Online sales in the U.K. will account for 12.4% of gross domestic product by 2016, according to consultancy Boston Consulting Group. To expand its services to online retailers, The Royal Mail Group Ltd., the U.K.’s postal service, is investing 75 million pounds (US $120 million) in its package delivery businesses and hiring 1,000 workers to focus on its delivery operations.
With the investment, Royal Mail will build a package-processing center in Chorley, Lancashire, U.K., to add to its hub in Coventry, West Midlands. It also will open two depots in Cornwall and Hampshire, with plans for nine others to be either expanded or moved to larger sites over the next four years. It’s also upgrading its information technology systems.
“Our investment is part of Royal Mail Group’s strategy to grow its parcels businesses in the U.K. and overseas,” says Royal Mail Group CEO Moya Greene. “Our strategy is to convert the rise in parcel volumes to profitable growth. That means becoming a much more customer-focused company being run on commercial lines and investing in new, vital technology. The investment will enable Royal Mail Group’s express parcels business to meet the rapid growth in demand in the business-to-business, business-to-consumer and consumer-to-consumer markets.”
In August, Royal Mail Group and GLS, its European package delivery business, formed a partnership with ZJS Express, a Chinese delivery company, to create a gateway to Europe for Chinese businesses. As part of the agreement, Parcelforce Worldwide, a division of Royal Mail that operates b2b and b2c delivery services in the U.K., will deliver packages to British consumers for GLS and ZJS packages coming from mainland Europe and China.
Royal Mail Group’s parcels businesses—excluding Post Office Ltd., the retail store and post office division of Royal Mail—accounted for 4.2 billion pounds (US $6.7 billion) or 48% of total revenues for the group in its last fiscal year. Royal Mail says its U.K. package delivery volume grew by 6% and revenues by 10% this year compared to last. That’s partly a result of U.K. consumers buying more online. U.K. online sales increased 20% to rise to 76 billion pounds (US$ 121.6 billion) over the past year, according to IMRG, an e-retail trade association in the U.K., and consulting firm Capgemini.