PARCEL International 2021

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THE RAPIDLY EVOLVING POSTAL RETAIL NETWORK: HELPING SHAPE THE FUTURE OF GLOBAL E-COMMERCE By Brody Buhler

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e recently released our fourth annual Future of Posts report, which highlights trends and the current state of the postal industry. The survey is based on responses from over 151 respondents from 70 posts around the world. The data from this survey provides us with tremendous insight into some of the strategies and priorities postal operators are implementing now and in the near future. Over the past four years that we’ve conducted this survey, we have witnessed the role of the traditional post evolve, as postal operators expand to higher growth areas like parcels, financial services, government services, identity services, and more. In fact, this year, 77% of posts indicated that e-commerce parcels are the top growth opportunity. This isn’t surprising, considering the pandemic-induced surge in online shopping. But even with the pandemic (somewhat) in the rearview mirror, it’s clear that parcels will remain a key driver of growth moving forward. Are Posts Profiting from Parcels? But are posts profiting from parcels? In our survey, we asked about the

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impact of the pandemic on revenue and profitability. Interestingly, from a profitability standpoint, 66% of posts said the pandemic had a negative impact on profitability, and only 24% indicated the pandemic had a positive impact on their profitability. This was an intriguing finding and raises several questions. Were the majority of posts unprepared for the surge in parcel volumes and unable to fully benefit from a profitability standpoint? Why didn’t profits rise alongside rapidly rising volumes? One potential explanation for this could be the swift shift in focus to delivery in order to accommodate the rapid increase in parcel volumes in an effort to avoid bottlenecks. In fact, during the pandemic, 38% of posts accelerated their delivery network expansion strategies in an attempt to alleviate bottlenecks. In this regard, these challenges have provided incredible clarity for posts on the delivery side of the business. However, there seems to be more ambiguity on the retail side of the business, with 35% of posts re-thinking their retail network expansion. In light of these findings, what is the best path forward? Here are five key strategies that will help posts not just

profit from parcels but truly thrive in this current environment. Realize Delivery and Retail Network Synergies Because posts consider e-commerce parcels their biggest source of potential growth over the next five years, it’s not surprising they also feel it will have the biggest impact on their business. This certainly explains why 53% of posts indicated they are planning to reorganize and adopt new strategies to handle the influx of parcels. But another way posts can begin to increase efficiency and improve profitability is to realize the synergies between their retail and delivery networks. Posts that can leverage their large, nationwide, retail networks will be able to actually expand delivery capacity too. A larger, more integrated retail network — made possible through pick up, drop off (PUDO) and third-party partnerships — will enable posts to deliver more parcels because they now have more pickup locations, more return options, fewer delivery stops, and more efficient routes. Increase Access Similarly, posts should offer customers