By Mark Harrison

For the past decade the International Post Corporation (IPC)’s IPC Global Postal Industry Report (GPIR)—published every November—provides an analysis of the performance of 50 postal operators worldwide and leading integrators (see box)

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Much has changed since the first edition was published back in 2009. The world economy has steadily expanded after recovering from the global financial crisis. The iPhone has revolutionized the world of mobile, while social media platforms like Facebook and Twitter have changed how we communicate. Meanwhile e-commerce has grown rapidly, with Alibaba and Amazon together now reportedly accounting for more than one in every three euros spent online.

The postal landscape has also changed dramatically. Postal operators (posts) are delivering far fewer letters and many more e-commerce packets and parcels than they were ten years ago. Competition has intensified as mail markets have been liberalized and the parcels market has become more vibrant. Posts have honed their commercial focus as private ownership has increased: ten posts are now listed on local stock exchanges. The industry has also become more diversified and developed an increasingly strong focus on e-commerce logistics.

More admail, less regular mail
This year’s edition of the GPIR confirms that despite significant structural change, the postal industry remains resilient. Industry revenue reached (euros) €392.3 billion in 2017, up €7.2 billion on 2016 results. Mail (letters, flats and packets) remains the industry’s largest segment, but it declined by €3.2 billion on aggregate, as structural volume declines in letters were only in part offset by price increases and growth in lightweight e-commerce packets.

However, many posts achieved volume growth in 2017 in advertising mail (admail). It represents the best performing segment for two-thirds of posts analyzed in the 2018 edition.

Given that admail remains tied to economic growth in many markets, improved business sentiment has helped increase advertising spend across media channels. For example, Österreichische Post’s unaddressed advertising mail volumes grew 5.2% in 2017; it cited new pricing models and overall economic growth in Austria as key volume drivers.

The admail trend is also occurring in Canada. In 2017, Canada Post delivered three billion domestic transactional mail items, generating €1.8 billion, or 32.1%, of its total revenue. With personalized admail services complementing other media for businesses, in 2017, Canada Post saw revenue for its neighbourhood mail service grow 6.9%. Canada Post is one of the posts, along with Norway Post and Royal Mail, which have seen volumes of unaddressed admail increase the most.

Parcels, logistics power higher revenues
At the same time, parcels and logistics were the two engines of industry growth in 2017, up €9 billion and €1.5 billion respectively according to the GPIR; both segments were fuelled by e-commerce and now account for over a third of industry revenue. E-commerce will continue to drive the growth of the postal industry. By some estimates Internet retail will be worth €2.5 trillion in 2022. The share of e-commerce in total retail is increasing and estimated to reach 14.1% on average by 2022. In advanced e-commerce markets, the online share of total retail sales already exceeds 20%. In Canada that share is only 8%, though it is expected to be one of the fastest-growing e-commerce markets over the next few years1. Parcel business already accounts for almost 45% of Canada Post’s revenue.

Admail/e-commerce synergy
A direct correlation is also found between admail and e-commerce. The IPC Cross-Border E-Commerce Shopper Survey, which surveyed over 30,000 consumers in 41 markets worldwide, showed that close to 50% of frequent online consumers had received an admail piece from an e-retailer.

Of those respondents who received admail from e-retailers in the past year, 41% made an online purchase as a result of it. In Canada, 37% of online shoppers received admail from an e-retailer and 43% of them made an online purchase as result.

As consumers respond to effective admail pieces and continue to shop by e-commerce (like using their voice assistants to place orders) it is not unreasonable to expect this transformation of posts to continue. Which is good news financially, enabling them to fulfil both their letter handling as well as their advertising and parcel-carrying roles.

Mark Harrison is head of markets, International Post Corporation (www.ipc.be).

The reference on the global postal sector

To stimulate postal transformation through market research and strategic thinking, IPC’s Marketing team produces a range of reports analyzing industry and operator performance. Now in its tenth edition, the IPC Global Postal Industry Report (GPIR) continues to provide an in-depth review of the postal sector. It features 72 charts tracking overall market trends and detailed performance comparisons across 50 postal operators from Asia Pacific, Europe, North America and BRICS (Brazil, Russia, India, China and South Africa) countries, as well as integrators UPS and FedEx. With 12 deep-dive articles and timeline of key events, the report also keeps on top of market news, hot topics and disruptive forces. The IPC GPIR is the sector’s most comprehensive, holistic and in-depth source on postal industry trends and performance.

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