Royal Mail’s strategy in the run-up to privatisation could have a significant impact on other carriers, according to a study by Apex Insight.
Consumers and small businesses have traditionally used Royal Mail. However, the growth of C2C parcels market has attracted more competitors, the report, Consumer & Small Business Parcels Services: market insight report, points out.
At the same time, the Royal Mail is going through a transformation, taking steps to improve its profitability as it prepares itself for privatisation. This has included increases to its prices with particular impact on certain size and weight bands.
As a result, in many cases, it has become significantly more expensive than some of the newer alternatives. While it has been successful in growing volumes from business customers such as home shopping retailers, growth for other providers to this segment has, to a great extent, been driven by those consumers and small businesses who have switched away from it. Such defections have not yet reached a tipping point but are likely to continue, given its recent price increase, it says.
It points out that growth prospects for the segment are good. However, the report warns that if Royal Mail’s strategy were to change “the effect on other players could be significant”.
