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The increasing pace of digitalization has changed the role of the postal service as mail volumes decline and parcel volumes grow. In the Ghanaian mail market, volumes have steadily declined for years, although the rate of drop has slowed somewhat in recent years, while revenues have risen slightly, mostly due to price increases. Ghana Post remains the dominant operator. In contrast, parcel volumes increased in 2014-15 by 7 per cent as e-commerce generates additional volumes for delivery. There is intense competition between Ghana Post the only universal postal operator in Ghana, operators of Expedited Mail Services (EMS) and many small international and local currier service operators.
Technology drivers in the postal sector
For the purposes of this article, the terms ‘technology’ and ‘innovation’ are used broadly to cover devices and products and their applications and uses. Different basic technologies are an enabler of innovation rather than an innovation in the postal sector in itself. Prime examples of innovative technologies which are already used in today’s postal industry are RFID chips (radio-frequency identification chips), sensors, PDAs (personal digital assistants) and also mobile internet and GPS (global positioning system), will in future play more significant roles in the postal sector.
Driven by competition and customer demand, postal and parcel operators use advanced technology for different purposes, above all to improve operational efficiency and to offer new products and services. In particular, consumers demand for faster and secure handling of orders and more convenient delivery is driving change in the sector and technological innovations are enabling e-retailers and postal operators to respond to those requirements.
For example, automated sorting and centralization of letter and parcel operations are important developments, especially sequencing of letter deliveries to street level, as well as automated scanning. These have both been facilitated by postcode granulation. In the parcels business, last-mile deliveries have been improved with technologies such as PDAs for signature scanning which also have added additional security for consumers.
E-commerce is a key driver for postal services
The internet has transformed society in many ways. About 90 per cent of the British population is now online. People in the more densely populated parts of the country benefit from high-speed broadband networks but there are still gaps in rural areas, such as parts of Scotland and Wales. In parallel, mobile access to the internet is growing fast, especially via Wi-Fi in cities. As a result, internet usage is rising across all age groups, although younger people remain ahead of older citizens in terms of overall time spent online.
High internet penetration has driven the rapid growth of e-commerce in the UK, which is Europe’s largest market. The UK has constant double-digit e-commerce growth rates and further strong growth is expected in the years ahead. Britons shop online for all kinds of goods, with groceries as one of the latest trends. Increasing competition in the e-commerce market provides positive incentives for all market players, retailers as well as parcel carriers and lends an additional impetus to the development of new online- shopping and delivery solutions.
Home delivery is clearly the most preferred option for consumers and delivery companies are using technology to introduce new added-value services. But many alternatives also exist and are being expanded to increase customer convenience. The most popular alternative delivery form is ‘click and collect’, where consumers pick up their online orders at ‘parcel shops’ or, to a lesser extent, from self-service parcel lockers.
According to latest figures released by Ghana's telecommunications regulator – the National Communications Authority –The NCA's mobile voice and mobile data market share trends for December 2015 also reported the number of mobile data subscribers rose from about 17.73 million to 18.03 million, an access rate of 65.74 percent. This provides 65.74% of the population to transact online commerce which would result in delivery of those items to the buyers.
Overall demand for postal services
Demand for postal services has been transformed in recent years. Mail volumes peaked in 2004 after a long growth period and have declined since then, albeit somewhat more slowly in the last few years. Consumer demand for transactional mail has dropped substantially due to e-substitution, while direct mail (advertising) volumes have tended to rise and fall in response to general economic trends. Publishing mail volumes have fallen as more communications and media go online, while social mail (ie greeting cards and letters) has also declined significantly.
Parcel volumes in the Ghana are growing as consumers buy more and more online, generating more orders for delivery. This business to consumer (B2C) volume growth is slightly held back by the digitalization of some physical goods such as books and music CDs. B2C volumes make up more than half the market compared to business to business (B2B) deliveries which are increasing more slowly.
Innovative technologies enable more efficient postal operations and better services for consumers
As a general trend, technology has helped the parcel delivery chain to become receiver- centralized. Consumers, who act as receivers, are not only better informed about the status of their delivery via tracking, they now also have the option to change the delivery process by redirecting a parcel to a different delivery point, or postpone delivery if they are not at home.
The increasing popularity of these delivery methods means carriers have to turn to a more individual approach instead of a standardized supply chain for delivery of each and every parcel. Consequently, this requires carriers to modernize their processes and to substantially invest in their IT infrastructures as a means of raising their operations’ efficiency.
The position of postal operators is under increasing pressure. Global e-retailers might be turning the carrier’s core offering, last-mile delivery, into a commodity which lacks added value and is subject to intense competition. By contrast, technology is impacting positively in different parts of the postal sector, mostly in sorting and delivery operations, helping to improve the overall consumer experience. Different kinds of technologies are enabling postal and parcel carriers to make their operations more efficient and create value added services in delivery. This is particularly valid in the parcels business where rising volumes are increasing the need for greater sorting capacity and faster handling processes as well as quality differentiation.
Barcodes speed up parcel sorting as they can be automatically scanned. More carriers are introducing data-rich 2D codes which contain additional information such as routing instructions which enable tracking. These barcodes also enable new value added mail services as the 2D code can carry additional information, such as personalized special offers or discounts that can be redeemed at a local shop.
Other technological advances that speed up sorting include sensors, cameras and area scanners, along with fingerprint technology based on parcel images and software recognition. However, it currently remains too expensive for parcel services.
1. Automation in letter and parcel sorting
• Sector: Automation in letter and parcel sorting leads to better operational efficiency and cost savings.
• Consumers: Automation in letter and parcel sorting adds to improved delivery quality, enables new products and services and cost savings for postal operators that might be passed on to consumers.
2. Extended track and trace for parcels and value-added mail services
• Sector: New data-rich 2D bar-coding will become a new standard that allows better tracking and tracing. Postal operators can develop new value-added mail services that contain additional information for consumers, such as discounts. Business senders may use value-added letter services to reach new customers. As response rates to digital marketing are low, physical mailings become more attractive even if costs per letter are higher. This will drive demand for direct mail and value-added letter services in contrast to other physical mail streams. New technologies like RFID and parcel fingerprinting will remain niche applications as they are more costly than barcodes on paper.
• Consumers: Consumers will benefit from improved delivery quality and new products and services which are based on extended track and trace, namely predictable delivery and redirected delivery.
3. Predictable delivery and redirected delivery
• Sector: Predictable delivery/real-time delivery redirections might become a new standard within the next three years. Competitive advantages for best-in-class companies stimulate innovations in this field. However, high investments in parcel carrier IT infrastructure are needed and it seems likely that these services will come with an additional charge for consumers.
• Consumers: Consumers value additional convenience in parcel delivery and their demand for predictable services will increase to avoid failed deliveries. Consumers benefit from improved delivery quality, yet this can require providing more personal data. This could give rise to increased privacy concerns and mean consumers are ‘always online’ leading to additional potential data security issues.
4. Same-day delivery
• Sector: Same-day delivery will probably become a normal service option within three years based on variable pricing. A condition for cost effective same-day delivery is the need for decentralised inventory and regional warehouses.
• Consumers: Same-day delivery is an attractive option for urgent wants and needs but the willingness and ability of low income consumer groups to pay premium prices remains unclear. Same-day is likely to stay a niche as there seems to be a stronger demand for ‘reliable’ deliveries than for ‘fast’ deliveries. For cost reasons, same-day delivery will not be on offer in remote regions in future and low-income consumer groups will be potentially excluded from the service because of extra charges.
E-commerce and the postal sector
Like postal services, e-commerce dynamics are uneven across the world. For example, the e-commerce revolution in Asia did not occur as dramatically in Africa, Arab countries or Latin America, where an extraordinary catch-up process could occur in the coming years. Asia Pacific is the largest e-commerce market with sales over $600 billion; and with a year-on-year growth rate of 30%, Asia Pacific has overtaken Europe as the largest e-commerce market and is soon set to account for 40% of the global e-commerce market. Smartphones, mobile e-commerce and increasingly, social commerce through Facebook and Twitter are driving this unprecedented growth. In China, the e-tail giant Tmall, which handles 7 million packages a day, is reporting growth of 100% year-on-year and this has been the case for the past five years. The trend in China today is for the digital-native generation to purchase everything online, including household products. Indeed, consumer behavior in emerging markets like China offers very important insights into potential trends in other regions as well.
Fully reaping this tremendous growth potential implies that Posts both maximize the value of existing services – by optimizing processes and increasing efficiency – and invest in new business areas. To realize this, Posts should have sufficient flexibility to adapt their processes, innovate and develop new business models.
Postal operators are further expanding their electronic and hybrid services to customers. According to a recent study by the UPU, which benchmarked the development of postal e-services in UPU member countries, there has been a significant progress in the take-up of postal e-services. These e-services can be classified into four groups:
1 E-post and e-government, such as: e-mailbox, online direct mail, postal registered e-mail, e-cards, e-invoicing, hybrid mail, reverse hybrid mail, e-postal certification mark, digital signature, digital identity services, credential services, digital archive, e-health, e-administration and e-registration.
2 E-commerce, such as online philatelic and postal products, shopping portal, integration of postal web services and merchant sites, performance reports and analytics, virtual international address, calculation of total landed costs, and online management of documents and merchandise delivery options. 3 E-finance and payments solutions, including escrow services for e-commerce, online account management, e-bill paying, e-invoicing, and e-multi-shop/single-pay gateway, etc. 4 Support services, such as online lookups (e.g. post codes, post offices), track and trace, online change of address, holding or forwarding of mail, digital personalized postage, pick-up service, electronic notifications, online contact and customer service, etc.
These IT services have an extremely positive effect on:
• The image of the postal operator as a high-technology centre of excellence.
• The benefits that an international shipper has access to and can receive from the Post.
• The wealth of added-value services and information that often precede and accompany the cross-border mail or package.
They also have a positive, virtuous circle, effect on international letters, parcels and EMS growth because they reinforce the Posts’ market position in the growing SME segments, which are traditionally areas of strength for the Posts. IT services further tilt the competitive scale in favour of Posts as they better meet the needs of customers who are increasingly trading off higher-priced and full-service premium and time-definite products, with lower-priced, reliable and information-supported cross-border postal services.
Overall impacts on consumers
Overall, the impact of technology on consumers of postal services has clearly been positive to date and will remain so in the years ahead. Technology, primarily through the spread of the internet and mobile devices, has empowered consumers and transformed them from passive to active participants in the postal services market. With the rise of e- commerce, carriers have changed their focus from senders, the business customers, to receivers, the consumers receiving the goods. Carriers have used technology to make their postal operations more efficient and to improve or introduce innovative new products and services. Other new technologies are being tested and many of them will result in further improvements for consumers of postal services.
Generally lower costs expressed through lower prices are good news for consumers, and particularly lower income consumers.
The main general benefits for consumers from technology in the postal sector include:
• better and faster delivery services
• more convenience and choice
• new revenues in parcels as part of revenue pool
• attractive prices, established through competition
There are also new opportunities for vulnerable consumers from the growth of e- commerce because doorstep delivery of all kinds of goods has become standard at no extra charge. With the introduction of the National digital Addressing system, GhanaPost GPS to be precise, challenges in delivering due to wrong addressing system will be a thing of the pass as courier operators like the EMS will ride on the back of the GhanaPost GPS to enhance delivery of packages to the valued clients at the comfort of the homes.
Technology plays an overall positive role for postal services and acts as an enabler and a driver for better services for consumers. The benefits to date outweigh the risks and concerns. Looking ahead, technology will become more and more important for postal services, and further positive benefits for consumers are expected.
Theophilus Tei Ayanou
Ghana Post Company Limited