Royal Mail eyes a future in online shopping with investment in e-commerce start-up

The postal delivery service has bought a stake in Market Engine, a start-up that powers companies’ online store fronts

Royal Mail is continuing to hedge against a decline in its traditional business of delivering letters by investing in an e-commerce start-up.

The postal delivery service has bought a stake in Market Engine, an Austalian technology company that allows businesses to build online shop fronts on marketplaces such as Alibaba-owned Tmall and its rival JD.com.

The financial terms of the deal were not disclosed, but Royal Mail said the size of the stake was “not material” in the context of its group as a whole.

The investment in Market Engine is Royal Mail’s latest step to build its digital capabilities as demand for its traditional services continues to wane.

The company is trying to capitalise on the online shopping market, where the UK is a leading force – internet retail sales are expected to grow by 16pc to £52.25bn this year.

Earlier this year, the 499-year-old company acquired Storefeeder, another e-commerce technology start-up. It also led a £2.5m funding round for Mallzee, a personal shopping app that has been called “Tinder for fashion”, which had previously turned down an investment offer on Dragons’ Den.

The letter delivery market is declining by roughly 5pc every year, and Royal Mail is facing fierce competition in its more resilient package delivery business, which grew revenues 2pc in the three months to June.

“I’m excited to announce our investment in Market Engine,” said Nick Landon, managing director of Royal Mail Parcels.

“We think we can leverage our scale and expertise to help Market Engine expand and accelerate its entrance into new markets, while identifying opportunities to incorporate its technology solutions within Royal Mail’s existing operations.”

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