The fortunes of the mail industry are shifting. The reality is that the mailman gets fewer and fewer letters to deliver each day. Is this an opportunity for mail organizations to leverage their strengths and assets and to shift their focus towards delivery services? Is the mailman of the future a qualified service provider, equipped with modern technology? Who are the front runners who have already made this happen?
The market is changing
It is evident that the mail market is changing. Letters and physical mail are declining, while digital communication alternatives are taking over. As this occurs around the globe, the speed of change varies, of course, between regions. In 2015, the share of total industry revenue represented by physical mail stood at 44.8 percent (Global Postal Industry Report 2016 key findings), indicating that physical mail remains important. In some countries, however, the decline is rapid. In Denmark, PostNord’s physical mail volume fell by 17 percent in 2016.
On the other hand, parcel delivery is increasing hastily in the Industry. The underlying growth engine is e-commerce. Over the past decade, global online retail sales have increased by more than 20 percent a year on average (Global Postal Industry Report 2016 key findings). The growing need for this type of delivery is of course positive for the mail industry. Nevertheless, it is also challenging for many mail organizations to comply with the cost and quality requirements demanded by consumers. One key reason is that they are not structured optimally to efficiently handle timely parcel deliveries (e.g. handling of unattended deliveries, same-day delivery, etc.).
The conclusion is clear. A major part of the mail industry is in serious need of substantial change.
Opportunity to become a service company
Perhaps that sounds quite bad! Do all mail organizations really face such a bleak future? No, not at all. There are excellent opportunities for many mail companies to emerge as winners in this market situation. History has shown us many successful examples where companies and organizations have successfully transformed to meet changing market needs. Well-known transformation cases include:
- IBM, which switched from hardware to IT services
- Xerox, which transitioned from paper to toner, ink, software and printers
- Nokia, which migrated from paper mills and rubber works to mobile phones
- GE, which first produced the light bulb, but today manufactures gas turbines, hybrid locomotives, etc.
- 3M, which progressed from making sandpaper to producing Post-It notes
In recent decades, the service sector has grown constantly and today we see a booming need for all kinds of services. Taking the characteristics of mail organizations into account, services could very well be a profitable business sector for them. A few aspects that make mail organizations suitable are:
- Appropriate assets – mail organizations possess buildings, vehicles and service trained personnel that can be used for service production.
- Similar processes – their current mail process is delivery, which is a kind of service
- Trust – many mail organizations enjoy a considerable capital of trust that they could leverage. Who would you entrust your keys to, if the food being delivered could also be put in the fridge?
Leveraging new technology
Many mail organizations are well-positioned to become service companies. Today, however, a key ingredient for most service companies involves leveraging new technology. Mailman 2.0 is not just a mailman with a new assignment. Instead, delivery workers are equipped with the most up-to-date technology to manage their tasks efficiently. This will involve the Internet of Things, Big Data, Blockchain, drones, robots, smart algorithms, intelligent mobile applications, workflow tools and much more.
Just a fantasy?
Is this really happening? In the future, will we see mail organizations turning in to fully-fledged service companies? The fact is, it is already happening. Finnish Posti and Post New Zealand are two front runners that have already progressed far on their journeys towards becoming service companies. Posti has a very broad, service-defined mission statement. They say they shall help people in their everyday lives. Examples of innovative services include lawn-mowing, health checks for seniors, installation, security services, traffic monitoring, data collection and much more.