Many readers will be aware of the current government plans to split off the Post Office Branch Network from a to-be-privatised Royal Mail letter and parcel handling and delivery service.
Royal Mail's Newfoundland-born Chief Executive, Moya Greene, thinks that part of the future lies in e-commerce and a return of the Cash on Delivery service.
Royal Mail has consistently reported profits in recent years, but the UK Letters & Parcels and International business lost £120 million in 2010-11 (compared with a £20m profit the year before). So there is a comprehensive programme of cost-reduction, and automation (though that is not without its considerable capital costs) all of which helps to support Royal Mail's Universal Service Obligation to be able to deliver to every household in the UK every day, for as little as 46p (or less for contracted bulk mail).
One thing that bites into revenues and profitability is the current regulation, imposed as part of the mail competition process, to accept process and deliver mail from other operators even when the price charged to them for access to Royal Mail's network is less than what it costs to process that mail. (The system is similar to that used in privatisation of water, electricity and gas where delivery by any supplier is through a national grid owned and operated by another company, except that Royal Mail's National Grid is primarily manpower, which is inevitably more costly.) Ms Greene is aiming to have this regulation changed on privatisation to halt the losses on this part of the business.
But e-commerce and online retailing could provide the answer. This sector is growing, and although the competition of online payment for postage to Royal Mail is reducing the amount of cash taken at its own Post Office retail network, there may be another way to make money from it, according to Ms Greene.
In an interview with the Globe and Mail of Toronto the company head, formerly CEO of Canada Post, suggests that there is still some reluctance among web-users to actually purchase and provide their credit card details to online retailers.
Her idea is that postmen and postwomen would use electronic gizmos to confirm delivery and then initiate payment. The payment details would be handled only by Royal Mail, a very trusted brand, and she believes that such a system would see a growth in business volume as well as, presumably, commissions and fees adding to the cash flow.
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