Revitalization: The Success Of New Postal Models Achieving High Performance in the Postal Industry Accenture Research and Insights 2014

Transcription

1 Revitalization: The Success Of New Postal Models Achieving High Performance in the Postal Industry Accenture Research and Insights 2014

2 High-performing postal organization research While the industry remains in transition, we are seeing successful strategies emerge that prove postal organizations can thrive

3 State of the Industry Although mail volumes continue to decline at a rate of 4.7%, mail remains profitable driving a higher EBIT than non-mail. Mail volume growth by postal organization, 2011 to Evolution of Mail And Non-mail EBIT EBIT* margin percentage Non-mail Mail Swiss Post Itella Austrian Post Group SingPost DPDHL PostNord Japan Post CPC Australia Post Posten Norge USPS Royal Mail Group India Post La Poste New Zealand Post CTT PostNL Correos Poste Italiane Note: 1. EBIT = Earnings Before Interest and Tax 2. Sample size 19 postal organizations. Source: Annual reports, Accenture analysis. Note: 1. Sample size: 13 postal organizations. 2. Excludes purely parcel/express operators. Source: Annual reports, Accenture analysis. *Earnings Before Interest and Tax 3

4 Diversification success For the first time, revenue from non-mail activities (parcels, retail, financial services and logistics) exceeded mail revenue, 52% to 48%. Note: Revenue diversification is based on business unit breakdown and numbers reported in the company annual reports. Accenture categorizes revenue into the above groups based on its understanding of activities which represent an approximation of diversification. Source: Annual reports, Accenture analysis 4

5 The high-performing postal organization model Digital Organisation Diversify Selectively Financial services Government services Retail services Authentication MVNO* Freight Warehousing Logistics Customs brokerage Hybrid mail Data collection Surveillance Local deliveries Home services Payments Retail Logistics Delivery Grow the parcels opportunity Defend the core business 5

6 2014 Key insights and Implications 6

7 Finding 1: High performers achieve core business excellence with diversification at scale Success in the mail business is driven both by cost control as well as adding value to mail through innovation. Revenue Growth by Performer Group Mail Volume, Revenue and EBIT by Performer Group Top 5 Next 5 Middle 10 Lagging 5 Bottom 5 Top 5 Next 5 Middle 10 Lagging 5 Bottom Revenue growth year revenue CAGR 5 year revenue CAGR Mail Vol. Growth Mail Rev. Growth Mail EBIT % in 2012 Note: CAGR = compound annual growth rate Source: Accenture analysis 7

8 Finding 1: High performers achieve core business excellence with diversification at scale High performers have achieved scale and market dominance in two diversified market areas. Evolution of Mail and Non-Mail Revenue, , B Euros Diversification Areas by Performer Group Top 5 Next 5 Middle 10 Lagging 5 Bottom % decline in CAGR came from Mail revenue 6.09% growth in CAGR came from non-mail revenue Mail Revenue 09 Non-Mail Revenue 09 Total Revenue 09 Mail Revenue Growth Non-Mail Revenue Growth Total Revenue 12 0 Total Areas of Diversification Dominant Areas of Diversification(1) Note: 1) Excluding Correios Brasileiros, Japan Post, TNT, FedEx, UPS because of non availability of data for 2009/2012; Dominant Area is defined as a number one or two in terms of market position or a market share above 25%. Sources: Accenture High Performance Post research; Operators annual reports; IPC website; Accenture analysis 8

9 Finding 2: High performers are evolving into digital businesses Our research shows that digital as a channel works, digital as a product does not. Exploit Mobile Digital Business Consumer Relationship ecommerce Ecosystem Enabling Self-Service Source: Accenture Technology Vision

10 Finding 2: High performers are evolving into digital businesses Our research shows that establishing a relationship with the consumer can give a differentiated competitive advantage over the next three years. Package related services international Value vs. frequency vs. willingness to pay* 90% Value to consumer 80% 70% 60% 50% High value, low frequency Redirect Low value, low frequency Secure delivery/ retrieval Manage returns Delivery instructions Alternate recipient authorization Release authorization Delivery scheduling Accelerated delivery Notifications Tracking High value, high frequency * Size of bubble: Consumer willingness to pay Low value, high frequency 40% 10% 20% 30% 40% 50% 60% 70% 80% Frequency of use 10

11 Finding 3: High performers operate with a strong commercial focus High performers are able to operate using a commercial versus a political decision-making process. Performer groups 2014 Degree of liberalization Middle 10 Bottom 10 Top Degree of private ownership Government intervention Strategic decision making Strategic focus Mergers and acquisitions Talent management Commercial Focus Limited government intervention in postal activities or decisions government outlines commercial mandate. Driven by Board and executive committee. Achieve profitability and long-term financial sustainability. Conduct mergers and acquisitions to grow inorganically and seize opportunities. Able to hire at market rates and attract talent from other sectors of interest and build and maintain centers of excellence. Social Focus Political considerations and intervention in operations favor a specific policy or social mandate. Driven by department and regulator. Focused on revenues and delivering public service. Limited ability to conduct mergers and acquisitions require department or regulator approval. Government salary and banding policies apply to the postal operator and limit the ability to attract and retain talent. Note: Degree of liberalization calculated based on the following point scale: 0 = Reserved Area still intact; not liberalized; 0.5 = liberalized less than 3 years ago; 1 = Never liberalized or liberalized over 3 years ago Source: Postal websites; Accenture Analysis 11

12 Finding 4: High performers are transforming their parcel networks to seize market share Parcel volumes continue to climb and are a strong driver of growth India Post DPDHL USPS PostNL Yamato La Poste bpost Royal Mail Group Poste Italiane Swiss Post Itella Austrian Post Group UPS FedEx CPC Japan Post CTT Posten Norge Correos Note: Parcel revenue is based on annual report data and may not include all express and courier volume. Source: Accenture Analysis, Annual Reports 12

13 Finding 4: High performers are transforming their parcel networks to seize market share Courier, express, parcels (CEP) as a percentage of revenue and market share by performer group Performer groups Top 10 Middle 10 Bottom 10 Cross-border ecommerce is expected to grow at 20% and high performers are positioned to capture that new revenue High performers have added new features that drive an improved customer experience and better service Strategic clarity is driving focused investment and acquisitions as high performers build out scale in their networks. 0 CEP as a percentage of total revenue 2012 CEP market share (domestic) Note: Competing with the Customer The Next Threat to Postal Survival, Accenture, Source: Wik Consulting Reports, Annual Reports, Accenture Analysis 13

14 On the horizon 14

15 On the horizon While B2C ecommerce is growing at 17% globally, parcel volumes in our study have been growing at less than 5%. Competitors are taking significant volumes. Global Integrators Expanding network to add new lanes Leveraging domestic carriers for extended last mile Negotiating global terms which simplifies integration Domestic Competitors New domestic or regional carriers growing quickly Experimenting with last mile solutions Range from full-service solutions to niche services (ie same day) etailers/ Retailers Experimenting with click-and-collect/ship-to-store solutions Intend to own delivery in key markets Aggressively pursuing alternatives (ebay buys Shutl, Amazon drones) 15

16 On the horizon Digital economy Identity services As ecommerce becomes more integrated into our daily lives and we become a more digital society, identity management and authentication will become far more important. Mobile commerce Mobile commerce will grow significantly over the next 5 years and will require a new type of shipping interaction that involves eliminating keystrokes and creating singleclick convenience. Analytics Postal organizations have a wealth of data around customers and operations they can use to capture a competitive edge. Emerging technology Drones Drone solutions will be effective not just for rural, hard to reach places but also in the center of mega-cities as congestion drives up the cost of delivery. 3D printing Expanded production capabilities and more readily accessible designs are creating new consumer focused solutions that could be accessed through postal retail outlets. Robotics From warehouse automation to driverless vehicles, the possibility to replace labor and become 24/7. 16

17 What does it take to be a high performer? Talent Transformation Less in mail, more in new business lines New knowledge workers and digital talent Additional flexibility Customer Focus Customer segmentation and CRM Relationships with senders and recipients Better cross-channel experience Manage by Data Customer and operational analytics Predictive solutions Big data Governance Commercial focused decision making Over-diversification Challenging the USO Investment Strategy Balanced investment for growth and efficiency Drive to scale in new areas Mergers and acquisitions 17

18 Contact us To discover more about how postal organizations can achieve high performance, please contact: Andre Pharand Brody Buhler 18