Failed to deliver: why Yodel is on the brink of administration

After scrambling and failing to find a buyer, Yodel is now assessing its options, including going into administration. What made Yodel run out of gas?

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Struggling parcel courier Yodel has put administrators on standby as attempts to find a buyer have reportedly proved difficult, potentially leaving its 6% worth of the delivery market share up for grabs.

A Yodel spokesperson told Fleet News that “in the summer of 2023, following a number of unsolicited approaches, we hired advisers to carry out a full strategic review,” and has confirmed that discussions with interested buying parties are still ongoing.

An executive at a rival operator explored whether to inject more than £25 million into Yodel in these past weeks to shore up its finances as it continues to seek a buyer.

The risk of slipping into administration would put the jobs of its 10,000 staff in jeopardy, as well as the delivery services of high-street giants John Lewis, Zara, and Argos.

How did Yodel go from being one of the biggest courier companies in the UK to being on the verge of administration?

Poor customer satisfaction

Your brand is only ever as good as its word of mouth, and in this regard, Yodel had a real reputational challenge to overcome. Many of us may have anecdotal experiences of poor deliveries, but stats show that Yodel scrapes the bottom of the barrel when it comes to satisfied customers. In customer polls conducted by Citizens Advice, 40% of customers reported issues with the delivery company.

These statistics place Yodel at the bottom of the customer satisfaction league for delivery firms, as DPD reported 37% of unsatisfied customers followed by Evri at 34%.

Alongside Evri, Yodel was rated 2 out of 5 stars. It also scored a low 2.2 out of 5 in customer trust and a 2.3 out of 5 for customer service.

Continuous poor performance on the customer service front has hardly won the company much sympathy, potentially explaining why it has been a less alluring sell for potential buyers.

Steep competition

Britain’s parcel market is highly competitive. Royal Mail, Evri, Amazon Logistics, DHL, and UPS together account for 71% of the 14 million parcels that were shipped in 2022, according to the Pitney Bowes Parcel Shipping Index.

Yodel takes up a mere 6% of the market, putting on par with DPD and UPS. While Yodel delivered 200 million parcels last year, it has grappled with challenges to secure sustainable profitability.

Yodel reported turnover increasing from £521m to £676m in 2021, as it benefitted from a rise in online deliveries during the pandemic. But, reports by The Telegraph have flagged the company needs an urgent cash injection within the next two weeks to keep operating.

The situation is particularly severe, given that accounts for both Yodel and its parent company Logistics Group Holdings for June 30 2022 are overdue to Companies House by over a month.

Currently, the biggest creditor on the frontline is HSBC, who is understood to be owed around £140m by Yodel.

Tight Barclays wallet

Grappling with debt is also the owning family of Yodel, The Barclays. The family’s finances have faced strenuous pressure after Lloyds Banking Group seized The Telegraph and the Spectator – both owned by the Barclays – were seized by the bank to recover £1.1bn it was owed.

The family repaid the debt using funds from the United Arab Emirates in December. In turn, the Middle Eastern state is aiming to convert £600m of the lending into ownership of The Telegraph for RedBird IMI, a media fund in which it is the majority investor.

Investigations are currently underway to scrutinise the deal, as regulators are concerned this would decimate press freedom.

The continuous challenges have made the unprofitable Yodel less of a priority in the family’s portfolio, spelling cloudy forecast for the courier’s rescue plan.

What’s next for Yodel?

Yodel is working with Teneo insolvency specialists to explore its options. The latest reports have confirmed that Yodel is still undergoing conversations with potential buyers.

As the road to finding a buyer continues to stretch ahead of Yodel, the courier will need to start planning a way to resolve the volatility of its profits, and work out if it has any route to speed ahead of the competition.

Besides finding a way to get an edge in the market, Yodel will also need to find ways to get more customers in its corner, after thousands of poor delivery experiences led to its poor rating. While delivery companies have not historically been synonymous with happy customers, Yodel should look closer at what the competition is doing right. Our own Startups 100 index, for example, has highlighted disruptor Packfleet as a brand to watch, thanks to its values-based approach to dealing with staff and customers.

There is no guarantee that Yodel will dodge going into administration. But retailers who work with the company should look closely at headlines to pre-empt having to switch providers.

Written by:
Fernanda is a Mexican-born Startups Writer. Specialising in the Marketing & Finding Customers pillar, she’s always on the lookout for how startups can leverage tools, software, and insights to help solidify their brand, retain clients, and find new areas for growth. Having grown up in Mexico City and Abu Dhabi, Fernanda is passionate about how businesses can adapt to new challenges in different economic environments to grow and find creative ways to engage with new and existing customers. With a background in journalism, politics, and international relations, Fernanda has written for a multitude of online magazines about topics ranging from Latin American politics to how businesses can retain staff during a recession. She is currently strengthening her journalistic muscle by studying for a part-time multimedia journalism degree from the National Council of Training for Journalists (NCTJ).

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