Online retailer blasts Royal Mail for price hikes

INCREASES to Royal Mail’s prices and package bandings will hit many SMEs in the West Midlands hard, an online retailer has said.

Mobile phone accessories business Mobile Fun said the new pricing and the introduction of a fuel surcharge would hit margins as firms were forced to pass on costs to their customers.

Ruel Taylor, Mobile Fun’s Operations Director, said: “We are disappointed by the Royal Mail’s latest price rises which will, once again, impact disproportionately upon online retailers.

“We recognise that Royal Mail is undergoing a period of change and undertaking cost saving initiatives. However, during a recession, it is unfair that loyal business customers and consumers should have to shoulder additional costs for the same services.

“If Royal Mail is to remain competitive in the long term, it must evaluate its relationship with the growing online retail sector.”

He said that each year online businesses had to brace themselves for Royal Mail’s next price rises, which were frequently above the rate of inflation.

“This year we are being hit by rising costs across the board, starting with Royal Mail introducing a 2.5% fuel surcharge on deliveries. Although Mobile Fun receives a volume discount on Royal Mail delivery services, the addition of fuel surcharges will effectively nullify this discount,” added Mr Taylor.

He said Royal Mail would also be changing its price bandings at the sub-1kg level to remove the 0-750g banding into which the majority of the firm’s postage fell. So, from April onwards, its packages will be charged at a much higher rate.

“Mobile Fun will strive to do all it can to avoid passing on this increase to our customers. For example, we have been working to reduce individual product packaging so that we can keep delivery costs down and pass these savings on to our customers,” he added.

“With the new Royal Mail pricing structure, it will become a daily battle for online retailers to keep costs down without compromising customer service and delivery times. 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.

“Over the long term, Royal Mail’s annual price increases will force its customers to seek alternative services. At Mobile Fun, 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 said his firm was urging 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.”