History over 200 years, government owned
Mail and parcel delivery throughout Australia
Meet community service obligations CSOs (uniform rate, meet community meets)
Market share 40%, dominant competitor in APS: providing mail and parcel delivery services, postages stamps, mail sorting and distribution in Aus and overseas, messenger services, and mailbox rental and post office facilities.
Unrivalled nationwide delivery network
Agency services outside the industry in banking and telecommunications.
Challenges: cost of servicing an expanding delivery network across Australia has risen. Revenues and profits have fallen as consumers migrated away from traditional mail and retail services to digital communication services.
Future ready business transformation program: stronger customer focus, managing costs more effectively, developing the retail network and by building sustainable growth in its parcel and e-commerce businesses in particular.
Remote environment 1. Economic conditions:
Rising disposable household incomes =>growth in online shopping => demand for parcel delivery
Higher Australian dollar =>more Australian buy goods from overseas via online shopping
GFC softened demand for postal services with business customers changing to cheaper surface transport modes and increase the use of electronic communication. Many of the service industries, which are the heavy users of postal and couriers series, grows at slower rate
The weaker economic conditions have contributed to an increase in the demand of parcel delivery services as consumers migrate their shopping to cheaper prices available online.
Rising fuel prices => decrease profit 2. Technology:
Growth of internet user is a double –edged sword:
Demand for traditional mail service decrease because consumers migrate to email and social networking as a main form of communication.
The need for original copies of signed documents underpins the demand for courier services
Provides means to improve operations and customer satisfaction through better route scheduling and tracking system for parcel delivery 3. Legal and regulatory factors
Under its CSO, A is required to deliver 5 days per week to 98 per cent of Australian addresses, fixed postal prices for standard letters.
A has kept monopoly on the delivery of letters under 200 grs.
C. The industry environment
The decline of the mail services segment is counter balance by growth in the parcel and courier segment 1. Market and customer segment
Manufacturers, wholesalers and retailers – margin is tight
Finance and property and business services – more able to pass on cost to customers
Government – 19% courier
International – bw Australia and overseas countries 2. Industry segment
Parcel segment – 65% of industry revenue
Mail segment – 35% industry revenue
+ Transactional mail – 24% industry revenue and is declining
+ Promotional mail – 8% industry revenue
+ Social mail – 3% of revenue and is declining
80% is intrastate or interstate and 20% are international. 3. Competition and industry force
Parcel segments: competition is high, low barriers to entry. Competition is based on price, speed of pick up and delivery, and the quality of information system for tracking and security.
26% share of parcel segment while other couriers have a combined 50%. Industry ownership is not expected to change.
Mail segment: 65% of market share, monopoly within market for letters under 250 grams, other services have been open to competition.
Industry forces:
Commercial auto wholesalers, and automotive fuel retailers and consultancy services are key supplier
Substitute including electronic forms of communication such as email, intranet, fax and internal mail distribution sys within large org have increase in strength and number. Taxi drivers that provide a courier service are a substitute for dedicated couriers.
Barrier to entry are low due to low cost set up. However in order to compete on a large and profitable basis the barriers are high particularly given the already intense level of competition in this part of the market.