Proposal to amend the United Kingdom Post Scheme in relation to universal service parcels September 2013 A consultation document Published: 16 September 2013 Responses required by: 16 October 2013 5pm Royal Mail 2012 Royal Mail is a trading name of Royal Mail Group Ltd. Registered number 4138203.
Purpose of consultation 1. Postal Schemes set out the terms and conditions for postal services for consumers and business customers who use Royal Mail s services, but who do not hold an individual contract with Royal Mail. Customers who use stamps, on-line postage, or franking meters to pay for Royal Mail services do so under a Postal Scheme rather than a contractual arrangement. The Postal Schemes are available on our website. 2. Making any amendments to these Postal Schemes has the effect of making new Postal Schemes. Royal Mail makes Postal Schemes under Section 89 of the Postal Services Act 2000 (as amended) the Act. Before making changes to the Schemes we formally consult customers and stakeholders. 1 3. Royal Mail plans to revise the exception to the USO Small Parcel format which was introduced in April 2013. The new exception will enable customers sending items which do not exceed 350mm x 250mm x 160mm to be priced as Small Parcels. 4. We are also taking the opportunity to clarify the compensation arrangements for customers purchasing Royal Mail Signed For service, when we are unable to provide a copy of the signature or proof of delivery. 5. These changes affects the following sections of the United Kingdom Post Scheme ( the Scheme ): How to pay for Postage (Section 8), How to work out how much to pay (Section 9); and Royal Mail Signed For 1 st Class, Royal Mail Signed For 2 nd Class and Proof of Delivery (Section 18) 6. Royal Mail is seeking feedback on the proposed new Scheme. We will evaluate feedback before we finalise the wording and publish (in the London, Edinburgh & Belfast Gazettes) the new postal Scheme, in order for that Scheme to take effect. 7. The above changes are planned to be introduced on 28 October 2013. 1 Royal Mail is undertaking this consultation exercise in relation to proposed schemes in accordance with the requirements set by our regulator, Ofcom. Royal Mail also is required to notify Ofcom of the changes to the Scheme we are planning to make under Section 89A (1) of the Act. Ofcom do not approve the Schemes but they do have the power under Section 89A of the Act to direct us to modify our Schemes. Royal Mail 2012 Page 2 of 10
Background Small Parcel format exception 8. The postal market is changing with the UK parcels market continuing to grow as consumers increasingly shop and sell online. Royal Mail is responding to these trends by restructuring its core network and updating its parcel services. Parcels are vital to many of our customers; they are equally vital to Royal Mail. 9. We have already introduced changes to make it easier for customers to receive and send parcels with Royal Mail. These include: Introducing delivery to neighbour for certain items if the recipient is not at home. Extending callers office hours for collection of parcels, and the facility to have an item collected at a local Post Office if more convenient. Enabling redelivery arrangements to be done online. Standardising the time items are held at delivery offices for collection to 18 days. Updating our products so that they are clearer and simpler to understand. We have created a better structured and consistent product set that allows customers to make clearer choices about the services they need for their items. 10. In December 2012, we proposed parcel format changes to USO 1st and 2nd Class products replacing the Packet format with two new formats known as Small Parcel and Medium Parcel. The Small Parcel format has maximum dimensions of 450mm x 350mm x 80mm and our analysis indicates that seven out of ten of the parcels that we carry fall into this format. On the basis of comments received during the consultation, we recognised that the dimensions for the Small Parcel format may be problematic for those who post relatively small parcels where the depth dimension is greater than 80mm. 11. As a result, we modified our initial plans and (in the revised version of the Scheme which took effect on 2 nd April 2013) introduced an exception to allow items that fit within packaging which does not exceed 160 x 160 x 160mm to also be priced as Small Parcels. This exception applies to any item which meets those dimensions and that does not exceed 2kgs in weight. Our customers have asked us to increase the size of the Small Parcel exception 12. The introduction of the 160mm x 160mm x 160mm exception has proved successful. It provides a solution for those customers who post relatively small items that might otherwise be classified as a Medium Parcel and has been relatively straight forward to implement and manage in the Post Office Ltd (POL) network. Royal Mail 2012 Royal Mail is a trading name of Royal Mail Group Ltd. Registered number 4138203.
13. Since April 2013 we have received additional 2 feedback from customers and e-commerce platform providers about other small items (e.g. shoes, trainers, hats, cloth, electrical equipment etc.) whose dimensions exceed the current Small Parcels format and which are larger than the 160mm cubed exception. Customers have requested that we increase the size of the Small Parcel exception, in order to allow these items to also be sent as Small Parcels. In addition, research from ebay shows that the most popular type of goods purchased on its site are clothes, shoes and accessories, with a pair of women's shoes (which exceed the Small Parcel or current exception dimensions) selling through the site every 15 seconds. 14. A box with a dimension of 350mm x 250mm x 160mm (approximately the size of a large shoebox) can also typically be carried on foot by our postmen and women as they complete their delivery rounds, as long as its weight does not exceed 2kgs. These are key factors in distinguishing between Small and Medium sized parcels categories which reflect the different costs associated with delivery on foot or by van. 15. Therefore, as the current exception has been a positive experience for customers 3 and customers are aware of the exception, we propose to extend the exception to the Small Parcel format to allow items whose dimensions do not exceed 350 x 250 x 160mm to be sent at Small Parcel format prices. We believe this would be a beneficial change for our customers, as it will enable more items to be priced as a Small Parcel. Customers who have bought the 16mm cube exemption size packaging will still be able to use it to post items as Small Parcels with this extended size. 16. We believe this change is fair and reasonable for the following reasons: The items fitting within the new size of the exception would be foot deliverable and therefore cost us the same to deliver as existing small parcels. The increased size would be beneficial for all USO customers, as a greater number of parcels would be priced as Small Parcels. The increased exception size would not cause a negative customer experience, either for customers in POL branches or for POL staff. POL executives have stated that the current exception is working well and that POL counters would be able to accommodate the larger sized exception. 17. The proposed new size limits for the Parcel formats will be: 2 Customers have fed back mainly through the Royal Mail s Chairman Office and to Post Office staff directly. We have also reviewed comments on online discussion boards and discussed the impact of the change with ebay executives. 3 Introducing the exception enabled us to trial the use of a dual format template (to check that items fit within the relevant format dimensions) within POL and with customers. POL staff have found the template to measure the exception items easy to use and we have received no complaints. This suggests the exception has not created customer confusion. Given this positive experience, we are now confident that we can introduce a larger sized exception. Royal Mail 2012 Page 4 of 10
Format Size (up to) Weight (up to) Small Parcel 450mm x 350mm x 80mm 2kg NO CHANGE Existing Small Parcel 160mm x 160mm x 160mm 2kg TO BE REMOVED exception Proposed new Small 350mm x 250mm x 160mm 2kg CHANGE Parcel exception Medium Parcel 610mm x 460mm x 460mm 20kg NO CHANGE 18. These formats apply to the following products: 1st Class, 2nd Class, Royal Mail Signed For 1st Class and Royal Mail Signed for 2nd Class paid for using Stamps, Post Office Labels, franking, smart stamp, online postage, and credit account (VAT exempt products only). 19. We will not make any changes to the maximum size for cylinder or roll-shaped items 4. These items will be priced as Small Parcels if they fit within the size limits. Larger cylinder or roll-shaped items will be priced as Medium Parcels. Compensation for the Royal Mail Signed For service 20. Where a customer who has purchased the Royal Mail Signed For service requires confirmation that the item has been delivered, they may request proof of delivery. Customers can access their proof of delivery online on royalmail.com, through a mobile application and from our Customer Service team for up to 3 months after the date that the item was posted. 21. If an item has been delivered but we are unable to provide a copy of the signature or proof of delivery (and cannot show that this was due to a refusal to provide one upon delivery) then we will refund the difference between the price paid for the Royal Mail Signed For service and the relevant 1st Class or 2nd Class postage rate. The current wording of the Scheme is not sufficiently clear on whether the customer would also receive a refund of the underlying 1st or 2nd class postage fee. Therefore, we have taken the opportunity to make it clear that as the item has been delivered, the postage fee will not be refunded. Customer Impact New Small Parcel exception 22. We believe that the proposed change to small parcel size will be a beneficial one for customers by ensuring more items are priced as a Small Parcel. In particular, it will enable customers sending items which do not fit in the current Small Parcel format or the current 16mm cube exception, but would fit into the proposed exception such as shoes, trainers, handbags, electrical equipment, wool/yarn, cloth material etc. to pay a lower price than would otherwise be the case. 4 Maximum length of 900mm. The length plus twice the diameter should not exceed 1040mm. As per UPU requirements. Royal Mail 2012 Page 5 of 10
23. We propose to manage the exception in Post Office branches through the use of a new template with dimensions of 350mm x 250mm x 160mm. Any item presented for posting at Post Office that is within the dimensions of a Small Parcel format or which fits into the new Small Parcel exception template would be priced as a Small Parcel. Customer communication 24. We will make it easy for customers to understand the revised exception to the Small Parcel format. All Post Offices will have a template to assess the size of the Small Parcel exception. 25. Counter staff at the Post Office will be fully trained on the change, so that they can price Small Parcels correctly. 26. We will update the Our Prices Guide, information on our website and communicate the change directly to all customers where we have their contact details (e.g. Post Office Drop & Go customers, meter customers, etc). 27. We will be mindful of possible customer confusion after the launch and will adopt a sensible approach to managing occurrences of incorrect postage. As most parcels are sent through the Post Office, we expect a very low potential for incorrect postage. 28. We consider that these changes are fully consistent with the requirements on Royal Mail under its universal service obligations in terms of fairness and reasonableness of the terms and conditions associated with the services offered. Compensation for the Royal Mail Signed For service 29. In certain cases a Royal Mail Signed For item has been delivered, however we are unable to provide customers with requested proof of delivery. The current wording in the Scheme states that in these cases we will refund the Royal Mail Signed For 1st Class or Royal Mail Signed for 2nd Class fee. However it is not clear whether customers will be entitled to a refund of the Royal Mail Signed For 1st Class or Royal Mail Signed for 2nd Class fee in addition to the underlying 1st or 2nd class postage fee. 30. Where an item has been delivered but we are unable to provide requested proof of delivery, we believe that compensation should be limited to the amount over and above the standard postage fee which has been paid. Compensation representing the difference between the price of the postage paid and the Royal Mail Signed For service is a more accurate estimate of the actual loss incurred by customers in these situations. Therefore, the proposed change to the Scheme will make this distinction clearer to customers. Royal Mail 2012 Page 6 of 10
Consultation question Question 31. Please comment on whether you think Royal Mail s proposals outlined in the document are fair and reasonable? If the proposals (summarised below) are not considered to be fair and reasonable, please explain why. amending the exception to the Small Parcel format; and clarifying the compensation payable in the event that proof of delivery is not available for the Royal Mail Signed For service 32. Please comment on whether the proposed new Scheme wording (Annex A), is a suitable replacement for the existing Scheme? In particular, is it clearly written and does it provide sufficient links to necessary information? If not, please suggest how the wording could be improved and what additional information could be included. Timescales and next steps 33. Stakeholders are asked to submit answers to the questions set out above as soon as possible and in any event before the deadline of 5pm on 16 October 2013. 34. Responses should be made by post or by email to: John Rowley Royal Mail 4 th Floor 148 Old Street London EC1V 9HQ By Email at: john.rowley@royalmail.com 35. Please provide a completed cover sheet with the response that you wish us to consider. This cover sheet can be found in Annex B. We may publish responses, in full, on our website. If you would like your response or parts of your response to remain confidential please indicate this on the cover sheet. 36. Subject to the responses to this consultation, we propose that the new postal Scheme would take effect on 16 October 2013. We would formal notify 5 Ofcom and Consumer Futures and publish that notification on our website. 37. We will also publish details of the new postal Scheme in the London, Edinburgh & Belfast Gazettes before they take effect. 38. We will make changes to our other literature and websites in order to give as much publicity to these changes as we consider necessary. 5 Made under Designated Universal Service Provider (DUSP) Regulatory Condition 1.10 Royal Mail 2012 Page 7 of 10
Annex A Proposed new wording 6 of the Royal Mail United Kingdom Post Scheme dated October 2013. See separate document: The Royal Mail United Kingdom Post Scheme consultation 6 Royal Mail reserves the right to make small drafting changes if required from to text that is set out in this Annex. Royal Mail 2012 Page 8 of 10
Annex B Cover sheet for response to a Royal Mail consultation BASIC DETAILS Consultation title: To (Royal Mail contact): Name of respondent: Representing (self or organisation/s): Address (if not received by email): CONFIDENTIALITY Please tick below what part of your response you consider is confidential, giving your reasons why Name/contact details/job title Organisation Whole response Part of the response If there is no separate confidential annex, which parts?. If you want part of your response, your name or your organisation not to be published, can Royal Mail still publish a reference to the contents of your response (including, for any confidential parts, a general summary that does not disclose the specific information or enable you to be identified)? YES/NO (please delete as appropriate)
DECLARATION I confirm that the correspondence supplied with this cover sheet is a formal consultation response that Royal Mail can publish, subject to any declaration in the confidentiality section. If I have sent my response by email, Royal Mail can disregard any standard e-mail text about not disclosing email contents and attachments. Royal Mail may like to publish responses for the purposes of transparency. If your response is non-confidential (in whole or in part) and you are happy for us to publish your response once the consultation has ended, please tick here. Name Signed (if hard copy) Date: