13 December, 2014

Christmas postage bankruptcy

There has been quite a bit in the news recently about Royal Mail and Amazon. Specifically, the complaint that by setting up its own parcel delivery service and so removing (some) of its custom from Royal Mail, Amazon is cherry picking the lucrative part of Royal Mail’s service, leaving Royal Mail with the much-less-lucrative rural delivery market.

I have been wrapping and sending off Christmas gifts and cards over the past few days. Last week, I took two parcels (one national and one international) and one card (international) to the Post Office. The total price for sending these three items was in excess of £40! I was astonished—the cost of delivery was almost more than the cost of the gifts themselves. My 2kg parcel to Southern Ireland cost over £26 (via so-called globaleconomy!!); my (almost) 3kg parcel to Scotland cost over £12; and my letter-sized card to Italy cost 90 pence. And the lady behind the counter assured me that this was via the cheapest services available. She was right—I checked online when I got home.

I am sure that Royal Mail would provide me with many reasons for the enormous cost of delivering my items. But the bottom line is that it is just too expensive for the consumer. I won’t be using Royal Mail to send my Christmas gifts next year because I can’t afford it! I will have to explore alternative options. And, yes, this may well include getting my gifts sent direct to my family by Amazon using, I assume, Amazon’s own parcel delivery service.

I don’t know anything about the ins and outs of parcel delivery and the associated cost to the delivery company. However, based on my personal experience, I can understand why Amazon has chosen to set up its own company rather than using Royal Mail. In the end, if there’s a much cheaper and equally reliable alternative, any sane person would take the cheaper option. And as for competition and cherry picking parts of the market...well, that’s how capitalism works. If someone can provide an equivalent service cheaper, then they are likely to gain custom. Similarly, if you are a privatised company, you can’t just expect to rely on people’s goodwill if you don’t provide them with value for money.

I wonder how Royal Mail survived prior to the advent and growth of Amazon? Not easily, if my memory serves me correctly, which, I suppose, is the problem.

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