[On :freetrade:] Royal Mail - RMG 📮

I hadn’t realised the UK gov ends its subsidy of the Post Office in two years, and Royal Mail / Post Office ends it agreement in three years.

Looking at Royal Mails shares it looks like it’s on its way out, anyone think it will/can be rescued? Fewer people sending letters these days I’m not sure what it can do. :thinking:

MPs today saying Post Office has a year left before the network collapses. I wonder if that will go online, and shut all the stores eventually, 2021 going to be tough.

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So what went wrong?
Looks like they were paying dividend well, no growth options?

I was looking at this area of ‘delivery’ and ‘post’ and ‘packaging’ as something upcoming.
More people will order things online (a la Amazon) more people will demand on time home delivery… you guys get the idea … so my idea was if Amazon and co grows and the way we consume goods changes this might have a positive impact on those who deliver those packages.

I also like to play devil’s advocate with my own thinking:

Amazon is pushing hard on taking over the delivery side of things in the US — Can I see Amazon having their own distribution system — YES absolutely.

I hope my thinking makes sense here – happy to hear feedback/criticism

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I agree @CEY

I honestly thought that the trust people now have shopping online would save the Royal Mail - it appears that’s not the case. They have the largest delivery network in the UK but the future isn’t looking bright, hence the current share price.

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Amazon Post. No stamps needed, all next day.
Write the location or pick from map, write a one off code generated in the app on the item. Take your letters/parcels to nearest Amazon Locker location. Larger items picked up directly from your home. Debits your account. Done.

Could even use what 3 words to modernise delivery location.

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Great observation. I mean the Post Office has warehousing, distribution lines and mechanisms, etc. Amazon or Alibaba might by them for the infrastructure and plug-in some much needed AI to modernise the processing.

Also - big fan of what3words!

The Royal Mail are relatively expensive when it comes to parcels or larger items of post. They are starting to support letter box parcel drops in some larger cities. They are starting to edge into this market more, such as having an app which will notify you when there’s items due for you, also more tracking options - though can’t buy them via the post office to reduce costs.

May I ask why. I have seen there adverts on instagram but did not really understand what they did different from jsut normal latitude and longitude

I purchased a few shares around a month ago, now i am 8% down.

Tempted to cut my losses and sell. I had doubts about buying them, should have held off.

You live and learn!

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What made you purchase some shares?

I was never aware they have a DIV of over 9% ! That is going to change I assume ? Have they always been paying out like that?

I think they’re on the way out unless a bigger company uses them for infrastructure. Unlikely though as they could do it cheaper themselves I expect

I was looking for UK companies with strong history in the UK. A stupid error.

Shares sold at 230.11 + £1 commission.

Learning from my mistakes!

Wel all have to start somewhere, you can only learn from the mistakes and become stronger.

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The yield is so high because the price crashed. Royal Mail Group has increased their dividend every year for the past five years, the total dividend for the last year was around 24p per share. They might cut this, I think since then we’ve had GDPR which is supposed to have had a major impact ( less junk mail, has to be positive for the general public ), also people are moving away from letters and towards parcels.

The thing is Royal Mail treats their staff well ( this is a good thing ) so they have higher expenses, which makes them more expensive. On the other hand consumers want the cheapest delivery possible, as do most online retailers.

Which means Royal Mail needs to figure out how to future proof their business. I know they announced parcel post boxes but that doesn’t really feel all that special. Previously Royal Mail has announced they want to use drones and autonomous trucks but there hasn’t been anything recently.

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I guess that is a start, now they need to expand and have a solid plan in place. Regarding the drones etc, that has gone really quiet, maybe they’ve not decided to explore that option.

Maybe but then they will be left behind. Just Eat ( amongst others ) are looking at robotic deliveries. Amazon is going around patenting all sorts like floating delivery warehouses.

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Amazon want to take over the world lol!

Interesting to see how Royal Mail will react and what they come out with.

Whilst they have a legal monopoly on a dying business (letters delivery) to maintain I have no faith that this can turn around. The big logistics companies of the world are investing billions in CapEx to build for the future, Royal Mail is not & cannot. I’d be amazed if this business survives over the long term.

look at future, not history.

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