U.K.’s Royal Mail boosts investments to begin twice-a-day delivery by 2023

As the United Kingdom’s postal service unveiled its five-year strategic plan today, it said it would invest about £1.8 billion to improve customer service and enhance its U.K. network, which would include the launch of a second daily delivery to meet customer demands for “next-day” parcel orders and keep up with growing e-commerce demand.

The investments, Royal Mail said, will help fund the U.K.’s Universal Service, which sends mail for a standard price six days a week to 30 million addresses across the country. The latest investment program increases Royal Mail’s total investment in the U.K. to almost £4 billion since 2013.

The second daily delivery service will be fully operational by 2023 and will likely include parcels that are typically purchased online from retailers during the previous evening and delivered by van in less than 24 hours. Royal Mail also said customers “will continue to receive a delivery of letters and all other parcels earlier in the day” via its ranks of postal carriers.

According to Royal Mail analysis, next-day parcels are “expected to significantly outpace growth in other delivery-time categories,” the postal service said. “Delivery in less than 24 hours is in tune with the ‘night owl’ shopping phenomenon.” The U.K.’s IMRG Consumer Home Delivery Review report from 2017 said that smartphone-based shopping at night had increased by 33% over the previous year and that more than 80% of consumers said they valued retailers that offered late-order acceptance.

“The separate processing and delivery of next-day and larger items will generate a reduction for Royal Mail in the cost of handling parcels, including small items,” Royal Mail said. To accommodate the extra daily delivery, the service will use the funds to build three new fully automated parcel hubs in various regions across the U.K.

In another nod to the increased demands of e-commerce, Royal Mail also said it will collect returned goods directly from customers’ homes, which would also be available for “small marketplace sellers” making sales from their homes. If customers are not at home, the service will also offer “a range of in-flight redirection options” for when their parcels are scheduled to fly, Royal Mail said.

Citing a 2018 study of expected European B2C e-commerce trends, Royal Mail said the value of online returns is expected to increase by more than 27% over the next five years. The postal service also announced earlier this week that it will roll out 1,400 parcel postboxes across the U.K. over a six-month period, beginning in August.