Royal Mail Price Hike is Dangerous for Small Businesses says Shiply

The rising cost of sending letters and packages could see small businesses turning to alternatives according to UK delivery marketplace

Shiply Limited

London, UK, April 2012 : Planned price rises by Royal mail will see the cost of a first class stamp rise from 46p to 60p at the end of this month. Reviews by Ofcom, pressure on the mail service and continued financial losses have led to the product-wide price hike.

The cost of sending a parcel of up 750g will increase from a variable cost with a minimum of £1.58 to a flat rate of £2.70 per parcel, a potential rise of more than 70%. The changes, which come into force at the end of this month, could cause disaster for many small businesses and sole traders.

The prices of larger parcels up to the maximum of 20kg remain unchanged, so those paying for furniture delivery for example will not be hit by the price rises.

The Federation of Small Businesses revealed that some 84% of small firms are dependent on Royal Mail for their postal needs meaning that overheads could soar for a huge number of UK firms.

For those businesses that rely on the postal service for high volumes of direct marketing and delivering products the direct impact will be difficult to bear meaning the cost may have to be passed to already squeezed consumers.

One business told the BBC they were stockpiling stamps before the price rise, evidencing the panic among some SME’s over the impact of the rise. Many product led businesses may be turning to courier services for their package delivery needs, provided that independent delivery services don’t follow Royal Mail’s suit.

Robert Matthams, Managing Director of online delivery marketplace voiced his concern over the price rises’ effect on businesses and how couriers might capitalise on Royal Mail potentially pricing itself out of the market.

“For those small companies that are heavily reliant on Royal Mail, this price increase is going to be hard-hitting, any business who still mail their customer base or send out product samples will be facing a substantial increase in costs.

Private couriers will be able to handle some of the business from the postal services’ fallout, but will need to ensure that they are offering an efficient and cost effective alternative to remain successful.”

Founded in 2008, online marketplace Shiply matches people to removal companies and goods transporters travelling similar routes. The site enables customers and transporters to make use of spare capacity that is present in more than 50% of delivery vehicles. Reducing wasted trips means Shiply helps to reduce CO2 emissions on road deliveries as well as saving the consumer up to 75%.

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