, now its about 3% (and thats only if its Large Letter or smaller).

    RM privatisation is a great example of selling the family jewels. In the long run it will bring no benefit to the customer. The only winners are institutinal investors. Bank of England’s gold sale is another example of stupidity. Time and again we have seen this happen and it never works in the long run (think Gas, Electric, BT, Trains….. etc). Essential services and national assets should remain in the public sector. Once privatised prices jump and we all foot the bil, and for what? A small injection into Government coffers? Is it really worth it?

    Yet again, we fail to learn from the past.

    • Jon
      3 years ago

      From one eBay Business seller to another. Here is my eBay message to another seller this morning.

      This morning I jumped out of bed ran downstairs in my dressing gown to
      answer the door in approx 25 seconds. I saw a Royal Mail van driving
      away & my parcel on the doorstep in the rain. There was no “while you
      were out” card. The driver probably did not wait/park because there was
      a tight parking space directly outside my house which meant he would
      have spent probably a minute fitting into it if he was a good driver. I
      phoned my local royal mail sorting office & was told my regular delivery
      van driver is off sick. As an eBay business seller & as I rely on RM
      myself I have to let you know & not to blame you for it. Some buyers
      might blame the seller for this. I suggest you call RM & express your
      feelings about their under performance so they can improve their
      service. Leaving parcels on doorsteps, no while you were out card &
      waiting less than 30 seconds is unacceptable. I’m sure you will agree. I
      hope you don’t ignore this as you can make a difference. When I spoke to
      RM customer service they told me that I should not call my local sorting
      office & that I should only call customer service complaints. Little
      did they know I already spoke to the sorting office. Make what you will
      of this. I was given a REF No by customer complaints & told the matter
      would be dealt with internally & that I will never find out why my mail
      was left on the doorstep. The person I spoke to in customer complaints
      was not in the slightest bit sympathetic. The postman at the sorting
      office said he was very sorry & would talk to the driver & tell him to
      wait next time. I know who I would rather
      speak to next time.



    • Steve
      3 years ago

      Complain because I can make a difference!! Get real.

      Sorry, but life is too short and these days complaining usually does little except to wind yourself up so its only worth bothering with if you can get something worthwhile from the exercise.

      The last time I bothered to “complain” (utility company) Customer Services told me that they would connect me to their “Complaints Department”. Yes, they actually had a department called Complaints! How utterly ridicolous is that?

      Personally, I will only bother complaining if I can gain a decent “Goodwill” payment for my efforts. My approach from day one is to keep a detailed diary: I get the names, position, and location of all I speak with especially managers (usually useless and seem to read from a book), record call times and duration, details of discussions, and basically let them turn what was something small and simple into a much bigger issue.

      CS rudeness is a huge benefit to the diary (ofton happens if you call at end of day when they are all pissed off and frustrated from dealing with problems). Then, once I have a huge issue due to their utter incompetance, I call the CEO’s office (first research his name and ALWAYS try to get a direct dial number – I will call a few times but if I have a direct dial for him or PA then I call just after 6 when the PA has gone home and he is likely to answer the call). Then you relate the diary (in length and detail which both bores and shocks him!), get him to agree how badly you have been treated, hon unfair it is, how unreasonable his staff have been, point out the value of your time, explain how if you treated your customers like that it would cost you dear, highlight how if your own staff behaved so poorly in sorting such a simple issue and were rude they would be dismissed immediately for gross misconduct, etc…

      Once he agrees you have been traeted terribly then go for it. Always start by saying some form of compensation is due and suggest a stupid high amount (use the word Compensation – these companies never pay compo as that is an admission of liability). When he says they never pay “Compensation” and argues the amount you are asking is too much, change to “Goodwill” ask him what he proposes. Once he makes an offer the intent to pay Goodwill is on the table and then you reiterate the diary in order to justify a huge payment and finally meet somewhere in the middle. Basically you bury them for as much Goodwill as possible. He is the CEO so he does not want to discuss this again later/tomorrow, he wants a resolution.

      This doesn’t work with all companies (they have policys after being screwed many times) but some companies are still worth the effort. Its all totally honest, after all, they created the initial problem and then made it a bigger issue by being totally incompetant. If you don’t ask you won’t get.

      My notable sucesses include: BT = £6,500 (over 3 complaints); Orange = Package totalling over £1,000; O2 = Package with Platinum Number (alone valued at £1,000), total goodwill value £1350; Mercury Communications = Cancellation of 2 bills, value £900; 3 Mobile = Two accounts, value £600; plus loads of much smaller ones including Hitachi, Dominoes, eBay, Dabs, etc, … I actually can’t remember all the others as the list is long.

      Tip: Only bother if its worth the hassle (£200 is my minimun “can I be bothered level”) and don’t ever bother with banks (£50 max) or Ryan Air!

      Up the Revolution! 🙂

    • adolf H
      3 years ago

      Ive been really happy with hermes for any thing signed for and tracked. Above 1KG. Before i was also using RM for all goods. What i really like about hermes is how easy it is when things go missing to claim. They dont loose much. But whenever they do its no hassle to claim. Unlike RM (No claims for PP anyway) and every other carrier out there is hardly worth the effort to claim because you never win. Even when they admit its their own fault.

  • northumbrian
    3 years ago

    royal mails dominant market position was undermined by being state run ,
    hands were tied when competition came along they could not alter methods quickly ,
    buy ,or compete with private parcel companies due to bearuacracy and regulations , in fact in some situations due to state regulations they are forced to actively help their competitors

    • Steve
      3 years ago

      Do you think “hands tied” has changed?

      Same management team, same ingrained “Public Service” idology except now they have to please stakeholders which they don’t understand,and can’t do unless they cut staff, raise prices and slash services, and even that won’t really work.

      My pridiction is there will probably be some scandle and then a scapegoat, quickly followed by major management changes – isn’t that what usually happens? (My favorite was death after bondage, found tied up and half naked in stockings with an orange stuffed in his mouth!!) Some of you will remember it – he was an MP! 🙂

      Give it two years and the Universal Service will be scrapped (contractually due to run to 2020) and then postage rates will be based on distance. People in remote areas will have to pay a premium and will probably have to settle for only two or three of deliverys each week.

      Downhill untill change at the top, then it will be all about profit for stakeholders.

      RM is already screwed but eventually all these “Privatised” failures will get Re-Nationalised. Sadly that won’t happen anytime soon.

      Long live the Revolution! 🙂

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