Postal system

Opinion: The postal system is failing our small businesses

We all have our favorite small businesses, whether it’s the bakery across the street, the garage down the street, or a local artist we buy birthday cards from.

When we think of small businesses, we tend to think of the goods and services they provide, but small businesses are also major consumers of goods and services. Many rely on postal services to order raw materials and send goods to their customers.

After dealing with the challenges of the pandemic and rising utility costs, it is important that these businesses, regardless of their size, nature or profit margin, can access fair and affordable postal services.

Recently, Citizens Advice Scotland commissioned YouGov to ask 500 Scottish small and medium-sized enterprises (SMEs) what they think of the postal service and what changes they would like to see. We publish the findings in full tomorrow. But you won’t be surprised to learn that affordability was a big issue, with 60% of SMEs telling us the cost of sending items with Royal Mail was expensive.

Despite the rise of online shopping and the use of parcel delivery companies, SMEs are more likely to use Royal Mail when sending goods to customers. One of the reasons for this is that Royal Mail must deliver all parcels at a flat rate to any address in the UK. This means that unlike other parcel companies, Royal Mail does not apply a location-based surcharge for rural deliveries.

67% of SMEs told us it was important to deliver parcels at one rate to any location in the UK. About 1 in 4 SMEs had to deal with additional surcharges on inbound deliveries from other parcel operators, which resulted in additional costs. The Federation of Small Businesses (FSB) welcomed our research, noting that for many of their members postal services are essential and that cost should not be a barrier to doing business.

Royal Mail’s quality of service has consistently fallen short of its targets since the start of the pandemic. Many Scottish consumers experienced delays or non-delivery of letters and parcels over the Christmas period. This is a concern for small businesses that rely on package delivery to serve their customers, especially during the holiday season. And when problems do arise, they often go unresolved.

Three-quarters of SMEs who complained to a parcel operator were unhappy with the response. SMBs need to know that packages will be delivered to customers on time and trust that when errors do occur, they can be resolved easily and efficiently. The postal regulator, Ofcom, is considering the changes needed to improve postal services over the next 5 years. At CAS, we have our own “shopping list” of changes we want to see.

Small businesses need access to reliable postal services that operate fairly across all parts of Scotland; they need a postal system that everyone can afford; the regulatory framework needs to ensure that people and businesses get the services they pay for, and when things go wrong, it needs to be faster and easier to fix.

At CAS, we think that’s not too much to ask. Madeleine Kennedy is Policy Officer at Citizens Advice Scotland.