AusPost price hike as parcels take over

Small businesses will be hit with higher Australia Post charges today, the second move in just over a year, as the organisation struggles under the weight of the shift towards parcels bought from online stores.

The majority of Australia Post’s business now comes from the parcels, most of which are bought online. But the sheer amount of packages is increasing distribution and logistics costs.

The changes will see “click and send” customers charged an extra $1.95 for obtaining signatures on delivery. Retailers have said this is a common product, but Australia Post says it is only used by 15% of those customers. 

“Previously, to obtain signature on delivery, customers purchased Registered Post at a cost of $3.20, which also included loss and damage cover. Depending on their needs, customers can now add Signature on Delivery for $2.95 or Extra Cover for $1.50,” Australia Post has said.

In a statement, Australia Post said the changes – which appear to be much more of an overhaul rather than simple tinkering – are a reaction to the “challenging business environment”, and the price changes vary based on different products.

“To continue to improve our parcels services, today we have launched a simplified domestic parcel range which will make it easier and more cost effective for our customers – large or small – to send and receive parcels.”

“Customers will now choose a speed – same day, next day, or regular; choose their size – small, medium, large – and then choose add-ons such as extra cover or cash on delivery. And tracking will now come as standard for this simplified parcel range.”

This is the second time in just over a year businesses have seen an increase in prices. Last year, SmartCompany reported many businesses received word the cost of sending bulk mail and parcels would increase 3.8%.

Australian Retailers Association executive director Russell Zimmerman told SmartCompany this morning while the increases are disappointing, he recognises Australia Post is trying to turn a profit.

“Online retail is now growing in Australia,” he says. “We’d like to see it grow among Australian-based retailers and obviously it would be a major disappointment if we see any increase which stymied or caused problems for retailers.”

Australia Post has been attempting to plug the holes appearing in its systems due to the shift towards parcels. Lockers have been established in major cities where shoppers can have parcels sent for collection after business hours.

Some other large businesses, such as Toll Holdings and a venture led by Yellow Brick Road founder Mark Bouris, are investigating parcel lockers as well.

“To its credit, the parcel locker system is very good,” says Zimmerman.

But he warns retailers need to see more stability, and warns Australia Post increasing prices could hurt online retailers in the long-run.

“You do have to make a profit as an organisation. But one would hope you don’t have to make a profit at the expense of retailers becoming less competitive.”

“If so, that’s just going to slow people down.”