The future of posts

Escher recently released the fifth edition of its annual industry outlook report, The Future of Posts 2022, exploring options and opportunities as the world and eCommerce marketplace settles into a relatively new normal. In a recent edition of Mail and Parcel Express Review (MER), Escher’s Marketing Manager, Eamon Kehoe gave an overview of their findings which we have summarised below to provide insights into the industry’s future »

In partnership with Triangle, the Escher team gathered, analysed, and reported valuable industry insights from 284 respondents from 91 national post offices worldwide, sharing their automation strategies, point of sales channel selections, key investment areas, future networks and more.

After shifting into overdrive to manage rising parcel volumes the past few years, Posts now have more breathing room to refocus on retail and delivery network opportunities and other cost-saving, network expanding possibilities.

It’s clear from the Future of Posts report that the future is eCommerce parcels, especially when looking at the numbers. Parcel delivery projections from 2019 for 2020 were modest in retrospect, anticipating 100 billion delivered parcels in 2020. The actual numbers far exceeded that projection with 131 billion deliveries. Looking forward, parcel volumes will only rise, and posts are already laying the foundation to ensure they can handle the increases.

From the Future of Posts 2022 report, we’ve learned that the majority of Posts have experienced improved revenue and profitability growth. However, Posts recognise how essential it is to continue seeking new innovations and means of serving customers’ varied and dynamic needs and demands that focus far more on parcels than any other business unit. Posts now must focus on satisfying a predominantly eCommerce first customer.

With 83% of Posts identifying eCommerce as having the most significant impact over the next five years, many posts are adjusting their investment decisions to prioritise parcel delivery. Comparatively, letter delivery and financial and government services are receiving a fraction of the investment priorities they once did.

Posts are relying on multiple strategies and investments to support this heightened focus on eCommerce parcel delivery to accommodate this massive but manageable core change in the original business model to thrive.

Posts are turning their attention to key areas like last-mile delivery, which tops the list wth 41% of Posts indicating it as the top investment priority over the next three to five years. Digital transformation, customer experience, and technological investments in parcel sorting and handling follow closely behind.

Major Themes Emerging Across Postal Landscape

Today, Posts have the resources, ideas, and technological infrastructures to significantly shape the new reality in eCommerce and parcel delivery. Escher has discovered several themes from their Future of Posts report, covering areas such as changing diversification, prioritising inbound delivery strategies over outbound, optimising the last mile, leveraging the retail network for delivery, and more.

Evolving Diversification Strategies

Posts have demonstrated incredible versatility in moving further into parcel delivery quickly and effectively. There are several strategies that Posts are working on to achieve the diversification necessary to offer many traditional services while also managing last-mile deliveries with ease, greater efficiency, and lower costs.

ECommerce parcel delivery remains at the top of the postal operators’ list of future revenue-making initiatives for the second year. And while other services such as third-party logistics, prescription drug, grocery delivery services, and inbound retail strategies are also services Posts are investing in, the focus is clearly on the eCommerce parcels business.

Inbound Vs Outbound Delivery Strategies

Given that in the not-too-distant past, Posts primarily focused on letter deliveries, it’s fair to say that their main service was outbound and has remained so for the past few years.

But things have changed and people are happier to go out to run errands, like picking up a package while grocery shopping. With that, Posts have an incredible opportunity to provide a vast array of ‘inbound’ services that also support changing diversification goals and efforts.

With more emphasis on providing inbound services, postal customers can customise their last-mile experience, opting to pick up their packages at a retail office, smart locker, or pick-up and drop-off location. Customers can connect through mobile apps to request change of delivery options, track delivery status, and so much more.

Ecommerce Parcel Profitability

An important focal point for Posts is getting to profitable growth in the highly competitive eCommerce market without cutting corners or the expense of customer satisfaction.

There might never be a complete return to pre-pandemic “normalcy”, as 84% of Posts noted a massive increase of eCommerce parcels during the past few years, so the path to profitable growth likely lies elsewhere for Posts.

Data from the Future of Posts report supports the idea of three crucial ways to get to profitable growth in a new delivery model:

- Optimise Last-Mile

Most Posts report that last-mile delivery compromises about 70-80% of labour costs and the overall cost structure. Posts are finding ways to address this high-cost issue and plan to focus on cost-saving strategies such as repurposing the depot for local fulfilment, centralised sorting, track and trace solutions, and more.

- Provide Relevant and Meaningful Automation

Automation offers key benefits such as improving the customer experience, decreasing human workload and job related stress, facilitating seamless communication, and much more. “Touchless” will be an increasingly used term as Posts move to reduce the number of interactions between staff and parcels, and automation begins to receive higher and higher priority. According to the Future of Posts report, we’re already seeing this, with 43% of Posts citing automation as a key cost reduction initiative for their delivery network this year. OCR, self-service, and track and trace technologies as well as areas Posts are prioritising now to expand automation throughout a Post’s operations.

- Leverage Retail Network to Expand Delivery Capacity

A great way to expand delivery capacity is to leverage the retail network. Post offices, PUDO locations, smart parcel lockers, and self-service kiosks are all ways Posts can handle higher parcel volumes. So while self-service and new PUDO locations are key part of reducing costs on the retail networks for Posts, these four channels are also currently the top four retail network channels according to the Future of Posts report. This means that Posts can start with this strategy of reducing delivery bottlenecks by leveraging existing assets.

CROSS-BORDER CHALLENGES

While prioritising eCommerce parcels is clear for Posts, there are some areas Posts are struggling with, such as cross-border shipping and eCommerce. Survey respondents stated that they plan to introduce strategies for increasing international parcel volumes. Still, challenges exist, such as real-time tax and duty estimation, transit times, cost transparency, and documentation difficulties.

Analytics Opportunities

When Posts can tap into the power of real-time analytics across their entire network, they can make better decisions and keep costs contained while ensuring customers are happy. From the Future of Posts report, 77% of Posts are using data analytics to understand operational efficiencies, 70% for exploring ways to boost customer service, and 69% for optimising last-mile delivery.

HOW DOES JERSEY POST GROUP FARE?

Jersey Post can tick a lot of the boxes that have been highlighted within the Escher report, demonstrating our innovative skills as a business. We already optimise our parcel sorting through automation for example. Over the last few years we have acquired and invested in other businesses throughout the world that allow us to exert some control over the supply chain and negate cross-border challenges where possible. In Jersey, initiatives including parcel lockers, selfservice kiosks and SecureDrop allow us as a postal operator to optimise our capacity for delivery. Overall, Jersey Post Group remains nimble and we adapt our processes and strategies to stay ahead of the game, as the world of Posts continually evolves.

*Article extracts from Triangle Mail & Express Review Winter 2022 Edition.

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