eBay issues warning over Royal Mail price cap removal

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eBay has warned that plans to scrap a price cap on Royal Mail parcel deliveries would apply pressure to thousands of sellers using its service.

The online marketplace said proposals to allow Royal Mail, owned by International Distributions Services, to charge whatever it wants for second-class parcels would put the squeeze on merchants using its platform.

Ofcom, which regulates the postal services, said a cap on deliveries was “no longer necessary” due to competition from rivals such as Amazon and Evri.

“eBay’s army of small business sellers have weathered quite a few storms over the last few years, so we are concerned about Ofcom’s recent removal of the price cap for Royal Mail on their parcel delivery service,” said Eve Williams, eBay UK general manager, quoted in The Telegraph.

The cap was first introduced in 2012 to limit price increases ahead of Royal Mail’s flotation in London a year later.

Second-class letters and parcels up to 2kg were pegged to inflation, but the increase in the competition since then has meant the price has lagged the consumer prices index.

The decision to remove the cap on parcels has sparked concerns that businesses using eBay will suffer once again at the hand of Royal Mail after strike action wreaked havoc over the last 12 months.

“We urge Ofcom to closely monitor the situation, so that prices can be kept as low and stable as possible for the many hundreds of thousands of small businesses who sell their products online, and for the millions of buyers who rely on these businesses for their shopping needs,” Williams added.