Australia Post has prompted an imminent increase in the price of mail delivery services, as it looks at mounting losses incurred in this business division. In contrast, the parcel business is booming thanks to e-commerce.
Understanding the mail delivery business as a distribution category is to my view the source of the problem. To amplify the commercial crisis we, as individuals and businesses, are all trying to hand-write less and use less paper. We don’t perceive high enough value (or low enough cost) in the physical delivery of mail.
I think this is because mail is rather an information and communications endeavor. The value of mail does not reside on the physical mail unit delivery but as conduit that triggers subsequent actions (a contract is signed; a bill is paid, etc.).
This is the thinking that would be supporting the launch behind initiatives like Australia Post’s own Digital Mailbox and a private company called Digital Post which closed earlier in the year, given the low levels of clients’ take up. Easier said than done, huh?
The parcel division certainly has the wind on their backs, but I would speculate that Aus Post is making a mozza delivering our shoes, dresses, headsets, etc.; because it has unrivalled distribution / delivery expertise. Whether it is fully unlocked is another issue.
This comparative advantage cannot be used in the mail delivery business; hence the huge gap in performance.
So what is Australia Post to do?
– Divest from businesses on which it does not have a comparative advantage. Mail delivery is one of them (counterintuitive I know but trust me on that one )
– Going even deeper into parcel delivery, investing in logistics tech, exploring crowdsourced delivery, etc.
– Sell mail delivery to a specialist in data, communications and workflow; yep even the physical part. They will be in the best position to migrate mail online faster that Aust Post trying to upskill.
Come to think of it, I reckon Telstra could be in a good spot to transform mail. Dropbox also comes to mind.