The good news is that sophisticated digital services are becoming available to make our lives simpler such as online versions of newspapers, online banking, online grocery shopping and articles personalized online. This trend is now touching the postal industry. Most national postal services now have an online entity that offers services to businesses and consumers such as sending digital registered letters, online franking services, designing and printing your own stamps, document archiving – all using an electronic wallet.
Why are these innovative and life enhancing services catching on now? On the business side, postal service providers are looking to generate new revenue sources to compensate for the decline in the volume of regular mail and revenues. First class mail in the U.S. dropped by 19% over the last 10 years in the U.S. and is projected to plummet by an additional 37% by 2020 according to the Government Accountability Office. Overall traditional mail volume decline is projected close to 25 to 50% over the next 5-10 years.
As Jack Potter, U.S. Postmaster General said in 2009, “We cannot just sell stamps. Lawmakers should grant this agency greater flexibility to target new revenue streams and also control operating costs.” Potter’s plea seems to have fallen on deaf ears if this startling infographic is any indication.
Diversification Across the Pond
Across the pond in Europe various national postal operators and global courier, express and parcel operators have diversified their offerings to various degrees and in some cases through geographic expansion. Private and business customers are increasingly using electronic media to communicate. This has resulted in a long-term drop in traditional mail volumes, particularly letters, and declining demand for conventional post office services. For instance, La Poste in France estimates revenue from traditional mail will drop 30% by the year 2015.
The industry is experiencing growing pressure on margins and a need for pricing flexibility, and must develop new services to retain customers. Diversification strategies vary between operators as illustrated in the chart below but recurrent themes appear to be offering financial services and mobile rate plans through their extensive retail networks, digital services and even specific vertical services such as rapid blood transportation services, the Clinical Express Service for doctors and laboratories in the case of TNT which can be ordered and paid for online. The full report by Pierre Audoin Consultants from which this chart is extracted can be viewed here.
On the technology side, cloud based services and electronic payment methods such as PayPal, Google Wallet and mobile payment enable these services to be consumed any time, any place. Electronic payments can use prepaid or postpaid models. Mobile payments use a mobile device and various payment tools including bank instruments such as checking and prepaid accounts. Mobile commerce is driving the requirement for mobile remote payments, creating new revenue potential for businesses involved in the value chain including Communications Service Providers, banks and credit card companies, transport operators and merchants and also postal operators who have diversified by offering banking services and mobile services through their vast networks.
Keeping Challenges in Check
Great news for consumers, but for businesses taking diversified services to market, the challenges are not to be underestimated. The introduction of online services implies a means of adequately provisioning and monetizing these services and, if other business partners are involved, a means of sharing revenue in a streamlined and hopefully automated fashion. Loyal customers and loyal partners need incentives and expect to be compensated for business coming through their channel. In the case of mobile payments many stakeholders with divergent interests need to collaborate and share the risks involved through revenue sharing partnerships. New and complex business models including partner revenue sharing models need to be supported to go after these new revenue generating opportunities and to augment the value of services delivered to customers.
We can expect to see many services being delivered online into our homes through our mobile devices, pc’s and televisions over the next few years. I recently printed off some rather snazzy stamps at home in order to meet the holiday season deadline, and paid for them using an online, electronic wallet (pictured, top of story).
So, before you leave the house, look at the sky to see if there are any clouds and ask yourself if you really need to go to the store/post office/ bank for the same task that can be done online at home.
Catherine Lynch is a senior product marketing professional for Next-Generation Billing at SAP.