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Business Analytics Blog

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Categories : BusinessOur World

With the recent postal strike and widespread delays in the post, Figure It Out takes a look at the change in postal trends over recent years and what the future looks like for the humble letter. The postal service has been around in one form or another for 350 years, although in the last decade our dependency on post has lessened, mainly due to the advances in technology and in particular the internet. What are the trends in internet uptake? Combining statistics from the ONS and a study by Nielsen reveals that in 2007, 64% (38.5m) of the UK population had access to the internet in comparison with 26% (15.4m) in 2000. This represents a percentage increase of 144% in internet users. If we look specifically at email and internet banking, the increase is much greater at 495% and 2944% respectively. fio28Picture1.jpg The increase is likely to be even higher by 2009, and you would expect this to be having an impact on the volume of physical mail we send and receive. So what effect has this had on the volume of post? Data on the volume of letters sent through the Royal Mail shows us that 16.4 billion letters were sent in the UK in 1993, increasing to a peak of 22.5 billion in 2005/6 (see graph below). In the period between 2000 and 2007, use of the Royal Mail increased by 13%, tiny by comparison with the 144% increase in internet usage. fio28Picture2.jpg Rates of growth have been largely in decline since 2000, however, turning into rates of decline in 2006 (see below). fio28Picture3.jpg Where will we be in 2015? The Royal Mail Group has forecast a further 10% drop in volumes in 2010, which would bring the level down to those seen in 1997. What about beyond 2010? In order to predict further than this we used a used a linear extrapolation method to predict what the levels will be between now and 2015. The blue line in the chart above shows the actual percentage change from 1993 to 2009. We then used this to fit a linear trend line and project forward to 2015. Now the Royal Mail Group’s forecast for next year includes a factor for the recession, and as the recession will not last forever, we hope, we have removed the effect of the recession on the downward trend. This gives a volume estimate of around 16.7 billion in 2015 which represents a 17% drop from 2009. fio28Picture4.jpg In Summary As we have used a straight line method to forecast what will happen in the future, by this method the volume of post will continue to drop year on year until it inevitably reaches zero. In reality this will probably not happen in the near future as the level is more likely to plateau at some point. There are likely to be some things and some people that will be dependent on the post for some time, whatever the advances in technology. It is not compulsory to do your banking online or pay your bills over the phone and while it is possible to send birthday and greeting cards online, we don’t see this replacing the feeling of receiving a physical, hand written card in the post in the near future (albeit the day after your birthday!). Rapidly advancing technology and the need for all things to be ‘instant’ does make the future look bleak for the humble letter, however I wouldn’t suggest an online only wedding invitation to the fiancé just yet! Data & Information Sources: ONS (Office of National Statistics) Royal Mail Group annual reports 2002 – 2009 Nielsen Net//Ratings Nielsen//NR Nielsen Online

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