Roger Morris, head of parcels, Royal Mail, speaks to PPTI about peak 2017 and the company’s latest tracking developments
How was peak 2017?
Peak was good, we delivered 149 million parcels, up 6% from the previous year. We also saw a 31% increase in our tracked services.
We’re in the middle of a £250m (US$356m) investment, with £130m (US$185m) invested in PDAs last year, and we’re spending around £50m (US$70m) on our parcel system, which includes a track-and-trace system that drives the notifications.
It’s the engine driving our new improvements at the delivery point, which will include estimated delivery times. This probably won’t be as narrow as an hour because our retail customers are asking us not to.
If you miss that window you incur a complaint, not just for the carrier but also for the retailer. When people over promise and don’t deliver then everyone tends to suffer. We’ll aim for an hour window with some of our premium products, but for our basic tracked product, where we try to strike the balance between quality and cost, we will go for a sensible window that is achievable.
What are the new improvements?
The track-and-trace system is enabling Royal Mail to introduce new event tracking capabilities that differentiate between delivering to someone’s home and delivering to a neighbor, as it captures the address and the name of the person who accepts the parcel.
So, in a multi-occupancy dwelling, you’ve got the name of the person who signs for the parcel and the address. We’re also taking safe place details from a dropdown list on the PDA and we’re taking photographs once the delivery has been made. We won’t make the photographs visible to customers just yet, but the intention is to start doing so from May 2018.
At the end of the year, we’re also planning to look at inflight options for customers if they’re not at home. The emphasis at Royal Mail has always been on providing value for money, so we’re not necessarily building options that are going to cost the customer a lot more.
We have a conservative approach that concentrates on reliability, so we under promise and over deliver. If you promise the Earth and fail, you’re essentially making the retailer suffer.
What are your biggest challenges?
Posts are obviously impacted by the unstructured nature of letters, which creates change and has an impact on the business. This means we have to transform our businesses. Of course, there are great opportunities with e-commerce, but you need to invest in them right way, at the right time and in the right technology, enabling operations to deliver e-commerce items with the service features that our customers want. That means both retailers and recipients.
We have reached the point where the majority of our revenues are generated by parcel revenues so we’ve reached that equilibrium between mail and parcels, and the gains are getting bigger and bigger.
There is obviously a huge amount of business at Royal Mail that is legacy business, and that will continue in some form, but does face the challenge of structural decline in certain parts.
But undoubtedly, the parcel business is where the future lies and is the real driver of all decisions that we make at senior level in terms of how to invest, how to steer the business and how to succeed in structuring the business.
There is a demand for e-commerce and parcel delivery services but also for other services such as advertising mail and data services that can also help e-commerce businesses.
What are your thoughts on same-day delivery?
Same-day delivery is an exciting opportunity in some ways but it’s also a challenge for retailers to choose how and when to introduce it to its customers.
Amazon obviously offers same-day for some items, such as those that can be warehoused locally and that fit into the company’s delivery model. There are opportunities for other retailers to do the same, but it will be in a fairly restricted way otherwise it gets very expensive.
Of course the consumer would like same-day delivery as standard, and if you can generate sales and profit by subsidizing it then you would – but if you have to charge the cost of the same-day delivery as a premium, then the evidence is fairly clear that very few people would choose it.
Having said that, there are many opportunities where same-day delivery does work for certain items and in certain circumstances. That’s why we offer same-day delivery through our Royal Mail courier services. However, as a standard delivery option, the numbers just don’t add up.
What does the future hold for Royal Mail?
If there’s a more efficient way of making a parcel delivery then we’re interested in it. We regularly look at ways of organizing vehicles and loading vehicles, as well as low-emission vehicles and electric vehicles, such as our ongoing trial with the electric trucks from Charge.
However, we generally don’t go for the quick headline by implementing the latest gizmo to show that we’re innovative, we concentrate on what’s real and anything that makes us more efficient is always worth exploring.
We focus on our workforce and believe that the experience of a person-to-person delivery is far superior to any replacement technology that we’ve seen on the market so far. For example, when we look at certain startups, like the Starship Technologies of this world, we see interesting developments but not necessarily a real business application for today.
February 1, 2018