Mail carriers adapt to deliver growth in a digital age

French postal service La Poste has decided to speed up its digital transformation and introduced, a new collection service from your mailbox. No need to walk, and queue(!) at the post office, or play hide-and-seek with the red, (yellow in France), mail boxes. Just place your parcel in your own letterbox.

So how does it work? Just connect to La Poste’s website to frank your parcel before 11pm, print the tag and place your invoice in your mail box before 8 am. Post officers will be notified through their smartphones and an e-mail will be sent to you to confirm the handover. So you can rest assured that the oversized jumper you just bought will be in good hands all the way back to the retailer.

As the decline of letter volumes is an international phenomenon La Poste finds itself in a similar situation to many other carriers. Most industries are vulnerable to digital disruption, but it has had a critical impact on traditional post carriers. Consequently, traditional postal services have been forced to respond and reinvent themselves to deliver the service users want in a digital age.

To tackle the problem many postal service providers have adopted one of two main strategies- either adding additional services complementing their existing offering or diversify in to new business areas.

When choosing to complement existing services, postal services have in general focused on their three main partners: governments, business and suppliers.

Singapore letter carrier, SingPost is a good example of successful model transformation and strategic development with businesses. It created a “one stop shop for e commerce retailers” successfully adapting Amazon’s model. It also enlarged its product range, offering a service of website development and online customer service.

Alternatively, some have implemented diversification strategies such as Japan Post. In fact, the state owned postal service is now the country’s largest bank and one of the leading life insurers. Another example is the Danish carrier, Danmark Post that chose to develop a partnership with the government in digital postal services. After losing 50% of its physical letter mail volume, due to new Danish government‘s decision to enforce digital communication, Danmark Post introduced a new postal electronic service in 2012: e-Boks. The secured electronic mailbox solution is now compulsory to use by law for Danish companies and citizens receiving mail from authorities.

However, some have failed to adapt.  U.S. Postal Service USPS has been losing money for eight years in a row, for a total of $51.7bn due to a number of factors including declining volume and pension fund obligations.

The decline in letter volumes and the rise in ecommerce have forced a change in the business model of postal services operators. Many have conducted service oriented adjustments using their widespread position and their historical proximity with customers as a valuable asset. This transformation could certainly drive opportunities as consulting firm Accenture estimates this new proximity-service market could reach $10 bn in 2019. The focus is now to ensure the continued existence of this new bread-and-butter revenue.