Friday 18 December 2020 7:48 am

Amazon circles Post Office as it loosens ties with Royal Mail

Amazon and Hermes are in talks to handle the Post Office’s packages, in a potentially major boost for Britain’s 11,500 branches.

The Post Office yesterday revealed it had signed its first “non-exclusivity” deal with Royal Mail, in a move that will loosen ties that have been in place for hundreds of years.

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Silicon Valley giant Amazon and Hermes, a US parcel delivery firm, are understood to be among those attempting to fill the gaps.

Royal Mail remains the biggest parcel delivery company in the UK, handling around 1.2bn packages in 2018.

However, Hermes, whose clients include retailers such as John Lewis, and Amazon deliver around 550m parcels in the UK each year between them.

A deal with state-owned Post Office will be seen as a major salvo to Royal Mail’s stranglehold over the parcel industry. Until now the Post Office has only handled Royal Mail items.

In a video message to Post Office staff, chief executive Nick Read: “The new agreement allows us to work with other third parties, marking an important milestone. The growth of online retailing means there is much more competition…We can provide online retailers access to the UK’s biggest parcels pick-up and drop-off network.”

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“You won’t be too surprised to know that we have been approached by third-party providers already. And clearly we will be having conversations with them to understand what the opportunity looks like.”

The taxpayer-owned company, founded in 1660, has been struggling to turn a profit for years.

However, the parcel delivery market has boomed during the coronavirus crisis, which accelerated a trend for online shopping and deliveries.

Post Office volumes are up by more than fifth this year, according to Read, with the company handling 16m transactions each week.

“I think it would be fair to say that our mail and parcels business has exploded,” he said.