The collapse of Smiths News’ Pass My Parcel service highlights wider issues in the click and collect services sector, according to PayPoint parcel services director Gary Winter.

Despite growth in customer numbers and a new returns service, Pass My Parcel said squeezed parcel margins were behind the large financial losses reported.

Winter, who has previously worked at Royal Mail, Parcelforce, Hermes and Unipart said this was an issue faced by parcel companies. He told Retail Express: “Consumers demand higher levels of convenience and lower costs, leaving parcel service providers caught in the middle.”

It's not just consumers making demands. Spar UK MD Debbie Robinson recently told retailers at the ACS Summit to demand a better deal from parcel services.

"We are fulfilling the last mile for people that are making ridiculous amounts of money. You simply can’t afford to subsidise the growth of these businesses," she said.

Describing the challenges faced by click and collect providers, the PayPoint parcel boss explained: “It’s a difficult market and the combination of maintaining a retailer estate while running a parcel service is a complex and expensive task.”

Asked what this means for the future of click and collect services, Winter predicted: “We think that in the future, it won’t be commercially viable to run a standalone parcel click and collect service.”

He explained that by using the same retailer network to deliver multiple services PayPoint can reduce the operating costs related to its Click and Collect proposition –  CollectPlus.

Read more: PayPoint to make partnered stores the home of click and collect