Three time Pulitzer Prize winner and Author Thomas Friedman calls it The Machine.

He is referring to the 3 biggest forces (digital globalization, climate change and the advance of technology) that are undergoing exponential accelerations and acting in conjunction. Alibaba’s Chief Technology Officer Jeff Zhang recently said, “In the past, Alibaba engineers might have taken three months to launch a new product. Now it might take just a few days.”

Friedman argues that these 3 forces are affecting people and cultures. They are shaping the market in more places in more ways and on more days. These simultaneous accelerations are affecting each other and are reshaping politics, geopolitics, ethics, the workplace, and community.

Of course, all decision-makers want to be aware of innovations and trends that are changing our world. Trend analysis compares business data over time to identify a direction or trend, which is decidedly much shorter now. It helps you understand why your business has performed the way it has and predicts where current business operations and practices will take you. It will also help you develop a strategic vision about how you might change things to move your business in the right direction.

So, how do you plan in the age of accelerated change and trends are so short? We believe that you can look at trends, but you also have to look at the “Big Picture”. You have to look at those “Big Things” that are impacting and reshaping the future – paradigm-shifting inventions, business models, events, movements, etc.

The Futuristic Post Office Pavilion, Shanghai, China

Do you have a 15-year postal strategy? In the next 15 years, the Big Things that will change the postal industry are the growth of online-offline shopping integration, the ubiquity of smart phones and other communication technology, artificial intelligence and robotics, increasing urbanization and the development of the middle class in the emerging markets of the larger ASEAN sphere. The 5 biggest impacts will be:

  • The major breakthrough will be for people in developing countries: extreme poverty (people living on less than $1.25 per day in 2016 dollars) will be virtually eliminated; another 1.7 billion people around the world will gain access to electricity; Sub-Saharan Africa will see the largest increase in the proportion of young people completing secondary education; financial inclusion efforts such as money transfer, postal banks and mobile money will help grow the middle class; cheaper video-communication devices will give people access to health care and the ability to buy items that will improve their lives.
  • Smaller super-computing and video-communication devices will be widespread as will Internet accessibility. This will accelerate real-time access to education, health care, jobs, entertainment and e-commerce. Artificial intelligence will be embedded in autos, robots, homes and hospitals.
  • Mobile money technology will be ubiquitous especially in developing countries.
  • Alibaba will dominate the worldwide online sales space and be very profitable. Amazon will have surpassed Walmart in worldwide sales.
  • The combined economic power of China, India, Japan, Indonesia and South Korea will surpass that of Europe and the United States. Their middle class and that of ASEAN countries is the engine of their economic growth that will be a great consumer of worldwide goods.

Here is a brief description of each of the trends that we see affecting the Postal Industry:

Integrated “New Retail” Eco-Systems

Today’s Posts are often seen as governmental, hierarchical and administrative in culture; totally unsuited to an increasingly competitive and fast changing environment. Today’s Posts generally focus on short-term, traditional and obvious strategies and products; rather than long-term “disruptive” innovation that will yield long-term sustainability.

Tomorrow’s Post will still dominate the growing international, incoming and outgoing parcel market. A regulatory framework for a global, seamless, postal delivery service will be finally achieved. Parcels will travel with visibility and traceability throughout the world due to enhanced RFID tagging.

The New Retail business model, first implemented by Alibaba will have been replicated many times over.

The successful Posts in the industrialized countries will partner and totally integrate with online retailers and integrate fully each others data, warehouses and shipping centers. They will become an integral part of a parcel delivery conglomerate ecosystem.

Posts will also facilitate e-commerce by being the intermediary between their country’s SMEs and foreign online retailers. They will know what products sell in the the right markets – particularly the booming markets in China, South East Asia, India and the emerging markets.

Letter mail will be fully replaced by electronic mail. Postage stamps will be a memory. Focus will be on parcels, although some Posts will continue with complementary and diversified products and services. Urbanization will continue and rural inhabitants will be reduced to 15% – 20% of the population. When they order or ship parcels, they must pay a premium.

Currently, in industrialized countries the small inter-city parcel mail market is dominated by a myriad of local operators. Future Posts will opt for competition instead of competition. Posts will deliver parcels for other shippers.

Posts will be more agile, lean, smaller, more business-like, more organizationally condensed and competitive in culture. The more successful Posts will reorganize themselves into a matrix-organization that shares common activities in an effort to be more cost efficient. They will become very customer centric and laser-focused on customer service and speed of delivery. They will be constantly resizing and managing costs and reacting to a very fast-paced and ever-changing world.

Parcels, Parcels, Parcels

Online marketplaces (Alibaba, Amazon, eBay, Etsy, Newegg, Walmart, Bonanza, Jet, Overstock, Rover.com, Rakuten, Pricefalls, 3Tailer, Zibbet, Allegro, bol.com, discount, DaWanda, Fanc, fruggo, La Redoute, Spartoo, Zalando, XAfricaMart, etc.) will continue to grow, despite the fact that they vary in business model, amount of commission charged (from 1 1/2% to 10%) and profitability.

eMarketer has estimated that global retail e-commerce sales, those purchased over the internet, makes up 7.4% of the total retail market worldwide, or $1.671 trillion. By 2019, that share will jump to $3.578 trillion, yet retail ecommerce will still account for just 12.8% of retail purchases.

In the next few years, Asia-Pacific is expected to double its sales and remain the largest retail e-commerce market (products and services market sectors). North America will remain the second largest regional e-commerce market, after China and experience a constant double-valued growth, resulting from current digital buyers, coverage of new market segments and an increase in m-commerce sales.

Alibaba in 2016 was processing 80 million parcels each day. By 2026 Alibaba will be processing 1 billion parcels each day. This will totally transform the logistics industry through integration of data and supply chain with Posts. Alibaba will demand 24 hour delivery in China and 72 hours anywhere in the world.

Automated Mail Processing

In 2016 alone, 30 billion packages were delivered across China. The Shentong Express (STO) factory in Tianjin is China’s largest fully automated sorting plant in the delivery industry. It is larger than the plant in Hangzhou, where more robots do exactly the same job. Robots here carry 200,000 packages a day (24/7) to different areas across the 21,000 sq. ft. sorting centre, sort through at least 300 billion route combinations then deposit them into underground chutes. In the past, it took at least 100 experienced workers to do the same job in the same time. The cost now is half of the costs it typically required to use human workers. Once in the plant, all packages get distributed within just three-and-a-half hours.

Self-Serve Kiosks

Posts are recognizing that today the proliferation of channels, devices and services means that people can shop in a huge variety of ways and they expect a seamlessly connected experience (kiosk-web-mobile). Many Posts are experimenting with concept stores where they try to leverage technology effectively in order to close the gap between digital and physical.

In early 2017, Canada Post opened its avant-garde concept stores in Toronto, Vancouver and Edmonton equipped with self-serve kiosks. The stores are equipped with self-serve kiosks for parcel rating and induction. The kiosks also print stamps on demand.

In October 2017 Singapore Post opened its first Smart Post Office. Singpost’s traditional, brick-and-mortar outlets are augmented by a digital network, including the SAM self-serve kiosk, which offers anytime and anywhere access to postal and other essential services. The General Post Office outlet, along with the systems powering the future island-wide Smart Post Office 300 SAM platform network is estimated to cost as much as $16 million.

 

 Post Office of the Future


Today’s Posts are sender and efficiency focused with fixed cost and capacity. Tomorrow’s Posts will be increasingly focused on receiver and customer-experience as well as flexibility in variable cost and capacity.

Some Posts will continue to focus on corporate owned facilities, self-serve kiosks and intelligent parcel lockers in locations such as gas stations and shopping malls. They will continue to incur higher than necessary costs or require government subsidies.

Other Posts will opt for competition, partnerships and franchise strategies – a further evolution of the symbiotic business strategy of a “business within a business.” Canada Post has perfected the concept of a break-even, postal franchise within a large host business such as a pharmacy. This evolution will create a small, largely automated or self-serve post office or shared-counter postal franchise.

This low-cost franchise partnership, within an existing business, allows the Post promote self-serve kiosks. The franchisee will sell any of 5 set-size, prepaid, flat rate shipping boxes. The franchisee also holds parcels for customer pickup. This format allows the Post to become increasingly receiver and customer-experience focused and gives them the flexibility of variable cost and capacity. While the franchisee receives a very small payment per parcel delivered; he makes his money on the purchases made by incremental, customer traffic or footfall.

The fixed-size parcel boxes allow for space efficiency and transportation lower cost.

Consumers and small retailers come here to rate and induct their parcels into the postal network for delivery throughout the world. Each parcel will be tracked end-to-end anywhere in the world.

Autonomous Parcels and Tracking Technology

80% of all parcels go to just 20 countries. 175 countries receive just 20% of all parcels. No Post or parcel company has complete global coverage. The hardest customer service issues are with the 175 countries. ParcelLive has now produced a tracker that the shipper scans and then places it in the parcel with the product being shipped. The tracker stays there throughout the trip. The parcel is now self aware and will report back to the user on it’s location, condition and security in real time, no matter the country. The user will also be alerted to any events with the parcel such as it being dropped, opened, or exceeding a temperature range. The parcel is now self aware and will report back to the user on it’s location, condition and security in real time, no matter the country. The user will also be alerted to any events with the parcel such as it being dropped, opened, or exceeding a temperature range.

Autonomous Vehicles

Autonomous vehicles (AVs) that are able to partially or fully drive themselves could become a reality within the next decade. The Office of the Inspector General suggests the Postal Service take a step-by-step approach: continuing to test the technology first, gradually automating vehicles where it makes strategic sense, and refining its AV strategy as the technology, market, regulation, and public perception evolve. The USPS is currently working with the University of Michigan on an autonomous mail delivery truck. The USPS intends to introduce small self-driving trucks on rural routes across the country by 2025. In one possible scenario, a postal worker would sit behind the wheel, sorting mail and doing other tasks as the truck moves along the established route. Rural areas are first for consideration due to the lower accident rate as a result of less traffic.

Disruptive Innovation

Mail volumes continue to decline as digital forms of communication proliferate. Countries privatize their Posts to reduce losses. The focus in industrialized countries is in reducing operational costs but no one ever shrank their way to greatness. Posts need disruptive innovation and strategies to survive and thrive. They need a new set of capabilities: visionary leadership, focus on much longer-term planning and success measuring, partnerships particularly in last mile delivery, multi-channel customer engagement to allow the consumer to choose delivery options, variable pricing models (subscription, tiered, weight, volume, cubing, temperature control, delivery time/method, etc.), big-data driven knowledge of each customer, agility to change, etc.

Managing the Last Mile Delivery

Delivering to low-density or rural residential customers will continue to be expensive. However, customers everywhere want faster (even same-day delivery) ecommerce fulfillment. Customers want to see where their package is at all time in the delivery process. Technology has improved parcel traceability, with proof of delivery and tracking information. Regional and local last-mile delivery organizations don’t necessarily have the technology bandwidth to provide that data but smartphone apps have revolutionized the process for tracking with GPS. Postal Administrations have the lowest delivery costs due to volume so last-mile partnerships with UPS, FedEx and other has always made sense.

Hive Box Pickup, China

In urban areas, parcels are being increasingly delivered to automated parcel lockers or to retailers who act as postal agents in order to get the customer traffic. Companies are also accommodating customer demands with crowdsourcing apps and the urban services of independent drivers using UberRUSH, Uber Delibery, Postmates, Deliv and even Amazon Flex and Amazon Fresh. Many companies such as Amazon are also insourcing deliveries using their own or shared vehicles for delivery. They are also setting up city warehouses closer to their customers in order to affect same-day delivery. Amazon is even offering two-hour deliveries. As we garner the benefits of big-data, retailers can predict the repeat product usage of their customers and automatically replenish the product.

With faster deliveries becoming the norm, Posts will have to learn to monitor perishable products such as groceries and pharmaceuticals and provide that information to customers as part of the tracking process. Pharmaceutical companies, frozen foods or spirits manufacturers will know the probe temperature and possibly the humidity level at every step.

Customer Centricity

The Post will accommodate customers who want to track and decide, in real time, where they want their parcel delivered.

Most megacities will ban individual traffic in city cores and most people will use mass-transit pods and pay-as-you-go driverless cars. The Post will deliver, 12 hours a day, within the city using electric vehicles powered by fuel cells or battery packs. It will deliver to the home or place of work or where the customer directs that particular parcel. It can also leave the parcel at intelligent parcel lockers throughout the city – located in office tower lobbies, pedways, subways, stores, etc.

Multi-Channel Customer Expectations

Customers want seamless interaction and customer experience with a Post or any retailer whether they are dealing with the retail post office, web site, mobile app or customer service. Large customers will want to deal with one team that can address all parts of the end-to-end e-commerce ecosystem. A successful multi-channel strategy must be led from the top and is an organization-wide reorganization and cooperative effort that also requires solid technology foundations and a clear strategic roadmap incorporating the ideas and the support of the entire business. Multi-channeling is all about creating a seamless and consistent customer experience while optimizing costs by identifying and leveraging the strengths and weaknesses of each of the channels and complementing one’s weaknesses with the other’s strength –  i.e. taking activities that have high cost in one area and moving those activities to be performed by the lower cost channel. The intent is to drive synergy between all the components so that the sum will be larger than its parts. It is much more than getting the different components to talk to each other and work cooperatively. By doing this, Posts will not only satisfy a customer need but also be able to data mine customer information and purchase patterns for growth, market much more effectively, minimize warehousing and logistics costs as well as grow revenues and market share.

Mobile / Smartphone Technology

Smartphone users now expect that any information or service they desire be easily available to them, personalized and where and when they need it. They want continuous connectivity, access to information, communication, friends, products and entertainment. Add to that the innovations and investments in mobility (fast, low latency 4G LTE mobile data networks, broadband and secure cloud storage); the growing number of the tech-savvy, info-hungry, 16 to 34 Millennials; as well as the fact that the majority of people in developing markets are accessing the Internet largely if not exclusively through smartphones and you can see the striking impact of Mobile.

For many people smartphones are replacing wallets, bank books, keys, home security system controls, ID and membership pass cards and credit cards. There are apps for almost anything and they are forcing industries to reengineer themselves.

 The future of Posts is Mobile Innovation. Many Posts have largely informational apps that allow one to find a postal code, calculate shipping cost, manage parcel pickup, give product information, allow you to buy product, locate a post office or postal drop off box, track the delivery status of a product, order picture postage with your own photo and even play interactive stamp games. However, few Posts see Mobility as a key part of their Future.

The Swiss Post’s app allows people to do much of the above but also to read the mail delivered to their homes via the Swiss Post Box electronic mailbox and handle payments and account queries via PostFinance Mobile. The Swiss Post Solutions Group unit scans millions of pages of paper for customers many of whom use Swiss Post Box to have worldwide access to their digitized physical mail via their smartphones or via the Internet. Russia Post & Poste Italiana are also working on hybrid mail. Singpost’s ScanDelight is a QR scanner application. The customer can scan any QR code with the application and receive free sample redemptions and e-Coupon offers. Interestingly Handyporto, an app developed by Deutsche Post DHL, allows the user to send letters without postage stamps using a code sent to the customer via SMS. Austria Post’s e-postcard service allows customers to send postcards via mobile phones. The Post of Poland (Poczta Polska) has NeoKartka and Singapore Post has its postcard. Singapore Post also allows various transactions, including pay bills, through MobileOne. India Post has announced eIPO (electronic Indian postal order), provides for the purchase of an Indian Postal Order as payment for government services on line from anywhere in the world. The Israeli Post provides a secure email box for citizens that is strictly for government business.

Copetition (Partnerships)

Drones and Autonomous Delivery

Blockchain

Point-of-Sale Technology

3D Printing

Smartphones and Mobile Communications

Rural Declining

Ecommerce exploding

Sustainable

Re-usable

Identity validation

Cashless

Pick-up where you go…and when you want…

GIS, Address,

People Management and Employee Engagement

Reduction/elimination of paperwork

Automated customs

Tracking

Digital Stamps (no inventory, distribution, risk)

Retail is all about induction and delivery

Online Training / Help (customer, staff)

Cost Management

Reduction of Carbon Footprint

Reduction of Handling

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