Royal Mail share price: Postal group to face increased competition

Royal Mail (LON:RMG) could soon face a challenge from Uber’s new delivery service. UberRUSH, run by the crowd-sourced taxi company but connecting customers to a courier rather than a taxi, could dent the market share of the British postal group and its European peers Deutsche Post and PostNL, equity analysts and investors have told Reuters.

“UberRUSH would be another potential competitor trying to take a slice of the pie, which would no doubt put further pressure on companies like Royal Mail when same-day delivery grows in importance,” David Kerstens, European transport and logistics analyst at Jefferies, was quoted as saying.
Uber has already launched its delivery service in some US cities such as San Francisco, Chicago and New York. The company says it “currently” has no plans to start UberRUSH in the UK, but analysts said it was just a matter of time before it launched elsewhere, given the rapid growth of its taxi service.

The other threat comes from firms such as Finland’s PiggyBaggy, which is now eyeing Denmark and Germany, and Norway’s Nimber. Both connect customers with people who are traveling to the same destination as their parcels. Nimber reported that it had 30,000 users in 2014 and launched in the UK in May 2015.
Royal Mail, DHL and PostNL have all expressed confidence when asked how they would tackle these new challenges, with some pointing out that they were already developing similar operations. A Royal Mail spokesperson said new entrants were adding to the options available to consumers mainly in the same-day segment, in which it was also a sizeable player, while PostNL said it welcomed competition, but believed in the strengths of its own business.
As of 13:46 GMT, Royal Mail’s share price was 1.43 percent higher at 447.40p. The increase was in line with a generally upbeat UK stock market trend, with the FTSE 100 meanwhile standing at 5,963.01, 1.73 percent up intraday.
As of 14:02 GMT, Wednesday, 17 February, Royal Mail share price is 447.55p.