Yahoo Finance Amazon and Hermes eye Post Office after Royal Mail stranglehold ends
Amazon and Hermes are in talks with the Post Office for it to handle parcels, allowing them to muscle in on Royal Mail’s dominant position in the delivery market.
The Post Office has struck a new deal that will free it from a centuries-old arrangement tying it to Royal Mail.
The Post Office remains in state ownership after it was split from Royal Mail, which was privatised and floated on the stock exchange in 2013.
Until now the Post Office only handled Royal Mail items at its network of 11,500 branches.
Chief executive Nick Read, the former boss of convenience store Nisa, said: “You won’t be too surprised to know that we have been approached by third-party providers already. And clearly we will be having conversations with them to understand what the opportunity looks like.”
Silicon Valley giant Amazon and Hermes, backed by a US private equity firm, are understood to be among those that have opened discussions with Mr Read’s team.
The parcel delivery market has boomed this year after accelerating a trend for people to shop online with goods posted home.
Advent, one of the world’s biggest buyout funds, agreed a €1bn deal to buy the UK operations of Hermes, whose clients include John Lewis and Next, and a minority stake in its Germany arm.
Post Office volumes are up by more than fifth, Mr Read said, with the company handling 16 million transactions-a-week.
“I think it would be fair to say that our mail and parcels business has exploded,” he said.
The new agreement with Royal Mail would not affect the services the Post Office provided. “Everything that is currently happening with Royal Mail will continue,” Mr Read said.
Having suffered from a sharp fall in the numbers of letters posted as Covid hit earlier in the year, shares in Royal Mail have surged under executive chairman Keith Williams, the former British Airways boss. Parcel volumes are now bigger than letters.
Stuart Simpson, interim Royal Mail chief executive said: “Royal Mail and the Post Office have a long shared history and both companies play an important role keeping the UK connected.”
Amazon declined to comment. Hermes did not comment.
Meanwhile, 13 of Royal Mail’s institutional investors have written to the company to commit to the “real living wage” to 33,000 temporary workers taken on to deal with increased numbers of parcels in December.
Neville White of EdenTree Investment Management said: “We support Royal Mail’s responsible approach to colleague reward, and believe now is the time to ensure that the many temporary and contracted workers who will be ‘delivering Christmas’ across the UK this year are themselves beneficiaries of the living wage.”
The national living wage is set by the government with the real living wage recommended by the Living Wage Foundation.
A spokesman for Royal Mail said: “All of our seasonal workers earn more than the national living wage and the majority of them earn the real living wage or more.
We offer a wide variety of shifts and flexible hours which can be suited to a range of worker requirements. “Our rates of pay are always competitive within the local area and our flexible workers are eligible for statutory holiday and sick pay.”
