OnRecycle Blog
How Will The Royal Mail Price Increase Affect UK Business?

How Will The Royal Mail Price Increase Affect UK Business?

The price of stamps has increased, what does this mean for businesses reliant on Royal Mail?

In preparation for our big launch this year, I tested our recyclers' turnaround from making my online order to receiving their padded envelopes. I must say I was quite impressed when the ten envelopes I requested all turned up the very next day; but it got me wondering... how feasible is this business model where mobile phone recyclers send you an envelope and offer a freepost address now the Royal Mail postage price increase is adding some padding to those prices?

If you ignore the expected uproar for just a few minutes and allow Royal Mail to explain what's going on, you'd understand just why the prices have gone up so much. Royal Mail has made almost a £1bn loss over the last four years for their core mail service (letters/parcels), and if they don't do something about it now, we won't have a Royal Mail to rely on in the future. It might not be as clear cut as I make out, but we all know any loss-making business is doomed unless it does something about it.

Special Delivery

The smartphone is becoming king, and even the lighter models weigh in at more than 100g - pushing the price to a 10% increase when sending your phone by special delivery. It's essential you send expensive phones by special delivery, you will be insured for up to £500 and someone has to sign for the parcel once it gets there. It's that peace of mind that you need, but it does come at a cost.

Let's take a look at three examples using my own personal phones.*

  • Dell Streak 5": Weighs in at 220g. Using OnRecycle I would get up to £76.50. Delivery price £6.
  • HTC HD2: Weighs in at 157g. Using OnRecycle I would get up to £72. Delivery price £6.
  • Samsung Galaxy S II: Weighs in at 116g. Using OnRecycle I would get up to £216.10. Delivery price £6.

*prices updated as at 01/08/2012

Those high value items you've fallen out of love with are going to turn a £5.36 special delivery into a £6.00 one - and let's not even consider sending that device without that wonderful silver bag and all of its insured glory!

Royal Mail Price Increase

I can only speculate on how things will work out for our friends in the recycling industry, who at the end of the day are trying to run a profitable business no matter how you look at it.

Will the price of your phone take a hit as they try to recoup the cost of receiving it? The risk there is that more people will turn to private selling regardless of the risks. Keep in mind you'll probably end up sending the phone using special delivery anyway.

Will they have to drop to second class freepost returns? Enjoy waiting up to five days for your envelope and up to another five to get your phone to the recycler. That's pushing any price guarantee timescales right to the limit.

Will printing their online mail voucher become mandatory? I may be in the minority here but I personally have never owned a printer, and if it weren't for the fact I work in an office, I would be rather stuck should I need to print something out...

I have no doubt an established, medium sized business would thrive regardless of the cost increase involved with sending and receiving mobile phones, but for some "one man band" recyclers who rely on the customer and a distributor, we have yet to see how they will manage.

Check us out at: https://www.onrecycle.co.uk