What SME Retailers Need to Know

The UK’s parcel delivery industry — the essential lifeline of e-commerce — is rapidly consolidating.
For small and medium-sized retailers (SMEs), this shake-up presents both opportunities and threats. As the major carriers streamline, merge, and scale, the implications for delivery costs, customer service, and business agility are becoming hard to ignore.

Key Developments Shaping the Market

Recent months have seen a wave of major moves in the UK logistics space:

• Parcelforce Worldwide, a trusted name among many SMEs for B2B and B2C shipments, is being fully integrated into Royal Mail Group under the IDS (International Distributions Services) umbrella. This marks a strategic simplification, but also raises concerns about service differentiation.
• Evri (formerly Hermes) and DHL eCommerce UK have announced a consolidation deal, combining their networks and infrastructure to create a more extensive and tech-enabled delivery platform. The combined force aims to challenge Royal Mail and Amazon Logistics in both scale and service speed.
• Meanwhile, Amazon Logistics continues to absorb parcel volume via its marketplace, edging third-party carriers out of last-mile delivery for many sellers.

What This Means for SME Retailers

1. Less Competition, Higher Costs

The shrinking number of independent carriers may lead to less price competition. SMEs — who already operate on tight margins — could be forced into contracts with fewer alternatives. Larger retailers may still negotiate volume-based discounts, but smaller businesses may face higher per-parcel costs and fewer service choices.

2. Streamlined Services… But at What Cost?

Parcelforce’s integration into Royal Mail could simplify invoicing and improve tracking through a single portal — but SMEs that relied on the flexibility of Parcelforce’s bespoke options might see these diminish. Similarly, the Evri–DHL tie-up will prioritize operational efficiency, but some regional and niche services may be phased out.

3. Improved Technology and Reach

A silver lining: consolidation usually brings investment. The new Evri-DHL group is expected to enhance parcel tracking, delivery time accuracy, and expand national coverage — good news for SMEs shipping to harder-to-reach areas. Royal Mail’s digital transformation push could also mean better visibility and reporting capability.

4. Peak-Season Pressure and Capacity Risks

With fewer logistics partners, SMEs dealing direct with carriers risk getting squeezed out during peak periods, especially if larger retailers and fulfilment providers command priority access. Planning ahead and securing capacity early will be critical — as will having backup courier solutions or local delivery partnerships.

5. Limited Service Personalization

As carriers merge and standardize operations, personalized or flexible delivery services (e.g., nominated-day delivery, hyperlocal same-day) may become scarce. This could affect customer satisfaction and brand differentiation — unless SMEs invest in diversified logistics strategies or partner with third-party fulfilment and delivery platforms.

How SME Retailers Can Adapt

To stay competitive in this changing landscape, SME retailers should consider:

• Diversifying carrier options – either directly or through an established fulfilment partner who is able to offer a wider variety of carrier options allowing cost efficiency, flexibility and switching/ back up where needed.
• Invest in customer communication tools or work with your fulfilment partner on this aspect to manage delivery expectations and improve post-purchase experience.
• Discuss with their fulfilment provider, options for click-and-collect or local courier networks to fill gaps in next-day or same-day delivery coverage.

Final Word

Carrier consolidation in the UK is here to stay — and it’s reshaping how e-commerce is delivered.
For SME retailers, the key lies in being able to adapt and be flexible.

For those retailers who partner with a progressive third party fulfilment  provider relationships will already be well placed. Fulfilment partners will be able to plan and negotiate with a broad range of carriers on behalf of their clients and put in place strategies to ensure their customers get the service they require.

The businesses that treat their order fulfilment as a strategic function — not just a cost — will be best placed to succeed in the next chapter of UK e-commerce.