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Blog

Five ways postal operators can profit from e-commerce

Ian Kerr

Postal operators were in the right place at the right time when e-commerce started to take off earlier this century. Posts dominated the B2C parcel market in many countries, so it was natural that postal operators would benefit from e-commerce growth.

In recent times, growth in e-commerce has outstripped growth in posts’ parcel volumes, indicating that their market share is slipping. Is it wise for posts to heavily rely on parcel delivery for future revenues?

Delivery is only one part of the e-commerce chain, and in the face of growing competition in the delivery sector posts must find other ways to profit from e-commerce.

1. Online advertising and marketing

Many postal operators have or are building customer databases containing individuals’ and businesses’ delivery data, along with other demographic and sales information. How powerful could that data be when it comes to online advertising and marketing?

The challenge for postal operators here is how to leverage that information without violating the public’s trust in the post.

2. Helping small retailers sell online

Postal operators can help small producers and retailers start selling online, and in the process make commissions on sales while growing parcel volumes.

Australia Post’s Farmhouse Direct platform is aimed at farmers and primary producers, helping them to sell home-grown produce and handmade products. Australia Post provides the producers with an online presence through the farmhousedirect.com.au website.

Farmhouse Direct automatically bills the seller a commission of 7.5% on sales. Australia Post ships all products sold on Farmhouse Direct. Australia Post doesn’t act as a warehouse for sellers who list products on Farmhouse Direct – the products are shipped directly from the farm to the customer.

More recently, Australia Post has started a trial whereby small, local producers can sell products online via a website branded with their local post office. These locally branded websites use the Farmhouse Direct platform. Both Australia Post and the local post office owner make a commission on online sales.

3. Selling into overseas markets

Growing numbers of postal operators have signed deals with JD.com and Alibaba to help local producers and retailers sell into China via local e-commerce platforms. Agreements that focus on increasing international outbound parcels are a good start, but La Poste has developed a value-add solution for prestige and luxury producers selling into China.

La Poste is using technology to counter fake French wines and other counterfeit luxury goods that are being sold in SE Asia. With this service, La Poste handles the international outbound shipments and also provides an IT solution, whereby Asian consumers can use their smartphones to check the provenance of luxury French goods.

4. Payment services

The banks and PayPal are the major players in e-commerce payment services. Can postal operators compete in this sector?

A few years ago Australia Post acquired online payment service SecurePay, which provides internet merchant services and a payment gateway.

If the post has set up an e-commerce platform, and handles the shipping for sales made through that platform, then it may make commercial sense to also provide merchant services for that platform.

5. In-store

Post office networks are extensive, with post offices located in metropolitan, regional, rural and remote areas. Already, many postal operators have implemented a “click and collect” solution for e-commerce, where customers can send their purchases directly to the post office to await collection. This gives certainty to the customer and removes the risk of a failed first-time delivery.

But a click and collect offering is just another form of delivery. More interesting is the concept of pop-up shops or sharing retail space.

Many e-commerce customers still like to see and touch products before they buy. Internet sellers often don’t have their own bricks-and-mortar retail network, or may only have a small number of flagship stores. By renting out space in post offices, the post can offer these retailers a physical presence.

Conclusion

As parcel delivery becomes increasingly competitive, postal operators need to earn more from other parts of the e-commerce chain. The post has the reputation and the assets to be able to deliver e-commerce services to sellers and buyers.

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