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Correos de Chile sees “astonishing” response to parcel terminal project

Tuesday, March 5th, 2013

The director general of the Chilean national postal service has said his company has seen “astonishing” results from the initial phase of its “CityBox” automated parcel terminal project.

Pablo Montané was discussing the first introduction of 24-hour self-service parcel collection and drop-off points in Latin America, which saw Correos de Chile installing 10 machines high-traffic locations in May last year.

Speaking at last week’s World Mail and Express Americas conference in Rio de Janeiro, Montané said so far the consumers that have been using the machines as an alternative delivery point for e-commerce purchases have given the service a 93% satisfaction rating.

The customer response bodes well as Correos de Chile prepared to install an additional 60 CityBox machines this June, along with a further 230 machines over the next two years.

Montané said the 93% approval rating gave his company pride, and suggested this was the right response to the growing popularity of Internet shopping in Chile, where the market is currently valued at about $749m USD.

He said: “People need this service – from the operating perspective, we had 25% missed deliveries for parcels going to households, because people were not there to receive them. But this is changing our image, not merely as a traditional company, but as a company that is ready to take the necessary steps to modernise and provide services people need.”

Multi-channel delivery


Pablo Montané has turned around the fortunes of Correos de Chile with a big emphasis on parcels growth

Correos de Chile has sourced its parcel terminal hardware from Polish company InPost, and according to Montané it takes only 17 seconds for a consumer to retrieve their parcel from one of the secure lockers within a CityBox terminal.

Montané said the CityBox project was now a key component in his company’s new multi-channel delivery strategy, which is allowing consumers to choose where to have e-commerce purchases delivered – to their homes, or to more than 180 post offices and the growing network of CityBox parcel terminals.

“We also have the option of reverse logistics – you want to make a return, you can also use these same outlets,” he said, adding that the new strategy was making Correos de Chile the “company of choice” for e-commerce delivery.

The Correos de Chile director-general said that as well as facilitating the country’s own Internet retail industry, his company was also encouraging consumers to shop outside Chilean borders.

Montané said that working with shipping partner TransExpress, the postal service had established a shipping address in Miami to allow Chileans to order from American websites – including those that do not ship internationally – and have items delivered back to Chile. The model is now destined for expansion.

“Now we want to have a virtual address in China – we have a lot of business in China, and currently purchases from China go through Miami, and from Miami to Chile,” he said.

Last year global consultancy A.T. Kearney ranked Chile as 4th in their league table of the most attractive markets for e-commerce among the world’s emerging markets, behind only China, Brazil and Russia. About 59% of the Chilean population is online, with around 30% engaged in e-commerce according to Montané.

Transformation

Pursuing the e-commerce market is part of the current strategy of Correos de Chile to turn around its image and look to the future in the digital age after significant slumps in sales in 2009 and 2010.

The company rebranded last year, and with its innovations and streamlining allowing revenues to grow 9% while operating income grew 62% year-on-year.

Montana, who joined Correos de Chile back in September 2011 with a reputation as a “change management” specialist in business, said the e-commerce world offered “enormous” opportunities for his company.  The firm entirely relied on mail revenue up to the start of market liberalisation in 1981, since when its share of postal revenues has dropped from 100% to around a 63% market share (by sales) at present, while parcel-express revenues have come from minimal to about an 11% share.

Since he took over, the director general has cut delivery frequency for ordinary mail to three days per week, and brought in new tracking technology and hand-held terminals to improve delivery quality.

He merged the mail delivery fleet with the parcel delivery fleet to push for efficiency and turn around a situation in which Correos de Chile was growing its parcels business at more than 20% year-on-year, but eating into profits along the way.

“The results of the unification of our fleet meant we were able to absorb our growth in courier traffic of 22% with merely a 6% increase in our costs,” he said. “Today we are seeing a situation that is much more comfortable and we are less vulnerable.”

Source: James Cartledge, Post&Parcel

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