The dotcom boom spawned a wave of online parcels carriers. Of the survivors, Parcel2Go is proving a remarkable success story - as thousands of online auction enthusiasts have found

The internet boom at the turn of the decade prompted the emergence of a new breed of business - the online parcels carrier. Before most of the "real" carriers had fully got their act together to set up systems for online booking, tracking and accounts management, various entrepreneurs were up and running with their own versions.

Mostly these were clearing houses of one sort or another. Some aimed to find the best-value carrier for any given consignment; others aimed to reduce prices by grouping together small orders and buying carriage at advantageous rates. They were not actually carriers themselves; in effect, they were agents for existing carriers.

With a few noble exceptions, these enterprising developments failed, usually for lack of traffic volume and market exposure. Also there was some wariness in the carrier market about how to treat them. Were they friend or foe?

But they didn't all disappear. Some are still flourishing, and possibly the best-established of these is Parcel2Go.com, which currently seems to be going from strength to strength. So what is the secret of its success?

To some extent, you begin to understand the answer as soon as you arrive at the company's Bolton headquarters, which are housed in a former textile mill. It's not that the premises are impressive by modern logistics standards (though the building is a fine one in a historical sense). It's just the immediate sense it conveys that this is no virtual company; it's a real company with directors, managers, staff and a lot of goods in storage or in transit.

In a nutshell, it says "freight" louder than any words could. You feel it's peopled by a team who can roll their sleeves up; who really understand the commodities they're dealing with.

To put some scale to all this, when we visited the company it was handling around 4,000 packages a day. It also had around 100,000 sq ft of storage space, admittedly on several floors, and much of capacity was packed out. Its growth last year was running at up to 300 per cent a month, and monthly turnover is now closing in on half a million pounds

No, it doesn't physically deliver the parcels. It uses existing carriers such as DHL, FedEx and UPS. Much of the company's UK traffic is handled by DHL, with which the company has a long-term contract, but it is not tied exclusively to this one carrier, and uses a least-cost routing system, especially for goods going abroad.

What the company does convey is a deep understanding of the culture of parcels deliveries, and the issues associated with handling freight. It may be virtual in some ways, but it's very real in others.

So how did it get to this position? The company's history is a fascinating one, and all hinges around the vision of entrepreneur Fil Adams-Mercer. Back in the 1980s he was heavily involved in the video rental market, which was then a burgeoning field. He built up extensive interests in video retailing and video trade publishing in the North West, and was a regular columnist in a magazine called Video Business.

With colleagues, Fil went on to start a publication called Video for You, which was distributed free in video stores. Fil also handled distribution. When he later sold his share in the title to a major publisher, he retained responsibility for the distribution operation, which became FAM Logistics (the FAM being his own initials). It handled a range of break-bulk, storage and distribution work (anything from electrical goods to rugby jerseys), and built up a range of account customers.

Jump forward to the end of the nineties, when internet shopping was starting to take off, and Fil's son Richard (now business development manager) and colleague Steven Kramer (general manager), both steeped in the freight business, decided to set up an online parcels business. Fil gave the scheme his backing, and Parcel2Go was born.

The first full year of the online operation was 2001. Four years later, the company's web site was recording 7 million hits a month, and online trade now accounts for about half of its overall business.

One of the keys to the company's success, says Richard Adams-Mercer, is the way Parcel2Go has made despatch so accessible to users - especially small businesses and individuals. One of its prime tenet is that customers don't need an account; they can just pay by credit card through the web site on a one-off basis.

"We've untangled a complex procedure," Richard says. "Other carriers tend to require users to specify weight and size. We don't." There is a 25kg limit, but up to that limit there's a flat rate, "and we apply a degree of tolerance."

It was this ease of use that gave the new company early appeal in a market sector that has since become one of its most successful: online auction deliveries. The company quickly became known in the eBay community - a profile it has since cultivated with great success. There's no commercial link between Parcel2Go and eBay, but unofficially Parcel2Go has become the leading fulfilment company for the organisation in the UK.

As Richard puts it: "When people buy or sell online, often they have no idea at all how to deliver the item in question. They want a service that's easy to use and transparent, and doesn't necessarily require them to have an account."

All these features were there in the Parcel2Go proposition, so in a way the company couldn't have been better-placed to slot into the eBay world. But it didn't happen without a lot of hard work. For instance, eBay holds regular all-day "universities" around the country, where buyers and sellers convene to discuss current issues; and for the past two years Parcel2Go has made a point of taking an exhibition stand at these events.

"I became a regular," Steven says. "I've attended them all over the country." The pay-off was evident. "We've become quite well known in the eBay environment."

But he adds: "On the other hand, I doubt if we handle even half a per cent of all the traffic generated by their system, so there's plenty of room for growth."

The company has also used more conventional means to promote itself in this field - particularly email marketing. "We work our database hard," Richard says.

The link with eBay has been strengthened by a very visible eBay presence on the Parcel2Go web site. People selling through eBay are offered a 10 per cent discount on delivery of their by product if they display a Parcel2Go logo with their eBay product description, and the Parcel2Go web site includes a very slick system for doing this. Users simply copy a very small piece of HTML code from a Parcel2Go page and paste it into their description. This calls up the logo on demand from the Parcel2Go site whenever the page is served.

Whilst eBay is now big business for Parcel2Go, the company has picked up business from many other sources as well. Some are what is known is "power sellers" - companies that bulk-buy batches of product at advantageous rates, and sell them on through a variety of means, often requiring one-off delivery to end users. In some cases Parcel2Go can provide storage space for such customers on site.

There are also thousands of small businesses and individuals who have homed in on Parcel2Go through publicity, marketing or word of mouth recommendation.

Now that the online parcels business is creating its own momentum, the group is keen to build up its more traditional account business, which includes parcels work, but also more conventional freight that may need processing through the company's own warehouse.

"Our focus inevitably moved away from the freight market when we were building up the online business," says Richard, "but we've always kept on that kind of work, and now we're aiming to expand it." He points out that the company is well placed to provide a range of break-bulk, repackaging, palletising and storage services. It has over 100 active account customers, he says, and there is scope to take on more.

Parcel2Go also has its eye on more distant markets. It is looking at replicating the success of its online parcels service in the United States, and has already acquired a small business in Florida that could provide a locally-based springboard for such an operation.

Meanwhile, it has found a useful niche market in providing a service for UK consumers who want to buy product at advantageous rates in the US. "Tourists and internet shoppers are very aware that dollar prices often compare very favourable with UK prices," Richard Mercer says, "but American suppliers often stipulate that they won't deliver outside the United States."

Its solution, offered through Florida-based Eaziship, was described in the last Fulfilment & e.logistics. It allows UK consumers to have product delivered to a US address, then shipped to the UK for distribution through the Parcel2Go network, and is apparently growing fast.

It is hard to resist the sense that after five years of steady growth Parcel2Go has become a firm fixture on the parcels scene, and has achieved real critical mass. It has succeeded where others failed by striking a subtle balance between being a "virtual" service provider and a business with real physical resources and expertise. It has also shown a remarkably consistent knack of coming up with innovation and resisting the temptation to stand still.