Connect’s Pass My Parcel business, and the directors

PUBLISHED: Jun 26 2018 @ 02:33 | Comments (0) |

Connect’s (LSE:CNCT) Pass My Parcel idea seemed like a good one at the time – 5 years ago, when it was launched. The idea is to offer companies such as ASOS and Amazon.com shipping of parcels to and from newsagents all over the country. Consumers can then pick up their purchases from a convenient local store.

But there are problems to be overcome with adding this business, not least that Connect’s fleet of News vans covers slightly over half of the country, but has many areas where its vans do not go to deliver newspapers and magazines. Thus it had to incur the expense of putting in place a distribution network in every region to get contracts from the likes of Amazon. This is where Tuffnells – which has nationwide coverage – was supposed to help out, but what help they have provided seems to be too little.

Second, ASOS, etc., are very good negotiators; they bargain hard with all their distribution companies. The prices PMP charges are only a fraction of the true cost of getting a parcel from A to B. In particular they make large loses on returns.

In the period when the company is getting the nationwide coverage in place we would expect losses because it has not built the volume yet. When the volume comes, and the margin rises due to Connect’s advantages and complete package offering then profits will flow. Or so the thinking has been for five years.

But the losses are getting worse as each year goes by. On sales of around £0.5m per month they lose over £0.5m per month.

With the CEO and the FD losing their jobs, the other Board

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