I worked in Parcels Marketing at a regional HQ until the demise of C&D necessitated (yet another) change in my railway career.
Almost all collections were from manufacturers and wholesalers. It was possible for a collection to be made from a private address, but in that case the customer would have to have an account because the van man had no means of calculating or raising the charges.
Most C&D traffic was conveyed on passenger trains, either in the working brake or in additional Non Passenger Carrying Coaching Stock. The costs of the rail haul were, therefore, little more that marginal and there were few avoidable costs of not doing it.
Particularly large flows were moved from their origin in parcels trains; an example from my early railway days being Mettoy's Playcraft plastic footballs from Northampton. Obviously very bulky, they were moved away in trainloads. There generally was no-where near enough N.P.C.C.S.* (see above) so recourse was made to Vanfits.
As the O.P. mentioned, a big part of the business was mail order catalogue orders. The contractual agreement was with the mail order supplier and was moved from that factory to the end customer's private address. In these cases, the contract was for the duration of the 'season' being re-negotiated each year with the new catalogue. Many of the suppliers in my 'patch' were based on a trading estate in the Valleys built I believe in the 1930's to provide employment when coal mines were closing and did not always have a good credit record. When they became insolvent and didn't settle their outstanding accounts usually a new firm sprang up, making an identical product in the same factory with the same directors...
We were in competition with the road C&D companies such as Wilkinson, Towsend and B R S Parcels and competitors' prices dictated the market. These did fluctuate because our competitors tend to fluctuate between 'buying' traffic (undercutting everyone for volume) and shedding unprofitable traffic (i.e., last year's 'bought' traffic). They also came unstuck, like us, with 'bad and doubtful' debts. No one moving parcels became rich - and hearing how many drops, and the price per package earned, by today's 'Sprinter' drivers, not much has changed.
The demise of C&D was indeed quick, a decision made above the B. R. Board. I can't remember which party was in government but a cynic might connect one party's reliance on money from Unions (a very large one being the T&G representing among others lorry drivers who then were almost all union members, a lot more of them than railwaymen) or the other's on donations from the owners of road haulage companies. Neither supported the railway in those bleak and depressing days. The Department's justification for closure was that road was 'more efficient' because we had transhipment and they didn't. That was of course nonsense - it would imply that either the trunk haul was done in 5 ton "Noddy' vans, or home deliveries made in a maximum capacity artic. Of course there was transhipment by road - it just wasn't inter-modal.
The cost savings were not great; the overheads organisations no longer received the contribution from earnings but I doubt whether, for instance, the Civil Engineers were able to reduce their expenses as a result of BSKs weighing 33 tons instead of 36.
We were instructed to forward details of all our customers, including market intelligence, to Royal Mail. And Sectorisation provided me with a new opportunity
*Scraping the barrel included S1S, the Wagon-Lits brake, and the eccentric ex L.M.S. Cream Vans (M38998-9), with the appearance of a passenger coach one side and a BG the other.