Unreceived and Undeliverable Mail - Costs to Individuals and Businesses

Part
01
of two
Part
01

Unreceived and Undeliverable Mail - Costs to Individuals and Businesses: UK

Research shows that undelivered or misdirected mail cost £4 million to all concerned individuals while businesses report a loss of £753,970,078 due to undelivered mail. On average, the cost for a single user is £16 while a business pays between £20 and £40.

Overview

Royal Mail
  • Revenue from letters: £4,152,000,000
  • Number of parcels: £1,068,000,000
  • Total Revenue: £5,220,000,000 [calculated]
  • Number of letters: 14,378,000,000
  • Number of parcels: 1,230,000, 000
  • Total number of deliveries: 15,608,000,000 units [calculated]
  • Average cost per letter: £0.29 [calculated]
  • Average cost per parcel: £0.87 [calculated]

Cost to Individuals

We have assumed that a very large percentage of complaints to Royal Mail about unreceived packages are from individuals, as businesses do not usually report such things. As such, this response does not include letters and parcels where Royal Mail was not notified. All the calculations are presented in the attached spreadsheet.
  • "The Royal Mail received more than 250,000 complaints about lost letters and parcels in the last financial year — and forked out more than £4 million in compensation, according to a new analysis."
  • Total cost for individual complaints: £4 million
  • Number of individual complaints: 250,000
  • Average cost per complaint is £16 per delivery [400,000,000 / 250,000 = 16]

Cost to Businesses

  • One source estimated that each undeliverable letter or parcel costs a business up to $25 in reprocessing, reprinting, new postage, and lost business.
  • Another source calculated that, when a company factors in delayed and lost revenue, return mail transaction cost and the risk of non-compliance, the total cost of undelivered mail results in $50 per piece or between £20 and £40 per mailing.
  • A study from the University of Westminister estimated that the total cost for businesses from returned mail in 2014 was £771 million. [7]
  • According to our calculations, the cost to businesses from undelivered mail is £753,970,078 [see spreadsheet for the full details of the calculations]




Part
02
of two
Part
02

Unreceived and Undeliverable Mail - Costs to Individuals and Businesses: Global

Research shows that the direct cost to businesses of undelivered or misdirected mail in the United States is approximately $20 billion annually. The indirect cost to businesses for undeliverable as addressed (UAA) mail range from $3 to $50.

COST OF UNDELIVERABLE AS ADDRESSED


Research Strategy:

After an extensive search, we were unable to find an answer to the cost of unreceived mail to individuals, as well as the cost of undeliverable as addressed mail to businesses globally.

We began our research on a general level by looking for the most direct, accurate answer to the request that will satisfy all parts of the research criteria. This strategy led us to official data and information on the cost of undelivered mail provided by the United States Postal Service and the Office of the Inspector General (OIG). These official sites offered key findings on the cost of UUA mail for businesses in the United States, but it did not provide information on the cost to individuals, as well as the global cost to businesses for UAA.

For the next part of our research, we searched for information in industry magazines/articles/websites related to mailing systems technology solutions, and industries specializing in solutions to problems like UAA. However, this strategy also did not yield information on the global aspect of the request or the cost to individuals.
Next, we attempted to find information on the percentage of outbound international mail, in order to triangulate a partial answer, or at least provide relevant information. However, this data was neither found on official sites nor through general research.

Regarding the global component, we assume that the unavailability of this data may be because autonomous countries have varying levels of development and government services, which would render quantification and comparison across countries effectively meaningless. Regarding the cost to an individual, we suspect the unavailability of information is due to how difficult it would be to calculate the cost, given that it would depend on all sorts of factors, including how an individual responds, what the UAA item was, if it wanted, e.t.c.

Sources
Sources