ROYAL MAIL’S PARCEL WAR PLAN

Postal giant takes on rival Amazon as it unveils blueprint to entice customers

ROYAL MAIL is planning to offer timed delivery slots for the first time next year as it attempts to win customers from rivals such as Amazon, The Mail on Sunday can reveal. The 500-year-old postal firm is planning a three-tier system allowing customers to pay more to send and receive letters and parcels on specific days and times.

In a video message to its 140,000 staff, seen by The Mail on Sunday, chief commercial officer Nick Landon said the company is stripping back its current range of services and is in the early stages of developing new options for customers.

He said: ‘Longer term, we’re looking at what customers actually need and how we can reflect that in our products. And we want a threetier product portfolio because three is a magic number. People always like to choose from three.’

Describing the three tiers as ‘good’, ‘better’ and ‘best’, Landon said: ‘ We’re looking at a “good” product, the base product, and this will be built around [the idea of]: “I’ll leave it to Royal Mail to choose how it comes to me”.’

He said the benefit of this option was that Royal Mail could move a parcel ‘as efficiently as we want through our network’, reducing its own costs and the price charge to customers.

The middle tier – or ‘ better’ – product would be more expensive and is l i kely to be called ‘ My Choice’. Landon said: ‘Customers will be able to select the day they want it delivered and they will have a choice of product features they can add on.’

He said the options would include the customer being able to choose the day of delivery and the selection of a safe place to hide the parcel if no one is home. Finally, Landon said customers who select the ‘best’ product will in addition be able to choose a time slot for the delivery as well as the day.

The top tier service would help to slash the number of ‘Something for you’ red slips posted through front doors. These create extra administration and additional costs for delivery offices.

Royal Mail sources said the services were unlikely to be introduced until next year.

The shake-up comes as new chief executive Simon Thompson, who took over in January, attempts to modernise the former state monopoly which had been battling a longterm decline in letter volumes and increasing competition.

The pandemic has revived the fortunes of Royal Mail. Former chief Rico Back was ousted last year and the boom in ecommerce sparked a spike in profits. Its stock has rallied strongly, bringing the firm back into the FTSE 100 after a two-year hiatus and making a paper profit of more than £500 million for its main shareholder, Czech billionaire Daniel Kretinsky.

Thompson has been trying to fight back against ri vals i ncluding FedEx, DHL and, notably, Amazon which is increasingly handling its own logistics.

Amazon currently offers rapid delivery options including fourhour delivery windows for large items, up to 14 days in advance.

The Mail on Sunday revealed last month that Amazon is more trusted than Royal Mail to deliver parcels safely to homes – a fact which Landon dubbed ‘very worrying’.

Amazon’s i nnovation i n rapid delivery has helped its meteoric growth in the UK. Natalie Berg, a retail analyst and co-author of a book on Amazon, said: ‘ Shopper expectations around delivery have changed drastically over the last decade and a lot of that is driven by Amazon.

‘Shoppers expect it to be fast, reliable and free and Amazon has been phenomenal at that.

‘Free delivery is not free so we know that’s not sustainable. It’s hard to put the genie back in the bottle, of course, but a tier system which offers greener, sl ower options makes sense.’

Landon said the company has conducted a review across its Royal Mail, Parcelforce and international divisions of ‘products that overlap’ to simplify them down to ‘one product for each customer need across our different brands’.

He added: ‘ We’re l ooking at [whether there are] some products where we’ve got different variants which probably had a very good reason for being launched at the time, but we can now simplify that product set down.’

The company’s Parcel Collect service currently allows customers to pay for postage online, print the address labels and to send up five items, which are collected from their home by a postal worker.

Now Royal Mail is looking at providing an estimated collection time window and removing the restrictions on the number of parcels that can be sent. It is also exploring options for label-free parcels for customers without printers.

Chief executive Thompson said: ‘We’re exploring other changes to make it even easier for customers, such as whether we could remove the need for packaging at all.’