Royal Mail has operated in a competitive market for some time now; constrained perhaps by the requirement that it operates a universal post service covering the entire UK, regardless of profitability.
When Whistl emerged from the TNT demerger in 2011 Royal mail raised concerns that the new company and others like it, would focus on winning the profitable delivery locations in major cities and leave delivering to less profitable towns and rural areas to the Royal Mail. Whistl has focused its services in London, Manchester and Liverpool but only to a previously defined set of postcodes.
Whistl offered an end to end delivery service to these postcodes including last mile deliveries, the only part of the delivery chain, directly in contact with the customer. Whistl’s roll out of the end to end delivery service is suspended pending review. This after a key investor in the expansion withdrew their support. The suspension of Whistl’s end to end delivery service is likely to impact on the staff involved with the roll out of this service but future investment in the service from another source is possible, pending the results of Whistl’s review of their services.
The question arises will this have a positive impact on the provision of a universal postal service? The withdrawal of Whistl from the end to end delivery market may help Royal Mail reinforce the importance of a countrywide postal service. There is also a possibility that the reduction of competition in the end to end delivery service may lead to high prices for postal deliveries from Royal Mail, leaving customers little choice but to pay them. So how important a universal postal service is to ecommerce sellers and whether they are willing to pay a premium to keep it.
Image credit: ell brown