Royal Mail launches parcel pick-up service

Royal Mail launches parcel pick-up service

Royal Mail will start collecting parcels and mail from people’s homes from Wednesday as it tries to grab a bigger share of the parcel market.

The firm is trying to capitalise on a rise in online shopping which has been accelerated by the coronavirus crisis.

Royal Mail has seen parcel deliveries increase in recent years but is still on track to make a loss in 2020.

The move to collecting could be beneficial if the company can work out logistical issues, an analyst said.

Royal Mail, which already delivers parcels, is joining an already crowded parcel-collection market where it faces rivals such as DPD, Hermes and DHL.

Its Parcel Collect service, which has been trialled in parts of the west of England, will be available every day except Sunday, and there will be 72p charge per parcel, plus postage costs.

Pre-paid return packages can be collected for 60p per item.

The firm said it was “one of the biggest changes to the daily delivery since the launch of the post box in 1852”.

The firm is under pressure to find new revenue lines after seeing the number of letters it delivers halve over the last 16 years due to the popularity of email.

During that time its parcel deliveries have increased greatly, and it now hopes to tap into the booming returns market, as online shoppers seek to change items bought online.

The company had already made moves to enter the parcel market, launching parcel post boxes last year.

However, historically Royal Mail has underinvested in its parcel services, and only launched automated parcel sorting in 2017, according to Hargreaves Lansdown equity analyst Nicholas Hyett.

Mr Hyett said the new service would see a “massive increase” in its capacity, which would require a “significant amount of investment” and a “high degree of planning and organisation” which had sometimes been lacking.

However, he said that if Royal Mail managed to get it right, it could help mitigate losses it incurs through its obligation to provide a “universal service” across the UK.

For example, currently it must deliver to more isolated places in the UK which drags on its profits. But being able to collect from those locations could help it maximise its returns, Mr Hyett said.

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