Royal Mail wins new contracts as it expands delivery and collection services for retailers
Royal Mail has won new contracts from multichannel and ecommerce retailers including John Lewis , House of Fraser and Asos following moves to improve its support for ecommerce sales.
But it says that the potential growth of its parcels business was being held back both as a result of Amazon's move to launch its own delivery network and an estimated 20% annual spare capacity in the e-retail parcels market.
"These factors are putting pressure on prices across the industry," said Royal Mail chief executive Moya Green as she reported half-year results today. "While we have seen growth in account and import parcels, competitors continue to target the attractive consumer/SME and export parcels market segments."
Royal Mail's recent initiatives have included an online returns portal and a link-up with Alibaba , enabling UK shoppers to have quicker delivery of their purchases from Chinese exporters. Now Royal Mail is to extend its local collect network to its enquiry offices, making a total network of more than 11,700 Post Office branches and offices. At the same time the letters and parcel carrier is investing in IT including the increased use of barcodes and finger scanners, and has taken a stake in online marketplace integration specialist Market Engine.
It plans to move into parcel automation, and will install its first parcel sortation machine in its Swindon depot in December before adding more in its busiest mail centres over the next two years.
Royal Mail is also trialling in North West England doorstep collections for marketplace sellers and small and medium-sized businesses to have parcels collected next-day from their home address.
Royal Mail sales of £4.39bn in the half-year to September 27 were slightly down on the £4.48bn reported at the same time last year, while pre-tax profits of £240m were 16% down on the £287m reported last time.