Top Postal Industry Themes for 2024
Linear patterns make planning and business decisions straightforward. Parcel volumes should always rise, and letter mail volumes will decline consistently. Inflation should be steady, tried, and true methods for reducing costs should always work, and steady increases in capacity on the delivery and retail network should work out long-term. Yet, recent research from Escher says otherwise.
In the seventh edition of its annual industry outlook report, The Future of Posts 2023, Escher gathered, analysed, and reported on industry insights from 271 respondents from 90 national post offices worldwide. Postal operators shared details of their strategic plans and operating methods, including key investment areas, automation approaches, channel selections, sustainability, and the future of their networks. This past year, things were not business as usual, and it certainly didn’t follow any linear pattern. Parcel volumes dropped, and falling letter volumes suddenly became one of the most significant issues to impact Posts. Inflation ravaged the industry, and cost reduction and optimisation jumped in priority, causing the majority of Posts to hit the breaks and start re-thinking their delivery and retail network strategies.
Yet, despite the challenging environment, Posts are still thinking longer term and remain focussed on e-commerce parcels, believing it will have the greatest impact on their business over the next five years. Consistent with Pitney Bowes Parcel Shipping Index 2023 research, the Future of Posts 2023 revealed that 52% of Posts indicated e-commerce parcel volumes are rising at their company.
What are some key takeaways from Escher’s Future of Post survey that will help Posts plan better and make more informed, data-driven decisions?
E-commerce is still the top focus
This year, despite the challenges they faced with fluctuating parcel volumes post-pandemic, the vast majority of postal leaders (84%) still indicated that e-commerce will have the most significant impact on their business over the next five years. Offering next-day delivery (8.5 out of 10) has emerged as the top e-commerce factor this year, with same-day parcel delivery falling to the bottom of the leaderboard. Posts appear to be prioritising consistent, next-day services over same-day delivery, as well as responding to customer demand for this less expensive service. Control of delivery timing (8.4) and greater integration of e-commerce sites with core systems through APIs (8.3) round out the second and third most important e-commerce factors for Posts this year. With this overall focus in mind, Posts are prioritising certain areas of their delivery and retail network.
Investing in delivery
Given that 62% of Posts indicated that growing parcel volumes with increased sales activity is their priority this year, we can expect considerable investments in key areas of their delivery network this year and well into 2024. Last-mile delivery, domestic e-commerce growth, digital transformation, parcel track and trace, and improvements in parcel handling are top investment priorities for Posts over the next three years. Addressing and route optimisation, as well as delivery automation, are of growing interest to Posts. Posts are also relying heavily on last-mile route optimisation solutions to help keep costs under control. Last-mile route optimisation is a main cost reduction initiative for the delivery network, followed by workforce management and optimisation as well as automation. Interestingly, Posts are increasingly turning to data analytics to help them derive the most from their delivery network, with “optimising last-mile delivery with data analytics” ranking as the second highest use-case among Posts.
Retail networks are also getting a complete makeover, driven mainly by customer expectations. With 96% of Posts indicating that enhancing the customer experience will deliver the most value from their retail network, we can certainly expect any transformation will keep the customer at the forefront. Increased self-service, customer data analytics, reducing waiting times for services, and capturing customer feedback were the subsequent highest-ranking enhancements, and all support an improved customer experience. What might this transformation look like? Over the next three years, Posts have indicated they intend to upgrade their post office counters (64%), add online stores (55%), roll out smart lockers (54%), and invest in self-service kiosks (51%). Investments in start-at-home finish-in-branch (30%) will help connect online and offline services, and the mobile postman (42%) channel could be used to enhance existing services or bring new ones to remote or hard-to-service locations. All of this would indicate that Posts are investing in channels that speak to more modern and diversified consumer profiles – a trend that is widely expected to continue beyond 2024.
The returns opportunity
Retailers and e-commerce providers face a tidal wave of returns annually – a challenge that is growing year on year. Fortunately, Posts are uniquely positioned for handling returns to retailers and facilitating pick-up. Statista estimates there will be $2 trillion worth of returns by 2025. Innovative vendors like Uber and DoorDash are already moving aggressively in this area, working with existing delivery providers offering return services for customers. However, 42% of Posts indicated they are not seeing rising reverse-logistics demands. Posts that prioritise reverse logistics with a compelling, cost-effective offering for retailers should see market share gains in this segment. Dealing with returns efficiently and cost-effectively is increasingly important for retailers, so meeting these reverse logistics needs is a potentially lucrative growth area.
Pitney Bowes has estimated the global cross-border market will account for 20% of all e-commerce sales by 2025. So, what’s keeping Posts from capitalising on this opportunity? Real-time tax and duty estimation was the greatest obstacle to cross-border e-commerce growth, according to 60% of Posts this year, followed by transit times and compliance regulations. It is worth noting Posts still appear to be making investments in cross-border solutions, given that fewer Posts are noting obstacles to cross-border growth. However, it does appear Posts have deprioritised cross-border relative to other areas (like last-mile delivery). With many recent regulatory changes impacting the cross-border landscape combined with a pandemic-related fall in cross-border volumes, Posts seem to be looking for greater clarity before boosting investments further.
AI building momentum
Finally, when asked about plans to use or augment artificial intelligence, 20% of Posts believe it will have the most significant impact on their business over the next five years. How are they using AI? While the survey didn’t cover specific use cases, the most likely use cases where AI will be deployed are in call centres, route optimisation and address learning, in addition to existing areas that are amenable to AI enhancement, like data analytics.
Get the Future of Posts 2023 Report
While last year threw Posts multiple ambiguities, what remains clear is that postal organisations will have to change and will need to do so quickly. Posts will have to shake off legacy constraints and antiquated practices that deter transformation as they reboot their strategies for growth. There is a lot to be excited about, and there is also a lot at stake. This year’s results show Posts are clearly prioritising last-mile delivery initiatives and delivery optimisation, transforming the retail network with a focus on modernising the customer experience while looking to specific opportunities in AI, cross-border, and expanding the services they offer, such as financial and identity services.
What else are Posts prioritising this year and beyond? Download your FREE copy of the Future of Posts 2023 report here: