3.2. Ensuring mails and parcel services are nearby and convenient as the United Kingdom’s e-commerce market thrives
Perhaps unsurprisingly, given its historic relationship with Royal Mail, postal services are the Post Office service that are the most used and valued by SMEs, with nearly three in 10 (28%) SMEs using postal services at a post office at least once a week and more than half (52%) indicating that they use them at least once a month. This is particularly notable in the retail industry, with nearly half (47%) of retail SMEs using postal services at a post office at least once a week and nine out of 10 deeming the provision of postal services at their local post office to be important.
This evidence further highlights how, as online shopping continues to rise, Post Office’s postal services are increasingly serving as a bridge between the online and offline economy. Small businesses can use their local post office to easily dispatch products to their customers, while customers can select their post office as the
destination for their online orders so that they can pick up and drop off at a time and place that suits them. In fact, internet sales made up one in four of all retail sales in the United Kingdom in July 2022, compared to just under one in 10 a decade earlier (Office for National Statistics, 2022d). Online marketplaces may have contributed to this growth, with the number of businesses selling on these platforms doubling in the past five years (Shieldpay, 2022). These marketplaces have meant that anyone can create products at home and sell them online, given they have a means to deliver them. Easy access to postal services is vital for microbusinesses or individuals that use these platforms, meaning Post Office is in a unique position to aid the success of these online marketplace sellers.
As online shopping continues to rise, Post Office’s postal services are increasingly serving as a bridge between the online and offline economy. Small businesses can use their local post office to easily dispatch products to their customers, while customers can select their post office as the destination for their online orders.
Although online shopping was already growing before the Covid-19 pandemic, the pandemic clearly accelerated this trend. Parcel volumes increased by 8% in 2019- 2020, followed by a much larger increase of 48% in 2020-2021 (Ofcom, 2021). Those businesses that developed business-to-consumer delivery operations were well positioned to respond to the changing circumstances and meet this sudden increase in demand for online shopping (Ofcom, 2021). Post offices were one of the few businesses that could remain open for faceto- face operations during the pandemic, and the ease of access and convenience of the local post office is likely to have aided the adaptation to online selling for businesses. Post Office’s role as a channel that connects consumers and businesses became even more essential very quickly during 2020.
A look at Post Office’s Drop and Go offering for SMEs during the Covid-19 pandemic highlights this increasing
role. Drop and Go is a fast-track service that enables business owners to drop off their mail at Post Office
counters without queuing, scanning, weighing or labelling, so that they can instead focus on serving their customers. As lockdown was enforced in the United Kingdom, Post Office saw a 45% increase between 2019-20 and 2020-21 in the number of Drop and Go transactions with three or more items per basket, suggesting that Post Office was an important channel for SMEs to get products to their customers as high streets otherwise fell silent.
Box 3
Case study: Supporting local business in Shrewsbury
Post Office is an important enabler of SMEs across the UK and helps bridge the gap between its physical and digital economy through its postal services. Whether online marketplace sellers or local retailers on the high street, many small businesses regularly rely on their local post office to get items out to their customers, particularly as online shopping thrives in the UK.
A great example of this is Post Office’s Drop and Go service, which allows small businesses to drop parcels and other mail items straight to the post office counter. This removes the need to queue or fill out lots of forms and lets them focus on what business owners do best: serving their customers.
The Postmaster in Abbey Foregate Post Office, Caroline Jones, saw the service’s potential right from the start as both a time-saver for her local business customers and as a scalable income stream for her branch.
Today, Caroline’s Drop and Go customers include larger local businesses, as well as smaller venture just starting out. She said: “I’ve been here for 16 years and have been involved with Drop and Go since it was trialed. I’ve increased my turnover year on year because I’ve worked hard and fine-tuned my business. “I make sure all my Drop and Go customers get exactly what they need, and they trust me to give good advice. Drop and Go has huge potential for Post Offices, if you’re willing to put the work in.
“I’ve put in a lot of effort to source, build and maintain my customer relationships, and through offering good service, have been able to keep them. I’m proud of what we’ve achieved.”
As well as it being a key income stream for her business, Caroline liked the fact that Drop and Go allowed her local business to support other local businesses, be they large enterprises or new ventures.
“I love the fact that we can be critical to smaller businesses’ success. I see it weekly: people come in and have just started a business, they’ll look at competitors, and see that we are the best option.”
This, in part, explains why SMEs value the provision of postal services by Post Office nearly three times more than any other Post Office service. Postal services were particularly important for small enterprises (those with between 10 and 49 employees), who valued the postal services provided in post offices at over £25 per month. More than four out of five of SMEs said that access to postal services at their local Post Office was important.
SMEs particularly value convenience when it comes to postal services, with more than eight out of 10 (84%) SMEs indicating that it is important that postal services are available nearby (regardless of who they are provided by), and the same proportion stating the importance of proximity for picking up and dropping off parcels. Respondents also indicated that postal services being provided by a known or trusted brand (76%) and being in the same location as other services (55%) were critical important. The combination of the core issues of trust and proximity highlights how uniquely well placed Post Office is to deliver postal services to
SMEs, given the long-standing existence of the brand alongside the breadth of the branch network offering multiple services in one place.