Tag: Royal Mail

Postcomm issues consultation on proposal to reject Royal Mail's zonal pricing

Posted by | Aug 17, 2007 | |

Postcomm, the independent regulator for postal services, has issued a consultation on its proposal to reject Royal Mail’s application to charge large mailers – using products which are not part of the universal service – different prices depending on where in the UK their mail is delivered (Royal Mail calls this zonal pricing).

To reduce industry uncertainty, Postcomm announced that it was proposing to reject Royal Mail’s decision on 23 July. This consultation sets out in detail the reasons for the regulator’s decision.

The main reason why Postcomm proposes to reject Royal Mail’s application is because it could result in a pricing structure that would discriminate between different classes of postal users. Postcomm concluded that there could be pricing discrimination between:

– two of the five zones proposed by Royal Mail;
– different areas within the London zone; and
– the proposed zonal retail tariff and Royal Mail’s existing zonal access tariff for delivery of other operators’ mail over the so-called ‘final mile’.

The regulator also found that Royal Mail’s application could be introduced in a manner which would result in unreasonable changes for customers. Royal Mail did not propose a sufficient notification period for customers to prepare for the withdrawal of geographically uniform prices. The company also offered limited help to customers in managing the transition and communicating the necessary changes. Postcomm believes Royal Mail should give postal users a notice period of 12 months before geographically uniform prices are withdrawn completely.

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Lost post drives Royal Mail's compensation bill to GBP 1 m a month

Posted by | Aug 17, 2007 | |

Royal Mail is paying out more than GBP 1million a month in compensation for its failures – including settling vast numbers of claims for lost and damaged items.

More than 800 claims a day are paid out for letters and packages that have been lost. There are another 80 a day for damaged parcels and 150 per day over delayed items.

The GBP 13.6 million annual bill to settle claims represents the tip of the iceberg of Royal Mail failings because the company has become notorious for refusing to pay up over complaints.

It received complaints and compensation claims for 651,582 lost items in the 2006-07 financial year, yet paid out on only 311,005.

The Federation of Small Business claims the decline in services has reached crisis point and is damaging the economy.

Royal Mail’s GBP 13,623,473 compensation bill for 2006-07 is likely to rocket in the current financial year because of industrial action by the Communication Workers Union, according to reports to the federation.

The consumer body, Postwatch, has in the past accused Royal Mail of “cheating” customers by failing to pay proper compensation when items are stolen.

It emerged in June that Royal Mail auctions up to 75,000 items a year that have been lost in the post and not reunited with their owners.

Lost items cause more complaints than any other issue dealt with by Postwatch. Another major problem is damaged parcels.

For lost items, Royal Mail customers can claim compensation up to 100 times the cost of a first class stamp or the market value, whichever is lower. Compensation for damaged goods is awarded at the same rate, but not for glass or ceramics.

The company said that complaints and compensation claims fell in 2006-07 and were around 200,000 fewer than the year before.

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Royal Mail fears GBP 350M strike fine

Posted by | Aug 16, 2007 | |

Royal Mail could face a GBP 350million fine after the recent strikes left services in turmoil.

The warning came as some workers voted for fresh action in a pay and modernization row and simmering disputes threatened to spark wildcat walkouts.

A memo to managers says the strikes “cost us dearly. Our quality of service has been ruined.

“We will miss all targets this year and could be fined up to GBP 350million unless we can convince Postcomm not to apply it”.

“Our relationship with customers is damaged and many are moving away altogether.” The Communication Workers’ Union staged two 24-hour national strikes.

It suspended more action for fresh talks. But up to 5,000 posties in South London have voted to strike on August 24 and 28.

Staff at offices including Streatham and Watford will be balloted after pay was docked. Royal Mail refused to comment.

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Royal Mail posts first loss in six years

Posted by | Aug 15, 2007 | |

Royal Mail slipped into the red for the first time in six years on its first and second- class and bulk business mail, incurring an operating loss of GBP 12m last year after a profit of GBP 197m in 2005-06.

Royal Mail’s operating costs were up GBP 181m at GBP 5.97 bn, despite shedding 6,300 jobs. The postal operator is likely to use the figures, which were submitted to Postcomm, the regulator last month, to press home its demand for an easing of price controls.

In its report, Royal Mail argued that it was suffering from a shrinking market as competition intensified and customers sought cheaper products that had not been anticipated by the regulator when it set its last price regime only 15 months ago.

The company is making an average loss of 5.6 p on each stamped item, amounting to GBP 185m for the year. It also lost GBP 61m on its bulk business mailing services. Its doorstep deliveries on behalf of other bulk mail operators that collect and sort the mail themselves doubled to over 2.4bn items under the new competitive regime introduced in 2006.

Royal Mail’s results also show that it made a slight profit, of GBP 27 m, on those services covered by its universal service obligation. This undermines the argument put forward by some of the company’s supporters that it is hamstrung by its duty to deliver mail to every address in the country at a standard rate.

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Integrated digital and direct mail campaigns win consumer vote

Posted by | Aug 15, 2007 | |

Royal Mail’s consumer study to understand the best uses of different advertising methods also revealed nearly seven in ten people believe that direct mail supports online advertising.

And those who prefer to engage with both direct mail and online advertising spend on average GBP 105 a month on goods and services after receiving a combination of the two – GBP 19 more than those who like online ads only and GBP 34 more than those who would choose only direct mail.

The research, carried out by Quadrangle, identified specific circumstances in which it makes sense for companies to use DM and online when communicating with customers:

• More than half of confident web users (55 per cent) prefer to be contacted by a combination of DM and online

• Nearly three times as many web users think direct mail is more personal than online communications and 50 per cent more said it was more professional

• Only 14 per cent of consumers mostly or always click on online advertising

• Whilst 50 per cent of people were found to rarely, if ever, look or interact with online advertising.

The research also revealed compelling arguments for a combination of email and direct mail:

• 84 per cent of people agree that there is a place for both post and email from companies

• 69 per cent feel that email is best used for supporting or clarifying the mail they receive

• Six in ten agreed that they would prefer a company to approach them first by post, than by email

• Over half of respondents (52 per cent) believe that DM gives a better impression of a company than email

• Eight in ten believe that email is best for communicating brief messages

• 66 per cent prefer to receive detailed information by direct mail

• 69 per cent prefer to receive important or sensitive messages by direct mail

• 71 per cent would rather receive vouchers, brochures or catalogues by mail

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