UK Mail: Special Delivery - A WASTE OF MONEY!!

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There seem to be a lot of confusion regarding Royal Mail services, insurance and tracking.
This results in many sellers insisting that the buyer pays for Special Delivery when this service provides no extra security or any compensation above that included in the basic low cost services. Yes, items are insured to £500 BUT only if that is what they can be proved to be worth. If you sell for £40 then the extra paid for SD is wasted.  2nd Class unrecorded (for packs up to 1Kg) is just as secure and includes loss/damage compensation to £42. A £35 (sale price) 1Kg packet costs £6.70 SD and is insured to £35 NOT £500. Send it  2nd Class Recorded Delivery - £3.59 (unrecorded £2.84) and the insurance is still £35. Note that your post office will  gleefully sell you worthless extra insurance - even for items they don't cover!
With bigger packs the cost increases. £21.65 for an SD 10Kg packet with up to £500 insurance. The same packet sent Standard Parcels is £16.11  with £500 insurance included - for SD £5.54 is being charged to collect a signature! Also the math' is revealing.   Std Parcels offer extra cover to £500 for £3.50 - this actually covers £458 as £42 is included with the 'uninsured' service. Do the arithmetic. You mail 1000 £500 packets and lose 5. You (or your buyers) pay  £3500 extra (£3.50 x 1000) and you claim £2500 (£500 x 5) for losses. Without the £3500 you would have claimed £210. So that £3500 buys you £2290 compensation. You/your buyers are down £1210!!
One would hope that tracked and signed for would be more secure but the loss/damage rates for ordinary mail and Special Delivery do not differ enough to justify the extra cost.*
The SD tracking is of dubious value - Paypal likes it but when claiming off the Royal Mail, it is irrelevant. It helps the RM to pinpoint where a loss occurred but that is to their benefit, not yours so why should you pay?.
If you mail everything SD and you suffer normal loss rates - about 0.5% - on 1000 £40 items mailed, your buyers will have paid an extra £3000 to enable you to claim maybe £200 total compensation. That is not sensible!
Most buyers are aware of true p&p costs and bid more when they feel they are being fairly charged. This increase in bids more than compensates for the very slight extra risk involved in using Recorded Delivery services instead of tracked SD. One extra bidder can double a final price!
Careful labelling will reduce losses to zero. I've mailed 7000+ packets over 8 years on eBay. Not one has got lost though some have suffered long delays. I've had 2 damaged items out of that lot. I've helped a charity where addresses were taped to packets and their loss rate was above 5% - sheer stupidity!
*Royal Mail 3rd Quarter Performance 2009/2010
Claims made & completed:72954
Compensation Paid: £1061863 or
£14.55 per loss!!
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