Royal Mail is unveiling a major shake-up of direct mail services, simplifying the portfolio into just five distinct products. But the move comes at a price, with 20% VAT for some, as well as price hikes of up to 5%.
The new-look products are being introduced from April 2nd, although they do not take into account Ofcom’s plans to let the postal operator set its own prices – a move which is still under consultation, as well as being probed by MPs.
The products are: Advertising Mail, Sustainable Advertising Mail, Publishing Mail, Business Mail 1st Class and Business Mail. Within the simplified products, bulk mail customers will be able to select various options to “fine-tune” the services to their own specific needs.
As well as renaming the services, Royal Mail said it is simplifying sortation requirements and is also looking to speed up delivery. Second class sorted items that had been delivered within three days will be delivered within two days under the new system, while economy options will be delivered in four days.
The UK postal operator said the overhaul would make bulk mail services easier to use and “even more relevant to businesses today”.
Among the key changes, the company is opening up its Advertising Mail product to smaller businesses or large businesses running smaller ad campaigns by adding new unsorted options requiring no sorting or address preparation.
It is also lowering its entry thresholds for sorted products to 4,000 letters or 1,000 large letters/packets.
Bulk mail price increases will average 11%, but individual business mail products could see prices increase by between 8% and 20%, while direct mail prices will increase between 1% and 5%.
The price changes are subject to approval by regulator Ofcom, which is expected to come next month. Royal Mail said some of the changes take into account a change in VAT status, with the 20% national sales tax set to apply to bulk mail services.
DMA chief of operations Mike Lordan said no price increase was welcome, particularly in the light of the VAT changes, but added: “We are pleased that Royal Mail acknowledges the importance of direct mail and is keeping increases for advertising mail to a minimum. We also welcome the introduction of new products that will allow more direct mail to qualify for discounts.”
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