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Postcomm annual report looks back on a year of significant change PDF Print E-mail
Tuesday, 12 June 2007

Postcomm’s 2006/07 annual report published today covers the first full year during which two significant Postcomm policy initiatives took effect: Royal Mail’s long-standing monopoly of the mail market was removed completely at the start of 2006 and a new four year price and service quality control came into effect on 1 April 2006.

Royal Mail still has a virtual monopoly over the final mile with less than 1% of the mail now being delivered end-to-end by rival operators. However, ‘access’ competition has developed to a more significant extent. Currently nearly a quarter of bulk business mail is collected from the mailer by rival operators and handed over to Royal Mail for delivery ‘the final mile’. More than 70% of the total revenues in this access competition structure are retained by Royal Mail.

Postcomm Chairman Nigel Stapleton said:

“Everybody has benefited from the significant improvements to Royal Mail's quality of service which has been an important feature of the company’s initial response to competition. Large mailers tell us that they have secured lower costs and a service better tailored to their specific needs from rival operators. Lately rivals have begun investing in mail sortation equipment which enables them to make attractive offers to medium and small business customers as well.

“However, Royal Mail and the new market entrants have a far bigger challenge than that of pure mail-on-mail competition. It has become clear in the past year that parts of this revenue are being lost to e-mail, text messages or other digital media. In parallel, direct mail - which accounts for nearly 40% of mail revenues - is competing in cost effectiveness terms with other promotional media, including internet advertising.

“The key to growing the mail market is to focus on getting more value-added into the product. Adding value to mail products can enable the sender to generate more revenue or provide greater satisfaction for the recipient. If adding value makes mail more effective than alternative media, there is no need to keep prices down.”

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