shopping online may save Post
WHILE the digital economy threatens to eradicate the humble letter, if it hasn’t already done so, an increase in online shopping could be the saviour for Australia Post.
This was one of the messages delivered by Australia Post CEO and managing director, Ahmed Fahour at the QUT Business Leaders’ Forum at the Brisbane Hilton.
“The reality is, right now we are facing the biggest challenge in our 200 years of history,” Mr Fahour said.
“The generational change in the global communication market means that the way the community is using the various services that we offer is changing.”
Mr Fahour said his major competitors were text messages and emails.
He said that there were 27 billion texts last year in Australia alone, and 400 billion emails. In comparison, Australia post handles around 5 billion items of mail annually.
“A stamp costs you 60 cents, or if you’re a big business customer quite a lot less than that, but an email is basically free. How would you like to have a competitor that is a free service?” he said.
“While there has been this phenomenal growth in other parts of the communication market, the reality is that mail volume has been flat now for a decade.
“Since 2008 it’s dropped 10% in volume. The challenge of digital substitution isn’t just limited to our letters business. Customer traffic into our outlets is also falling as people increasingly not only don’t send letters, but are going online to pay bills or to handle some of the transactions they would ordinarily do in the shop.
“So we are seeing this perfect storm in both our core businesses. In short the trend towards electronic substitution is hurting us. And it’s not only volume wise, but profit wise. Only two years ago Australia Post made just under $600 million of profit. Very recently we announced our profit had fallen to its lowest level in 20 years to $100 million.”
Mr Fahour said while the internet was his letters business’s worst enemy, it was actually his parcel business’s best friend.
“The more home (online) shopping goes up, the better off we are placed. Because no one can deliver to every business and every household in the country like we can,” he said.
While the recent decrease in Australia Post’s profit reflected a $170 million drop in the letters business, he said for the same period there was an increase in the parcels business of $176 million.
Mr Fahour believed this figure may continue increasing because Australia lagged the world in terms of online shopping. “We are half the level of the UK and US and other western countries,” he said.