How much does Royal Mail make from undelivered parcels?

 
pile of parcels

As online shopping booms, have you ever wondered what happens to those valuable items sent in the post which can't be delivered?

Freedom of information research shows that the Royal Mail is making an increasing sum of money by selling these goods at auction, amounting to nearly £1m last year.

Over the past six years the postal service has more than doubled the income it generates in this way, from £432,000 in 2005/06 to £933,000 in 2010/11.

Financial year Royal Mail income from auctions

2005/06

£432,000

2006/07

£485,000

2007/08

£646,000

2008/09

£798,000

2009/10

£824,000

2010/11

£933,000

The items are undeliverable because the address is inadequate or the recipient has moved, and there is no return address.

Valuable goods which cannot be delivered or returned are stored for up to four months. If they are not claimed, they are then sold at auction. The company insists this is always a last resort, where the sender cannot be traced.

Although the sums involved are very small in terms of its annual turnover, the Royal Mail says the proceeds are used to recoup part of the cost of its National Return Letter Centre based in Belfast, which aims to return undeliverable items to the sender wherever possible.

This centre processes a total of around 20 million items a year, mainly business mail, at a cost of over £4m.

While the quantity of letters sent is falling, the number of parcels being mailed is growing due to the rapid spread of online shopping and sites like eBay.

This suggests that the increasing auction income could well be linked to the popularity of online commerce, if more items of higher value are now being sent through the post.

The figures were obtained from the Royal Mail by the BBC through a Freedom of Information request.

 
Martin Rosenbaum, Freedom of information specialist Article written by Martin Rosenbaum Martin Rosenbaum Freedom of information specialist

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Comments

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  • rate this
    +6

    Comment number 1.

    Hang on a mintute. So the RM runs a centre which costs £4m to run but only gains say £1m??? where is the sense in that?!

    the way i see it, if the sender is silly enough to not write the return address etc then tough ...in the bin it goes or open a shop next to the collection office for these uncollected items. There is no excuse for poor labels and no collection in this day and age.

  • rate this
    -2

    Comment number 2.

    Seems a good system to me - not unlike a Ponzi scheme for businesses.
    You charge a customer money for delivery - don't deliver the goods - then sell them at auction for a profit. Where is the incentive to do better? Money for old rope!!!!!

  • rate this
    +27

    Comment number 3.

    I once worked in a small (120 people) sorting office. It was one person's sole job to find the correct recipient and she did a fine job - very little post was undeliverable.

    Return addresses are so important. Just add your house number and postcode in the top left corner in very small writing.

  • rate this
    +6

    Comment number 4.

    Is this really a subject for a HYS discussion? It all seems to be fairly inconsequential and good to know that Royal Mail is boosting its profits this way.

  • rate this
    +58

    Comment number 5.

    Assuming the parcels really are undeliverable, what else can Royal Mail do?

    Store them forever in a series of ever expanding warehouses?

    Dump them in the nearest land fill?

    It's one of those situations which while being ethically grey, still has a clear, logical solution.

 

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