One of the dynamics ReVive is currently seeing in the South African business environment is that distressed companies are underachieving in a thriving business environment. Good market, bad positioning, strategy and or management.
This is evident among South African State-Owned entities that are performing very poorly is the South African Post Office (SAPO). They should be making real gains in online distribution for e commerce. Service failures have resulted in an uncompetitive positioning for the SAPO. They are litigating the service with Takealot, potentially one of their biggest customers.
The SAPO faces the same challenges global postal services face…an uncertain future in a world driven by technology. Companies are painstakingly looking at different value propositions that will create sustainable business models.
We have previously explored this issue, examining the responses of the US, UK, and Canada to the technology challenge. In this article, we will delve into the potential of the Pakistani model, which could hold promising solutions for the SAPO.
Shifting Focus
The article highlights that while the commodification of postal products has intensified competition in the courier and express parcel (CEP) market, it also presents a unique opportunity for growth and improvement. In this dynamic market, a longer lead time between ordering/booking and delivery can be a challenge for any postal or courier organisation. However, by prioritising speed and service excellence, these organisations cannot only survive but thrive. For many Posts in developing countries, these rapid changes call for a profound adaptation of their strategies, operations and business models, offering a promising path for future success.
In the current business environment, a company’s success is no longer solely defined by its traditional core product or service. It is now much more about its additional features and services, accounting for 80% of a successful portfolio. This shift in focus means that any courier or postal service must prioritise service excellence to gain a commercial advantage. By using responsiveness and reliability to meet customers’ volatile demands and increased competition, these organisations can differentiate themselves and secure their position in the market.
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A multi-disciplined approach
The article adds that many postal services in developing regions (like South and Central Asia) have the largest delivery networks on their continent. (and South Africa) Their primary activities include booking, transmission, delivery, and mail return, while their support activities are related to human resources, infrastructure, and technology. Their cost leadership and national outreach have been their defensible advantage during the last few decades.
Since commercial success is derived through either cost leadership or value advantage, postal services should maintain either (or both) to stay competitive in the courier business environment. Unfortunately, during the last couple of years, many postal services have lost cost advantages in domestic and international mail without ever gaining any value advantage due to poor performance in service excellence. Their extensive booking and delivery networks, which could have been used to create a sustainable advantage, have sometimes become a liability due to technology-aversive human resources and the need for digital transformation of their primary activities, especially in rural and remote areas.
Note that this is referring to Asia and not South Africa.
The technology game changer
The article indicates that a technology-driven e-commerce postal service must be outwardly focused. Postal services, particularly in South Asia, have remained inwardly focused for a long and have needed to respond to market changes. It is easy for postal management to become divorced from the reality of the marketplace while being preoccupied with the day-to-day pressures of running the business.
One primary reason postal services may need to be more responsive to the realities of the marketplace is the absence of a purpose-based research and development (R&D) section in their central office. Consequently, they cannot create a unique value for customers who demand speed, visibility and accuracy for their domestic and international orders. In addition, there has been more focus on functions than processes. Process-based organisations focus on innovation, customer relationships and cost efficiency. The world is an uncomfortable place for those organisations that do not continuously innovate throughout the whole course of their organisational development.
The article adds that some postal services in South Asia, Central Asia and Africa could not innovate during the incubation, transition, and maturity development stages. As a result, they could not decrease their reliance on manual operations and make the best of the available technology. Conversely, many postal services in Europe and some in Asia-Pacific have performed well in procedural and technological innovations. Yet even those Posts should remain open to innovations to keep up with the global CEP market.
Logistics costs
The article points out that last-mile logistics costs 50% of a postal parcel supply chain in Europe and the US. In countries like India and Pakistan, where road infrastructure development and transport efficiency are lower, it can go up to 65%. Postal products like parcels, small packets, EMS, letter mail and cash on delivery (COD) generally meet customer demands. However, the product heavily depends on issues such as delivery time, the attitude of booking and delivery staff, the convenience of booking and delivery, and the security of mail, which are heavily influenced by logistics pain points that increase the cost of mail operations.
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Moreover, postal services in South Asia still rely on memory and experience when determining how to complete a route rather than on route optimisation software. Mobile apps are ubiquitous in the global CEP market. They help in indoor and outdoor operations used by both employees and customers. Some postal services in developing countries have shifted towards these apps, but they must develop this area further. It is important to note that South Africa does not have a complete physical address register.
The article adds that letter mail volume has deplorably decreased during the last couple of years with the explosive growth of parcel mail amplified by e-commerce and m-commerce. Most Posts in the region still have their last-mile delivery shaped around letter mail, leading to a severe parcel delivery gap. For example, postal workers can’t carry bulky parcels, and customers are called to pick up them weighing 10 to 30 kg. Hence, to reduce the gap, these Posts need to look exhaustively into the 21st-century last-mile solutions like pick-up drop-off (PUDO), parcel lockers, at least for capital cities to start with, and cargo bikes with a capacity of 100 kg for both urban and rural deliveries.
Model fit to SA
One must be cautious in thinking that most of the solutions presented in this article will apply to the SAPO. It is important to note that there are many similarities between the developmental levels and those discussed in the article.
While there are some similarities, it is crucial that we conduct a comprehensive risk analysis of the South African environment, identifying the specific challenges that hinder the SAPO. This will allow us to accurately determine the cost and time frame associated with addressing these issues.
The solutions presented in the Universal Post Union present food for thought.
