Post and parcel organisations are being hit hard by two equally powerful disruptive forces. On one side, they’re battling a stark decline in mail, primarily with transaction mail but with digital advertising posing a new and significant threat to direct mail. On the other, they have to manage the unrelenting expansion of parcel volumes driven by the rapid growth of ecommerce. So, an industry that’s remained relatively stable and predictable for decades, with limited competitors, now finds itself at the heart of greater disruptive change than we see in any other market.
The response to that disruption has to be transformational. Of course, the industry’s networks and high-touch relationships with consumers, built over decades, are formidable assets. But those assets also come with liabilities created by the legacy organisation: architectures, processes, structures and culture, built for a very different era. Most delivery was mail and parcel delivery was infrequent and almost exclusively focused on the shipper, not the consumer. Now post and parcel organisations sit at the heart of the two fast paced, dynamic disruptions of digital advertising and ecommerce. So how can they become the agile organisations they need to be to keep up with constantly accelerating change?
They can start by looking at businesses that possess many of the qualities that postal organisations need to acquire: start-ups. By learning from and partnering with the right start-ups, post and parcel organisations should be able to move forward in three key ways.
The first is learning from start-ups’ agility with technology. They use cloud by default, deploy DevOps for rapid delivery and microservices to easily integrate new capabilities. They have a fail-fast, learn quickly approach that enables them to respond and iterate quickly. One example? Whereas a traditional postal organisation may release an update once a quarter, Amazon, for example, issues hundreds of thousands of releases every day.
The second area is partnering with start-ups to bring in innovation at speed and scale. Start-ups enjoy a much lower cost of capital and are built for agility. Post and parcel organisations should think about partnering with the right start-ups – perhaps as a prelude to acquiring those that prove a good match – to expand their innovation ecosystem much faster than they could achieve alone. Examples of acquiring start-ups to capture new capabilities include DPD’s purchase of Stuart.com and Swiss Post’s acquisition of notime.
And the third opportunity is to combine the strength of post and parcels’ existing assets with start-ups’ new capabilities. Take winning in the last mile, for example. There are plenty of sources of inspiration out there today. Companies such as Deliv or Roadie that use crowdsourcing-based platforms, or Shipsi, a last-mile delivery broker connecting retailers with drivers for one-hour deliveries, all exemplify the new capabilities that today’s ecommerce market requires. By mimicking those in their own networks, post and parcel organisations could leverage the scale and reach they possess to achieve similar services, but at a lower cost.
Digital marketing too is a big area of opportunity. Post and parcel organisations have the customer reach that could create a new channel for advertising. But to capitalise on that potential, they need to look at how the start-ups in this space are innovating. Take optilyz or Lob, both of which offer digitally-enabled, platform-based marketing services via direct mail.
The pace of change in ecommerce and digital advertising is only going to move in one direction. Post and parcel organisations have the chance to take advantage if they can use their existing assets and strengths in new ways and with the right models to deliver at the speed the market demands. How can they do that? Taking inspiration from start-ups has to be a great place to begin. Do you agree?