Second anniversary of the liberalisation of the UK postal market

Postcomm has found competition in its second year is starting to benefit more and more mail users, but has urged all operators to rise to the challenges posed by the digital age.

Research commissioned by Postcomm in 2007 found the benefits that large mailers have been experiencing since the market was opened have now started to slowly spread to smaller businesses. However, much more progress is needed and the challenge posed by the growing number of alternatives to mail confirms the need for mail operators to continue to pursue greater innovation.

The market research, which formed part of Postcomm’s annual Business Customer Survey, revealed that although Royal Mail remains the dominant operator, one in five small and medium mailers and more than a third of large mailers are using more than one mail provider.

One in five respondents have explored alternatives to mail and have moved some of their mail to other media in the past 12 months, this confirms the need for all postal operators to place more emphasis on customer service and innovation.

More than half of respondents agreed that competition has improved choice and more than a third believe competition has improved Royal Mail’s quality of service.

Postcomm’s annual Competitive Market Review (CMR), found that mail volumes were 2 per cent down on last year, but there are indications that direct mail is growing in sectors such as building societies, charity, and health.

End-to-end competition has declined by four million items and stands at less than one per cent of total mail volume, but mail volumes collected by ‘access’ operators and delivered by Royal Mail have more than doubled and now represent 19 per cent of revenue-derived mail volumes.

The research shows that a larger number of small businesses are beginning to benefit from competition, but much more needs to be done before small firms can experience the full benefits of competition that larger mailers have seen since the market was opened.

Awareness of the opportunities created by competition among all businesses is growing and many mailers are now using more than one provider. Indeed, Postcomm’s research found that businesses were overwhelmingly in favour of competition in the postal services market.

Postcomm has found there is plenty to be optimistic about, but the findings of the Business Customer Survey also reaffirmed the need for all mail operators to continue to innovate to meet the challenges raised by alternative media. Although respondents still value mail as a communications medium, more businesses have moved some of their mail to other media such as email during the past year.

Postcomm believes one key to the success of mail as a medium is to focus on getting more value into the product through innovation which can enable the sender to generate more revenue or provide greater satisfaction for the recipient.

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