Imitation and co-operation key to postal market survival

Postal operators should imitate, rather than innovate, to diversify their revenues and pursue opportunities from new technologies, an industry gathering in Mexico heard this week. While many Posts around the world have already made huge strides into new ideas on improving service quality and exploiting new technologies, others do not have time or the resources to re-invent the wheel.

The view was particularly stressed at the World Mail and Express Americas event in Mexico City, with limited budgets, declining mail volumes and growing competition make life difficult for Posts with important universal service obligations.

Luis Jiminez, the respected founder of Strategy Dialogues and former Pitney Bowes chief strategy officer, said Posts had to collaborate more.

He said: “The Posts are very good at innovation – but they are not great at imitation – they want to do it all themselves. Sometimes we need to see who is good at this already – there are many of the other operators in the industry that are willing to partner with a Post.”

Daryl Jackson – Director of Federal Government Practice of Deloitte Services – noted some particular examples of Posts that have been leading the way in technology innovations, including Australia Post, Canada Post, Deutsche Post and Swiss Post .

Jackson said Posts with universal service obligations could be great drivers of change, teaching customers about new forms of electronic communication and making the most of commercial opportunities from e-commerce.

Postal operators at the conference appeared very receptive to the idea of collaborative working and taking up the ideas and experience of others.

Chile’s Post, Empresa de Correos de Chile, said they were ready to be great imitators in pursuing new ways to counter declining mail volumes and increasing competition, while also eyeing the opportunities that flourishing e-commerce has to offer.

Salustio Prieto Marquez, the company’s vice president of business units and marketing, said: “We want to increase our productivity and to have more quality services – but to find solutions we are copying. Our innovation is to be great copiers – there is no time to innovate.”

Marquez added that his company was already looking to learn lessons from Poste Italiane, an operator which recently signed agreements to help Russia Post modernize its network.

The private sector operators, too, recognized the need to learn from outside in order to react to a market that has been changing rapidly in recent years.

Juan Tamariz, chief executive of Mexican parcel delivery and logistics company Pronto, part of the AMPM Group, said: “We have to copy and look elsewhere in this changing market. But we are a small company and we can move faster than our competitors.”

“Co-opetition”

The advice on innovation fit in with an overall mantra at the conference in Mexico City, that postal operators can do better in chasing a quality service through partnerships, rather than seeking to do everything themselves.

Working with other Posts to build international services, and with the private sector to strengthen logistics capabilities at home could be more effective than Posts investing in their own brand new infrastructure.

“Posts all want to be a full service – but why? Why not be a good service instead. Do what you are best at, and outsource the other services,” said Jimenez, who said postal operators had to work towards a “less volume, more quality” philosophy in today’s market conditions.

“You still have to fulfill your social mission – Posts can’t get away from that,” he said in a speech advocating a more flexible approach to postal services. “But why do you have to own and operate everything?”

UPS vice president of international government and postal affairs Ron Jordan coined the term “co-opetition” to describe the situation of companies that compete in certain areas of their business while being able to co-operate in other areas in which joint working benefits both parties.

“We certainly have businesses that can complement each other and we have businesses that definitely compete,” he said. “But where companies work together in areas that they don’t compete, they can share costs and drive new processes and innovation for the benefit of all our customers.”

Carlos Modesto Guzman, the director general of the Instituto Postal Dominicano, of the Dominican Republic, spoke passionately of the need for the industry to work together – or fail.

“We have to pay attention to joint ventures or else we will all lose,” he said. “Joint ventures of the public and private sectors in this process are more necessary than ever. We have to be open, we have to negotiate, we have to share.”

While looking for partnerships to ensure its own future, the Dominican Republic’s Post has also been providing a great example of its own by helping its devastated neighbor Haiti to re-establish a postal system.

This has included construction of a brand new postal processing centre, and setting up a new network that is now “working slowly, but effectively again”, said Modesto Guzman.