Many observers ten years ago wouldhave said the posts had no real futuregiven the growth of e-mail. In fact,the development of the internet, andin particular e-commerce, is changingthe shape of the postal world in lessobvious ways. E-commerce is driving ashift in doorstep delivery from lettersto packets and parcels.
McKinsey estimates that by 2050 halfof retail sales will be via the internet.Who is going to deliver the goods?Posts, at least in the developed world,have the best capability to deliver tothe home, not the integrators who arefocussed on the business-to-businessmarket.
The immediate problem for theposts is, of course, electronic substitution.Whilst overall letter volumes aregenerally being maintained, it is thehigh revenue first class mail that is beingsubstituted, in the areas such astransactional banking and credit cardtransactions, as more and more peoplego on-line. This first class decline,combined with the continued growth indirect marketing, suggests that the traditionalpostal model geared to a dailyuniversal service is becoming more andmore outdated as ‘urgent’ mail is nowsent electronically. Arguably, there isnow no need for a daily home delivery.The direct marketing sector wants ‘daydefinite’ more than daily i.e. the timeof the arrival of its advertising by mailon a particular day linked perhaps tolocal television advertising and followupby call centres.
So what of the integrators? Whatshould they do about B to C (businessto consumer) markets? The gripon final mile delivery that the USPS(United States Postal Service) has inAmerica perhaps provides a model.There the integrators deliver as closeto the customer as possible, typically toa local USPS location, and the USPSdelivers ‘the final mile’, with an almostdoor-to-door tracing and tracking service.Certainly an economic method ofdistribution. In fact the USPS is nowhandling so much business in this way(including letters) that it is estimatedthat seventy-five per cent of their dailyvolume is now delivered by the privatesector downstream to a local postalcentre.
Is this the model for other parts ofthe world? How will the B to C marketin Europe and Asia develop? There areseveral indicators on the horizon – thecombination of customers receivingtheir home delivery via local distributioncentres (private boxes in stations,for example, in Japan) or even privateexternal boxes outside their homewhich can be electronically sealed andopened by the carrier.
All this seems satisfactory, exceptthat one of the biggest problem ofe-commerce is returned sales. Estimatesfrom around the world range fromtwenty, or even fifty per cent, of goodsbeing returned. This is where the systemall too often falls down at the momentbut, again, posts with their local,particularly rural, networks could havethe key to holding on and growing thismarket against private carrier networkswhich do not have such a facility.
What is certain is that the marketis going to change rapidly. Even asgovernments relinquish or diminishownership of the posts, the politicianswill still get involved in definingongoing obligations such as the USO(Universal Service Obligation) and thesize of the retail networks. There areno votes in closing post offices or reducinga daily delivery obligation. Thebottom line is that posts are so muchnational institutions that the cultureof a country, let alone its government,has to change to reflect the changingmarketplace………. and that’s going tobe very difficult!
– Paul D Jackson
