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Online retailer speaks out as Royal Mail changes parcel pricing

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Online retailer Mobile Fun has spoken out about changes to the Royal Mail’s parcel services that come into force today.

This year’s annual price rise comes alongside a 2.5% fuel surcharge on deliveries made under parcel contracts, and changes to parcel bandings that will remove the 0-750g band into which most Mobile Fun postage previously fell.

Instead, the PacketPost band will now cover parcels of up to 1kg. Contract parcel rates have risen today by an average of 5-6%, Royal Mail confirmed today.

“We have introduced a new parcels portfolio to make it simpler for our contract business customers and more accessible to small businesses,” a spokesman said.

“We have thought carefully about our new prices for 2013. Where possible we have limited any increases to below or around the current rate of inflation. For some services the increase is higher than inflation as we need to ensure we more closely align our prices with our costs while remaining competitive.”

But the loss of the 0-750g service will have a major impact on Mobile Fun, says its operations director Ruel Taylor. He says that while the mobile phone accessories pureplay has worked to keep postage costs down through initiatives such as reducing packaging and wants to avoid passing on the price increases to its customers, it will nevertheless become a “daily battle for online retailers to keep costs down without compromising customer service and delivery times.”

He continued: “Many businesses, like ours, simply do not have sufficient margins to continue offering next-day delivery at an affordable low price for our customers. We have no choice now but to begin offering our customers cheaper and therefore slower, delivery services, which is a bitter pill to swallow.”

Taylor predicts that Royal Mail customers will over time be forced to look for alternative services, as annual increases continue. “At Mobile Fun,” he said, “we’re about to trial the introduction of courier delivery to nationwide collection points, allowing customers to collect their parcel at a convenient time.”

He added: “Mobile Fun urges Royal Mail to reconsider its pricing structure and try to accommodate the needs of its business customers. We would like to continue to support Royal Mail but the increasing costs involved mean that we must consider alternatives, to continue offering best value for money to our customers.”

Commenting on the fuel surcharge, Royal Mail said today: “We are introducing a fuel surcharge for business contract parcel products from today (2nd April 2013). Fuel surcharging is established practice in the parcel delivery market. This will bring Royal Mail in line with other parcel delivery companies. The charge we will apply compares very favourably to fuel surcharges already applied by other UK parcel delivery companies. A fuel surcharge will not apply to non-contract business and consumer parcel services. The rate will be 2.5% from 2nd April 2013. This is considerably lower than the current charges applied by other UK parcel carriers (March 2013) of 7%-10%.

“The price of fuel is a major element of parcel delivery costs. Our fuel costs are at a record high – up more than 40 per cent in the last five years – and volatility in the price of fuel means that we need a more effective method of reflecting this in our price.

“The specific business parcels services affected are: Royal Mail Special Delivery Guaranteed by 9am, Royal Mail Special Delivery Guaranteed by 1pm, Royal Mail Tracked 24, Royal Mail Tracked 48, Royal Mail 24, Royal Mail 48, Special Delivery Guaranteed Returns, Royal Mail Tracked Returns, and Mail Order Returns.”

Are you affected by the Royal Mail’s changes to parcel banding? Let us know what it means for your business in the comments below.

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