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













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 Article written by Martin Rosenbaum Martin Rosenbaum Freedom of information specialist

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  • rate this

    Comment number 21.

    I have often wondered why the National Return Letter Centre is in BELFAST of all places? Surely this means that a very large majority of the undelivered mail is effectively shipped "overseas", and then, if able to be returned, shipped back again...

  • rate this

    Comment number 20.

    I am a postman. One of the biggest problems is that people register their details with suppliers like Amazon or Tesco, then move but do not change their address information. I get sick of people complaining about poor service when they do not do the simplest of things to help themselves. As for selling off unclaimed stuff, don't the police do the same? Don't hear many complaints about that.

  • rate this

    Comment number 19.

    @Ussie "There is no excuse for poor labels and no collection in this day and age"

    Good god i hope i never have to sit next to you at a party

  • rate this

    Comment number 18.

    Don't forget they have also been paid to deliver the items. With that, enormous amount of over-paid postage and the fees they charge for under-paid/over sized items now - suspect the make a pretty.

    It really is amazing that, with the massive increase in deliveries for internet shopping, that the Royal Mail have failed to take advantage and only by over-charging they can get into profit.

  • rate this

    Comment number 17.

    re 14.angry_of_garston
    Yes, because you can dump them off at the post office and luckily in my case it's easy to park outside for free (unless the carpark bloke from Sainsburys spots you doing it that is)

  • rate this

    Comment number 16.

    I'm interested in what 'undeliverable' means. Often a card is put thru the door saying 'we tried to deliver' with no effort being made to alert those in the house.
    A new one here is the charge for redelivery of letters that are too thick for the new regualtions, while refusing to provide any details of the item that was 'incorrectly' stamped. Bring back simplicity!

  • rate this

    Comment number 15.

    A much more fairer way, would be for Royal Mail to deliver to a warehouse of a registered charity. Then, after deducting transport and sorting costs, it could deduct the amount from it's turnover as a charitable donation. Royal Mail gains by saving tax and charities will benefit. A win-win solution, plus Royal Mail will experience an enhanced reputation for a change. A missed opportunity?

  • rate this

    Comment number 14.

    Do people really still send parcels by Royal Mail?

  • rate this

    Comment number 13.

    Recently, I was unable to take delivery of a parcel and so it went to the post office. I misplaced the 'you were out' slip and so didn't get to the post office before they were sent to a warehouse. After 2 weeks where you can collect them, they become the property of the sender again. Without a letter from the sender to reclaim it, even though it clearly had my name and address on, it's gone!

  • rate this

    Comment number 12.

    RM also is making millions by not having to redeliver post for people who get mail for others that live in the same number house but different street. It's easier to pop it around rather than go to the Post Office with it.
    The Singing Postman (aka Allan Smethurst) would turn in his grave if he had misdirected Molly Windley's post - hevv you got a loight boy.

  • rate this

    Comment number 11.

    As long as RM has tried every means to deliver or return then I can't see a problem, what else can it do?

    If it covers 1/4 of the returns departmental costs from the auctions then it may help stop the price of stamps going up & up & up..........!

  • rate this

    Comment number 10.

    And yet if you call the RM to find out where your package is there's no system for getting what is yours. I routinely have to rearrange delivery for parcels due to the dreaded WYWO card. And before now I've been told my package has been returned to sender before I had chance to sort it out. Seems RM want the Fee but not the duty.
    Ussie , the £4M centre also caters for business mail.

  • rate this

    Comment number 9.

    Jack, no, the ethical way would be for Royal Mail to send in leaflets to people highlighting the importance of a return address as well as handover the profits from auction sales to charitable institutions. RM has no right to profit from people's losses!

  • rate this

    Comment number 8.

    This appears to be the only sensible solution that's economically viable.

    If you leave something in the street with no personal details on it, you are unlikely to get it back (indeed, even if you did put your details on it, you might not). I think the same logic applies here.

    Auction is an honest way of making money and providing the origin of the goods is stated, no repercussions should arise.

  • rate this

    Comment number 7.

    I have always found the Royal Mail to be an excellent service and am thus a great supporter of it and the people that work in it.
    My postman turns up snow or shine, invariably in a decent mood which is great.
    I do wish however that Red Star Parcels were still operating - that really was a brilliant service which I used almost every day.
    If they do have any problems they are all at the top

  • Comment number 6.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    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.

  • rate this

    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

    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

    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!!!!!


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