The decline in traditional mailing
A changing economic landscape, characterised by digitalisation and innovation, has resulted in a decline in traditional mailing services. The digitisation of traditional mail occurred though the adoption of email and other forms of digital communication. A relevant example is the South African Post Office (SAPO) which has paid the price for falling out of relevance and not adapting to industry changes, making a loss of R 978 million in the 2017 financial year.
Does this then spell doom and gloom? It certainly does not, incumbents are seeing this as an opportunity to create value.
What are these new opportunities?
- The growth in parcels generated by rising volumes of online retail and eCommerce.
- Technological advances that enable the incorporation of more consumer-driven service
- Market liberalisation allowing the incumbents to explore complimentary industries.
To capitalise on the new opportunities arising from these areas, postal organisations need to:
- Grow the parcel opportunity
- Become receiver-centralised by modernising their processes, and investing in IT infrastructures (e.g. Parcel shops by USPS, sorting robots by Amazon) to expand the global footprint
- Offer customer centric digital products, such as:
- Electronic Postage by USPS allowing to print postage indicia (stamp) directly onto the mall;
- Digital Mailbox incorporating web-based mail functions e.g. Send, receive, archive text/pdf files, and verified delivery methods (as implemented by Australian post);
- Electronic Bill Payment & Presentment to users via card/EFT e.g. SAPO;
- Reduce costs of core business
- Reduce number of employees within traditional mailing by redeploying existing staff to revenue streams with higher demands (e.g. parcels, digital products)
• Vertical diversification across the value chain e.g. diversification related to parcels which includes logistics, warehousing, logistics related IT as seen in Finland Itella with the aim of capturing more value from customers supply chain.
• Horizontal diversification via product offerings such as banking, insurance or mobile telephony e.g. PostMobile in Italy has developed interesting applications in mobile banking which is a clear differentiation from other mobile network operators, SAPO is also in the process of developing Post Bank.
Whilst larger organisations such as traditional mail operators and courier organisations are better positioned financially to reinvest in new service offerings how do smaller organisations and departments within organisations that offer traditional mailing services reinvent their relevance?
These departments generally act as collection and distribution hubs for B2B and B2C mailing. Moreover, they are often overlooked even though they will be impacted the most by the changing landscape of the industry.
Strategies for mailing departments within large organisations
Mailing departments within large organisations operate as a cost centre, operating as a B2B and B2C hub for the organisation. With digitalisation and innovation mailing departments are at risk of becoming irrelevant. In addressing the relevance of these departments there three strategic options available for these departments:
Retain & Grow
Retain existing department by increasing demand or refocusing service offerings
Shrink existing department to cater for current demand and retrench or shift the additional resources to complementary under-resourced departments.
Shift all resources to complementary under-resourced departments and close down the mailing department completely.
Considering the mailing departments has a need to continue to support ad hoc mailing requirement of the organisation, the solution may be a combination of all the options. A defined process is recommended to determine the mailing departments relevancy and required change in its sustainability. The five-step process includes:
1. Assess the mailing department’s offering;
2. Establish if and what the future requirements of the mailing department are;
3. Review the existing services of the mailing department and how relevant these are;
4. Understand the department’s readiness and capability to adopt new services; and
5. Confirm and adopt the proposed services to establish relevance;