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Online shopping helps boost profits at Royal Mail

21 May 2013 - 09:21 by Simon Crisp

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Although the web has certainly altered the function of the UK's postal service, making written communication between people a relative rarity, it seems that it might also be the saviour of the Royal Mail.

In the past 12 months, it is expected to have generated revenues of up to 400 million, almost twice the 211 million it managed in 2011, according to The Telegraph.

Later this year the Royal Mail is going to be privatised and experts believe that its strong performance will help to improve its value when it finally hits the stock market.

Millions of British people shop online to buy products which then need to be delivered to their homes and the Royal Mail is arguably in the best position to offer this type of service, even with large rivals putting up a fight.

The privatisation of the Royal Mail will be one of the biggest in almost two decades and the future remains unclear for current employees, although business minister, Michael Fallon, has said that the 150,000 staff will receive 10 per cent of the shares in the company once they are released.

An initial valuation of 3 billion is set to be placed on the Royal Mail and it will be interesting to see whether investors believe that it has a future, thanks to the current popularity of shopping online.

Of course, there might be cause for concern if people start using click and collect services more regularly, which means local pickup of goods ordered online will not involve the postal service directly.

Quite how much of the e-commerce market this will eventually represent remains to be seen, although it is a trend that needs to be observed, with complacency potentially being a damaging risk.