Postwatch’s evidence to the Independent Review of the Postal Market

Postwatch, the watchdog for postal services, has today submitted to the Independent Review Panel answers to forty questions principally relating to the provision of the universal postal service (UPS). Postwatch also submitted and published the research it commissioned about the value of the universal service to customers.

Millie Banerjee, CBE, Chair of Postwatch said: “Postwatch is doing all it can to help the Independent Review Panel come forward with recommendations that overtly take account of customer needs. Postwatch is a keen supporter of a sustainable universal postal service which meets the needs of senders and receivers. We are acutely aware that declining mail volumes and the recent announcement by the Royal Mail that the UPS has become loss making give customers real cause for concern about the future of the service they value.”

Postwatch’s research is wide ranging and assesses; whether the current universal service fulfils customer needs and expectations, the sustainability of the universal service in the light of market changes; and alternative mechanisms for funding the universal service.

A summary of the research into the User needs of the Universal Service is attached at the end of this release. The main points from the customer perspective being:
• Next day delivery, reliability (in terms of published performance target being met) and deliveries to the door are valued;
• The frequency of collections should be included in the UPS but no strong preference for more than 5 days a week;
• Strong support for one price goes everywhere postage and recognition that current postage prices are affordable; and
• Homes but not all businesses value 6 deliveries a week. Postwatch, the watchdog for postal services, has today submitted to the Independent Review Panel answers to forty questions principally relating to the provision of the universal postal service (UPS). Postwatch also submitted and published the research it commissioned about the value of the universal service to customers.

Millie Banerjee, CBE, Chair of Postwatch said: “Postwatch is doing all it can to help the Independent Review Panel come forward with recommendations that overtly take account of customer needs. Postwatch is a keen supporter of a sustainable universal postal service which meets the needs of senders and receivers. We are acutely aware that declining mail volumes and the recent announcement by the Royal Mail that the UPS has become loss making give customers real cause for concern about the future of the service they value.”

Postwatch’s research is wide ranging and assesses; whether the current universal service fulfils customer needs and expectations, the sustainability of the universal service in the light of market changes; and alternative mechanisms for funding the universal service.

A summary of the research into the User needs of the Universal Service is attached at the end of this release. The main points from the customer perspective being:
• Next day delivery, reliability (in terms of published performance target being met) and deliveries to the door are valued;
• The frequency of collections should be included in the UPS but no strong preference for more than 5 days a week;
• Strong support for one price goes everywhere postage and recognition that current postage prices are affordable; and
• Homes but not all businesses value 6 deliveries a week.

Notes to Editors
1. All the information submitted to the Review Panel can be seen at www.postwatch.co.uk under policy documents.
2. The main research was undertaken collaboratively by Accent, Rand Europe and cebr.
3. Postwatch also subsequently commissioned Ipsos MORI to research customer preference for which days of the week they would prefer mail to be delivered on should the UPS be reduced from six to five days. In this context it should be noted that there is a strong social customer preference for deliveries to remain at six days a week. However, if a change becomes necessary customers, in general, value deliveries Monday to Friday more than they do at the weekend.
4. In addition, Postwatch undertook further research with bulk mailers about their preferred days for delivery to their customers. Also published today.

More information
Contact Andy Frewin on 020 7259 1223 or 07900 263 004 or
Daryl Barrett on 020 7259 1239 or 07900 263 020

Users Needs of Universal Service – Postwatch Research

Summary
1. The research covered the range of users – social, small and medium sized businesses and bulk mailers – and used both a questionnaire and ‘stated preference’, examining respondents' willingness to pay for the inclusion of elements in the universal service
2. Whilst the current specification of the UPS broadly meets customers’ needs, there are some enhancements which could be made, particularly in the areas of speed of delivery and reliability. Likewise there are features whose inclusion could be reviewed, notably the six day delivery and some of the additional services. Additionally, a high value was placed on the inclusion of 1st class mail compared to its comparative affordability, with a willingness to pay a significant premium for a next day service.
3. If the standard specified is low, for example 3 day a week delivery or collection, customers do not value having it in the UPS; it is better to have no standard specified than one which is perceived to be inadequate.

Delivery Issues
4. Mail arriving on time and delivery to the door rather than the boundary are both important to customers and are selected for inclusion but are not currently in the UPS. Four in ten say that delivery to the boundary of their premises would inconvenience them.
5. Delivery is an important part of the universal service but a 6 day a week delivery is not essential for businesses (often closed at the weekend) and is not valued more highly than 5 days for inclusion by such customers. Further research with social customers shows that if deliveries were limited to five days a week they would opt for weekday deliveries.
6. Customers place a value on having delivery speed and reliability included in the universal service (these are elements currently included in Royal Mail’s licence).

Collection Issues
7. A 6 day collection is not essential for businesses; both business and residential customers would like collection frequency within the UPS but there is no strong preference for 6 over 5 days.

Pricing Issues
8. Overall, there is a clear preference for keeping the choice of first and second class within the universal service; residential customers in particular need a first class service and there is willingness to pay a significant premium for a next day service.
9. However, 53% of residents agree that they would not be affected if Royal Mail offered only the one class. Postwatch is proposing to undertake further research into social customer use of 1st class mail and how they deal with their mail more generally (testing behaviours on urgency, choice of product and price).
10. Three out of four believe that postal prices are affordable for most people and few residents would rather see a reduction in standard than an increase in prices.
11. There is strong opposition to a move away from uniform pricing.

Products
12. Features such as overseas mail, parcel services and redirection are also valued.
13. Bulk Mail senders are keen that there should be provision for bulk mail products within the UPS, broadly on the basis that it provides for uniform prices but Postwatch is undertaking some follow-up research with these customers on this issue.