UK Consumer & Small Business Parcels Services (C2X): Market Insight Report 2019

£1,175£2,245

Published: January 2019
Pages: 68
Format: PDF download + conference call

 

 

 

 

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Description

About UK Consumer and Small Business Parcels Services: C2X Parcels Market Insight Report 2019

What does the C2X parcels market report contain?

This report focuses on an important segment of the parcels market: services designed to carry parcels on behalf of consumers and individual traders and micro-businesses, such as small eBay, Gumtree or hobby-site sellers.

It includes:
– Historical and forecast size and growth of the market from 2013-2023
– Evaluation of the role and positioning of the Royal Mail in the C2X segment
– Profiles of the other main service providers with our analysis of their performance and prospects
– Market share estimates
– Summary of the market evidence and analysis of the drivers on which our market views are based.

What are the sources and methodology?

The main sources for the report are
– Extensive desk research on the parcels market and its operators covering company accounts, websites and other sources.
– Published information on key market drivers such as economic data and estimates of home shopping levels and practices.
– Interviews with senior-level contacts in the market.

We have analysed this information to build our own market model, to support our forecasts and our views on the market

Changes since last year

Since last year’s edition, all areas of the report, including our forecasts have been reviewed and updated and, where appropriate, re-written to reflect latest market developments and new information which has come to light

Readers who have used previous versions of our report will note that this process has led to us making revisions to our estimates of the overall size of the segment and our forecast growth rates.

Who is it useful for?

The report is intended for parcels carriers and logistics groups, home-shopping retailers, operators of consumer / small business parcels service providers, potential entrants to the segment, investors, banks, analysts, consultants and other parties with interests in the area.

Summary

Consumer / Small Business Parcels Market Background

Consumers wishing to send occasional parcels have traditionally been served by the Royal Mail with customers taking their parcel to their local Post Office and queuing to send it.

Historically, other parcels carriers did not target small customers as this type of volume did not fit their business models, which rely on consolidation of pick-ups to obtain superior economics. This, plus the fixed costs of setting up and operating an account made small customers unprofitable.

However, other business models have now developed the ability to serve this segment, via an online presence and / or physical locations such as parcel shops or lockers without incurring the high fixed costs which previously made it unattractive.

Market size and growth

We believe that the consumer / small business parcels segment is now over 350m parcels per year.

It splits into two similar-sized parts:
– Returns of online purchases
– C2C parcels – which includes presents sent to friends and family and also fulfilment of items sold on marketplaces or hobby sites by non-professional or very small scale sellers.

Returns volumes are growing year by year, as home shopping increases, while C2C parcels are mature.

Competitive landscape

Market developments mean that the competitive advantages of the Royal Mail have evolved.
– It is no longer the only carrier with the necessary reach to serve the C2X segment.
– However, its universal service delivery network makes it extremely competitive for the delivery of small items to consumer addresses.
– This has led to changes in its pricing, as it has sought to retain or even grow its packet volumes but been prepared to trade off volumes of larger parcels, which are less profitable for it to handle.
– Hence, the pricing changes Royal Mail undertook in 2013 encouraged some marketplace sellers (with items of large dimensions) to find alternatives.

New models specifically focusing on the needs of this segment have emerged, such as:
– Networks, with collection and delivery points: lockers or manned locations such as convenience stores. Some are independent while others are aligned with a specific carrier. Examples include Collect+, Doddle, myHermes Parcel Shop, UPS Access Point, DPD Pickup and InPost.
– Brokers, operating consumer-facing websites which offer services from a range of carriers, typically at rates which would not be accessible to the consumer. Examples include Parcel2Go and Parcel Monkey.
– Carrier services, such as DHL UK’s ipostparcels service

Reflecting the price-sensitive nature of the C2X segment, several of these operators offer very keen pricing to consumers, although some, such as Collect+ and Doddle, have stepped back from price-driven competition for ‘send’ parcels to focus on the ‘returns’ segment.

Our research into pricing shows that:
– Royal Mail continues to be very competitive for lighter parcels (less than 1kg)
– InPost and MyHermes are the cheapest for larger parcels
– UPS is very competitive for next-day deliveries.
C2X
Many of the new models have achieved impressive growth rates, although most have slowed in the last couple of years, suggesting increasing maturity

 

Outlook

We expect the market to grow in the future but at a modest rate with faster-growing returns volumes being balanced by more mature C2C parcels.

The Royal Mail’s key challenge continues to be to retain as much of the segment as possible in the face of increased competition

Key challenges for the newer players are:
– Networks must increase their scale to the point where they are a truly convenient option and have the capacity to deal with growth.
– Brokers must seek ways to increase the value that they add to contain the threat of disintermediation, for example by improving their customer service and partnering with carriers to run their direct site.

About this report 2
Summary 3
About Apex Insight 6
The consumer & micro business consigned parcels segment 12
Market definition 12
History 12
New business models 13
Response of incumbents 13
Royal Mail 13
Other established parcels carriers 13
Smaller carriers and new entrants 13
Consumer / small business parcels segment size and growth 14
Consumer parcel sending behaviour 14
Market size and growth 15
Segmentation 16
Segment drivers 17
Overview 17
UK economic performance 17
Retail sales 18
Internet retail sales 19
Internet retail and parcels volumes 19
IMRG market size views 20
Internet retail – international comparisons 20
Returns 21
Basket size 21
Returns rate 22
Free returns 23
Use of free returns labels 23
eBay / Amazon marketplace sales 24
Competitive landscape 26
Royal Mail 26
Royal Mail C2X sales 26
Royal Mail share 26
Royal Mail’s route to market 28
Other providers – business models 29
Networks 29
Brokers 31
Dedicated services from mainstream carriers 32
Local newsagent postal services 32
Service price comparison 34
Service price comparison – 1kg / economy service 35
Service price comparison – 1kg / next day service 36
Service price comparison – 1kg / next day, time-definite service 38
Service price comparison – 2.5kg / economy service 39
Service price comparison – 2.5kg / next day service 40
Service price comparison – 2.5kg / next day, time-definite service 41
C2X network / broker volumes 42
Network size 43
Revenue and growth 44
Profitability 44
Website rankings 45
Profiles 47
Collect+ 47
myHermes 48
InPost 49
UPS Access Point 50
ipostparcels 50
Parcel2Go 51
Interparcel 52
Parcel Monkey 52
Doddle 53
Connect Group / Pass My Parcel 53
Forecasts 55
Key driver forecasts 55
UK Economic performance 55
Retail sales 55
Internet retail 56
Marketplace sales 56
Market forecast 57
Market share trend implications 58
Risks to the forecast & questions for key participants 59
Royal Mail 59
Networks 59
Brokers 60
Traditional carriers 60
Appendix 61
Glossary of terms 61

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