E-commerce generates more than a quarter of SingPost business
Singapore Post has said online shopping now accounts for as much as 27% of its entire revenue. Building on its strategic location, the company has been reshaping itself in the light of declining letter volumes from a largely domestic postal provider into an e-commerce shipping powerhouse for the Asia-Pacific region.
The transformation through acquisitions and infrastructure investments has seen e-commerce generating S$116.1m of SingPost’s revenue in the first half of the year, a 20% growth on last year.
The company said yesterday that it now has close to 1,000 e-commerce customers, who have propelled double-digit growth in parcel volumes in the first six months of 2014.
Recent acquisitions have included shipping firms FS Mackenzie (UK) and Tras-Inter Co (Japan), who have provided additional customers from Europe and Japan as well as more cross-border shipping capabilities. Acquisitions of The Store House (HK) and Axis Plaza (Malaysia) have helped expand warehousing and fulfillment capabilities.
The company’s growing importance for regional e-commerce has also been reflected in retail giant Alibaba Group’s investment — the Chinese company bought a 10% stake in SingPost earlier this year.
World Mail Award winner SingPost is continuing to reposition itself to win more e-commerce business, its ongoing investments including a new $182m eCommerce Logistics Hub in Singapore.
Wolfgang Baier, the SingPost group chief executive, said the company would continuing making capex investments over the next few years to scale up its regional network and infrastructure.
“We are on embarking on the next trajectory of the Group’s transformation to be a regional leader in ecommerce logistics and trusted communications,” he said.
“We will continue to expand our end-to-end ecommerce logistics solutions network in the region and make further investments in ecommerce logistics infrastructure, technology and capabilities to take advantage of opportunities and weather challenges such as our declining domestic postal business. As part of our growth strategy, we will also continue to explore investment opportunities in Asia Pacific.”
The extent of SingPost’s achievements in e-commerce came as the company disclosed its latest financial results, for the second quarter of 2014/15.
The company saw its group revenue up 8.1% year-on-year in the second quarter, to S$ 220.3m, and up 6.4% in the first half, to S$431.3m.
However, with investments in infrastructure and increased labour costs, SingPost’s underlying net profit was fairly flat compared to this time last year, up 0.8% in the second quarter, to S$37.5m, and up 0.3% in the first half, to S$73.7m.
Expenses were up 10.2% compared to last year’s second quarter, with acquisitions also impacting, along with higher parcel volumes.
SingPost’s mail division increased its revenue 3.2% year-on-year in the second quarter, to S$123.5m. International e-commerce shipments have helped counter the 5.2% decline in domestic mail and 10.9% decline in hybrid mail business.
The company’s Logistics division saw revenue up 15.1% year-on-year in the second quarter, to S$108.9m, benefiting from acquisitions but also from e-commerce logistics activities.
Baier said: “Overall, the businesses performed well in the second quarter, with growth coming from regional and ecommerce related businesses. We are also beginning to see bigger contributions from our logistics segment as we seek to rebalance our revenue portfolio and forge ahead with our aim to be the regional leader in ecommerce logistics.”
The SingPost chief added: “The postal business however remains very challenging with the continued decline in domestic mail volume and rising operating costs. The postage rate adjustment will help to partially mitigate cost increases in the mail business. We will remain prudent and continue to drive productivity and service innovation to achieve efficiencies and maintain quality service while meeting new customer demands.”
Baier said that with the business shifting towards e-commerce and logistics, and with domestic mail volumes continuing to decline, SingPost maintains a “cautiously optimistic” outlook.