Released on 24/01/24, the report has received widespread coverage, both nationally and industry specific publications. This heightened coverage underlines the critical importance of the service. Emphasising potential impacts and shedding light on the inherent challenges of the current structure, deemed unsustainable for both the present and future needs of the industry.
Urgent Need to Reform Royal Mail USO
The Ofcom report highlights the current structure has not changed since 2011.
Currently Royal Mail must offer as a minimum:
- Letter delivery 6 days a week, Monday – Saturday
- Parcel delivery 5 days a week, Monday – Friday
- 1st class service – next day delivery service
- 2nd Class Service – within three day delivery service
- A uniformly priced and affordable service across the UK
In a backdrop of a declining need for letter delivery which has reduced from 14.3 billion in 2011/2012 down to 7.3 billion in 2022/2023. Whilst the parcel delivery need has increased from 2.6 billion in 2018/2019 to 3.6 billion in 2022/2023, even spiking to 4 billion during this timespan. Highlighting the change in the market’s needs and emphasising the lack of change in the USO.
Martin Seidenberg, CEO at Royal Mail parent International Distributions Services stated “Ofcom’s report demonstrates that reform is urgently needed to protect the future of the one-price-goes-anywhere Universal Service. We are doing everything in our power to transform, but it is not sustainable to maintain a network built for 20 billion letters when we are now only delivering seven billion.”
“We have been calling on the Government and Ofcom to tackle this issue for four years, and the lack of action means that we are now facing a much more serious situation.”
Proposed Infrastructure for Royal Mail USO
The Ofcom report on Royal Mail USO suggests two ways to improve the Universal Service Obligation (USO) and secure the postal service’s future.
- Make most letters take up to three days or more for delivery, potentially saving £150-650 million. Urgent letters would still have a next-day service.
- Involves reducing delivery days from six to either five or three, potentially saving £100-200 million or £400-650 million, respectively. Though this would require legislation change by Parliament and Government.
These changes aim to balance efficiency and cost-effectiveness while keeping the postal service accessible and reliable.
In Martin Seidenberg’s statement he went on to say…“Whilst other countries have grasped the opportunity to change, the UK is being left behind. There has been a lot of discussion about dropping Saturday letter deliveries in the UK, but as other countries have shown, there are a range of options to consider.”
“A modern and sustainable postal service is crucial for our people, our company and the customers we serve. We want to engage with all stakeholders as part of the process to find an outcome that will allow us to compete and adapt to today’s realities.”
Current Financial Challenges
Alongside the changes in market needs, the call for modernising is compounded by Royal Mail’s significant financial losses, with a £419 million adjusted loss in the last full financial year and a £319 million loss in the first half of the current financial year.
It is unsustainable to continue as it is, which gives hope that this may find positive guidance and outcomes for both the mail industry, network and end users. An opportunity to create a more efficient and sustainable future for everyone involved.
Quality of Service Issues
Changes would hopefully allow Royal Mail to address and improve upon some significant service quality issues experienced in 2023. Resulting in a more reliable and efficient mail delivery.
- Royal Mail fined £5.6 million last year for not meeting its delivery targets.
- First Class mail delivery achieved 73.7% on time, missing the 93% target.
- Second Class mail delivery was 90.7%, falling short of the 98.5% target.
What this may mean for Direct Mail campaigns and print marketing
As the postal landscape undergoes potential changes, the implications on delivery timeframes, reduced delivery days, and the need for adaptability and innovation pose considerations for the future of direct mail campaigns and print marketing.
Delivery Timeframes
Slower delivery options for most letters (up to three days or more) could impact the timely delivery of direct mail materials. Though scheduling and planning will be able to minimise the impact. In addition, Ofcom have discussed a next day service which would be able to help with time sensitive urgent mailings.
At Eight Days our Economy Service is one of our most popular postal services, as it’s one of the lower rates and has the chance to be delivered earlier depending on network capacity and demand.
Explore our postal incentives to make the most of your marketing budget while trying out new and innovative direct mail campaigns. Whether it’s your first dive into direct mail or experimenting with a different mailing approach, we’ve got you covered!
Reduced Delivery Days
The potential reduction in delivery days (from six to either five or three) may affect the frequency and timing of direct mail campaigns. Marketers may need to adapt their strategy and plan campaigns more efficiently to align with the new delivery schedule. Though there is potential for significant impact on those wanting a Saturday delivery.
Potential Impact on Magazine Publishing
The Publishers’ Association (PPA) has expressed concerns about the potential impact on magazine publishing if delivery days are reduced. Time-sensitive weekly magazines, particularly those dependent on Saturday deliveries, are identified as being most affected.
Adaptability and Innovation
Marketers may need to embrace a changing postal landscape by exploring innovative approaches to captivate their audience. Integrated marketing strategies may become increasingly crucial as a means to offset potential delays or alterations in mail delivery. By incorporating various channels such as email, SMS for a cohesive multi-channel approach. Marketers can ensure a resilient and effective outreach, staying connected with their audience even in the face of evolving postal dynamics.
Print and Mail Industry Reaction to the Royal Mails USO
Mixed initial responses to Ofcom’s proposals, with concerns from publishers of time-sensitive materials and concerns around the potential removal of Saturday deliveries.
Our MD, Lance Hill, has penned an insightful article sharing his thoughts on the future of the USO & Royal Mail. With a wealth of experience in mail, direct mail, and print marketing, plus a background working at Royal Mail.
“The SMP welcomes the review from the regulator Ofcom and the opportunity for discussion around the guidance on routes forward that it has outlined.
“We will, of course, be working and collaborating closely with Royal Mail to ensure the best outcome for the users of mail and for our members in the mail manufacturing community.”
Lucy Swanston, Chair of The Strategic Mailing Partnership (SMP) Quoted in Printweek
“Obviously Ofcom has a role here and is reviewing the future of Royal Mail.
“But the prime minister’s strong view is that Saturday deliveries provide flexibility and convenience that are important for businesses and particularly publishers and the prime minister would not countenance seeing Saturday deliveries scrapped.
“So I think we’ll see exactly what the outcomes are. But given the importance of these deliveries, particularly to businesses, it’s not something we would countenance.”
The prime minister’s representative quoted in The Guardian
“We’re hugely concerned about the proposal to remove Saturday deliveries. Radio Times is the UK’s biggest selling weekly subscription magazine and it is really important that the magazine arrives in good time for readers to plan their weekly viewing.
“We have seen a significant reduction in the quality of service in the last few years and we are very worried this will make a difficult situation worse.”
Jess Burney, managing director for subscriptions at Immediate Media, Quoted in Printweek
In summary, the proposed reform of Royal Mail’s Universal Service Obligation (USO) outlined in the Ofcom report has sparked widespread discussions and highlighted the urgency for change. The industry faces challenges, but there is an optimistic outlook for positive guidance, outcomes, and a more efficient and sustainable future for all involved.
Direct mail will still be a viable and extremely effective channel to reach your customers’ on their doormat. Embrace additional channels to support and elevate your marketing campaigns and navigate any potential changes in Royal Mail services.
