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PayPoint is to slash retailer commissions on parcel services, blaming InPost’s acquisition of Yodel earlier this year.
As first reported by Convenience Store, letters sent to major chains this week announced commissions for most Yodel parcels will drop by more than a quarter from 35p to 25p, while store-to-store parcels commission will be set at 20p.
Despite the letters only going to major chains, the cuts are due to affect all PayPoint retailers providing Yodel services from 22 September onwards.
For a store accepting 10 Yodel parcels per day, the cut equals £365 less profit per year.
In a statement enraging those retailers already concerned over the profitability of parcel transactions, PayPoint defended the move stating that volume increases would ‘offset much of the impact’.
Nilesh Patel, owner of Nils Convenience in Ilford, London stated: “Another retailer said It’s like cutting someone’s wages and then offering them to work more hours to make it up, it’s ridiculous.”
Another retailer suggested the cuts would make accepting Yodel parcels unprofitable.
Better Retailing’s calculations show a minute of an employee’s time costs at least 23.4p in wages, pension contributions and National Insurance. This suggests the retailer’s claim that 25p commission is unprofitable may be accurate once other operating costs are considered.
PayPoint’s letter said Royal Mail Click & Collect services would be rolled out across its Collect Plus parcel network and some stores would receive self-service kiosks to help with parcel handling.
PayPoint claimed letters would be sent out to all stores explaining the cuts, which it blamed on ‘harmonisation’ of commission rates across Yodel and its new owners InPost, which both offer parcel services through PayPoint stores.
The change is the latest parcel upset for PayPoint stores, with many still frustrated at losing InPost parcel services at short notice in July, also thought to be a result of InPost’s acquisition of Yodel.
This week John Vine, owner of Vine & Co in Church Stretton told Better Retailing: “I’ve been loyal to PayPoint since the beginning. They themselves admit you need to offer a wide range of its services to make it profitable, so it’s a real kick in the teeth to have lost InPost parcels. It’s 18 miles to the nearest InPost site, it makes no sense but they won’t listen.”
The cuts by PayPoint follow DPD also cutting commission rates in July from 65p per parcel to 45p per parcel.
