Digital disruption in the postal industry
Digital disruption in the postal industry
If you work in the postal industry, you’re probably looking for ways to maintain your market share and competitive advantage. How can you develop products and services that align with shifting customer needs?
In theory, digital disruption might the answer. But what does the digital refer to? And what gets disrupted?
Digital Disruption occurs when new technologies challenge the value of existing business models. By disrupting the status quo, it forces businesses to reexamine their core business.
According to Deloitte’s white paper on the Smart Post Office, “The generations following Millennials will be even more rooted into the available technologies as they, in turn, will grow up with their eyes fixed on the screens of their devices. Businesses have to profit from this digital disruption and re-design their services to offer a positive user experience.”
But digital disruption is more than technology. It’s about exploring how business models can deliver greater value to customers through multiple touchpoints and channels.
Digital Disruption Complements Not Substitutes
From one angle, the term ‘digital disruption’ can feel negative. After all, disruption implies that you’re going to stop, impede, or interrupt an activity. In truth, it’s more concerned with augmenting existing processes, and retooling out-dated, or soon to be, processes.
Harvard Business Review highlight another misconception, which is that ‘new technology will inevitably substitute old technology, rendering it obsolete.’ It adds that industries with perfect substitutes are the exception to the rule.
For Postal executives, this means the focus should be on identifying potentially complementary areas, rather than assuming complete substitution. In other words, the purpose of digital disruption isn’t to digitize all strands of the core business. Rather, it’s a strategy that complements the underlying business model, allowing it to take advantage of nascent and emerging technologies, such as IoT and Big Data.
How can Posts achieve this?
Gartner recommends the following in its Surviving the Storm Winds of Digital Disruption paper:
- Develop best practices to advance disruption across business units.
- Adopt conversational user experience, bots and artificial intelligence to improve customer engagement.
- Look specifically for secondary effects from opening up data or from using new technologies that will change the way people behave or which processes are still needed in a business.
Opportunities and Threats
For Posts, and other related industries, Digital Disruption can be viewed as both an opportunity and a threat.
The opportunity is to use technology to redefine its business model, enabling it to generate new efficiencies, products and services.
Likewise, the threat exists in that competitors, such as specialist couriers, are taking market share by quickly harnessing technologies to identify, attract, and convert customers.
For Posts that want to approach digital disruption, where do you start?
Previously, Posts might have looked at improving their own operations: upgrading the infrastructure, refining the delivery service, lowering service costs and so forth. Today, the focus is on the consumer experience. How to digitize existing services and build products with long-term value.
This is where digital can disrupt, in a positive sense, under-performing processes and outdated systems, and help the company achieve its consumer-centric objectives. After all, today’s consumers expect the same quality of service from the Post as they currently receive from banks, utilities, and internet retailers.
For Posts to meet this expectation, this means reimagining their relationship with consumers, in terms of product mix, delivery channels, and responsiveness to market changes.
With this in mind, let’s look at the potential of disruptive services to refine delivery services, mail processing, and the consumer experience.
Riding the Waves of Postal Digital Innovation
The U.S. Postal Service Office of Inspector General (OIG) in its Riding the Waves of Postal Digital Innovation report identifies four waves of digital innovation that are effecting postal operators.
Each wave affected different posts at different times and to different degrees.
- Wave 1: Efficiency and automation of operational processes.
- Wave 2: Creation of new revenue-generating digital services.
- Wave 3: Digital enhancements to existing core products and services.
- Wave 4: Large-scale digital transformation of an enterprise using advanced innovation management practices and cultural change.
The OIG report highlights several Posts implementing digital capabilities to develop their business.
- Australia Post – the MyPost platform and mobile app creates a digital mailbox for consumers to manage their deliveries.
- FedEx and UPS – Delivery Manager and MyChoice meet consumers’ mCommerce expectations to manage delivery service with the same device used to purchase the product.
- Deutsche Post DHL – Resilience 360 uses data analytics to identify potential supply chain disruptions to improve business performance and customer satisfaction.
- US Postal Service – Real Mail Notifications provides consumers with images of pre-delivered mail with links to offers or targeted advertising.
- Canada Post – uses the MyDashboard social media portal to improve customer service.
Digital Innovation Roadmap
Where can Posts ‘disrupt’ their own business and capitalize on emerging technologies.
UPU highlight that, as with all emerging trends, the financial potential and implementation timeline is difficult to estimate. It suggests several new areas of innovation in postal e-services, such as:
- Improve existing postal e-services — leverage geo-data sourced from sensors on postal delivery trucks, mailboxes, or from mail carriers’ smartphones.
- Create new postal services — use sensors on ‘smart mailboxes’ to notify recipients of deliveries. Sensors can also flag returned items for pickup and control temperatures for fresh produce or medicine.
- Create new non-postal services — examples include collecting real-time air quality data along delivery routes for “smart cities” and environmental purposes.
Data is everywhere, but knowing how to use it effectively is more challenging than ever. With the explosion in mobile usage and the need for ‘always on’ access to services, Posts are looking at data to examine consumer preferences, strengthen the connection between touchpoints and channels, while also anticipating future needs.
A collaborative report by DHL and Cisco on implications and use cases for the logistics industry highlights that IoT will generate $8 trillion worldwide over the next decade with the value coming from five primary drivers: innovation and revenue; asset utilization; supply chain and logistics; employee productivity improvements; and enhanced customer and citizen experience. It estimates that supply chain and logistics alone will provide $1.9 trillion in value — a promising indication of the untapped potential and profits to gain from utilizing IoT in the logistics industry.
Through APIs, Posts can expand into markets it many never have previously considered. APIs empower Posts to integrate operations, logistics, and delivery services with partners, enabling it to expand its reach, increase the sales of its own postal products and services, while also cross-selling its partner’s products. According to USPSOIG, the use of Postal Service APIs increased by 70 percent in 2016. More than 70,000 businesses use APIs to access USPS tracking data through shopping carts or shipping software. USPS is currently introducing APIs, for example, to help direct mailers locate and select suitable routes for their campaigns.
How To Thrive in the Digital Economy
POS Indonesia’s 2016 Annual Report highlights several examples of successful digital disruption. For example, Deutche Post strengthened its logistics arm through various acquisitions, such as DHL. Japan Post has become a financial powerhouse with Postal Saving service backbone and insurance, while Singapore Post has transformed into an e-commerce platform.
For Posts to thrive in the today’s digital economy, emerging technologies represent a tremendous opportunity to refine every aspect of the core business.
To help achieve this, The World Economic Forum recommends four areas for consideration:
- Digital business models - change the way Posts identify, develop and launch business ventures.
- Digital operating models - develop a lean approach to core and support functions.
- Digital talent and skills - embrace cultural change, recruit millennials, and adapt new ways of working. Likewise, prepare for greater automation.
- Digital metrics for success – develop key performance indicators to measure the performance of a business in the digital age.
By implementing the appropriate digital tools, Posts can capitalize on emerging technologies to meet eCommerce-driven customer expectations, drive parcel growth, and realize new revenue streams.
Topics: Customer Experience