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Revitalization:
The Success Of New Postal ModelsAchieving 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.
Copyright © 2014 Accenture All rights reserved.
2009 2010 2011 2012 20132006
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.
Copyright © 2014 Accenture All rights reserved.
Note: 1. EBIT = Earnings Before Interest and Tax
2. Sample size 19 postal organizations.
Source: Annual reports, Accenture analysis.
Mail volume growth by postal organization,
2011 to 2012
Evolution of Mail And Non-mail EBIT
12.1
8.4
5.6
0.9
-2.2-3.0-3.6-3.7-3.9
-5.0-5.3-5.7-5.8-5.9-6.9
-7.7-9.0-9.7
-12.1-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
Sw
iss
Post
Itel
la
Aust
rian P
ost
Gro
up
Sin
gPost
DPD
HL
Post
Nord
Japan P
ost
CPC
Aust
ralia P
ost
Post
en N
org
e
USPS
Roya
l M
ail G
roup
India
Post
La P
ost
e
New
Zea
land P
ost
CTT
Post
NL
Corr
eos
Post
e It
alia
ne
4.4
0.1
3.5
6.4
4.5 4.7
7.9
7.0
4.6
4.0
7.0
6.4
2007 2008 2009 2010 2011 2012
Non-mail Mail
EBIT* margin percentage
Note: 1. Sample size: 13 postal organizations.
2. Excludes purely parcel/express operators.
Source: Annual reports, Accenture analysis.
*Earnings Before Interest and Tax
For the first time, revenue from non-mail activities (parcels, retail,
financial services and logistics) exceeded mail revenue, 52% to 48%.
Diversification success
Copyright © 2014 Accenture All rights reserved. 4
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
The high-performing postal organization model
Digital Organisation
Diversify Selectively
Grow the parcels opportunity
Defend the core business
Retail Logistics Delivery
• Financial services
• Government services
• Retail services
• Authentication
• MVNO*
• Freight
• Warehousing
• Logistics
• Customs brokerage
• Hybrid mail
• Data collection
• Surveillance
• Local deliveries
• Home services
• Payments
Copyright © 2014 Accenture All rights reserved. 5
Finding 1: High performers achieve core business excellence
with diversification at scale
7
Revenue Growth by Performer
Group
Mail Volume, Revenue and EBIT
by Performer Group
13.9
-1.8-2.6
4.0
1.3
-5.4
4.9
-1.7
0.5
-3.5
-5.4-5.9
-3.1
-5.9
-10
-5
0
5
10
15
-2.4
Mail Rev.
Growth 2011-12
Mail Vol.
Growth 2011-12
Mail EBIT
% in 2012
Note: CAGR = compound annual growth rate
Source: Accenture analysis
Copyright © 2014 Accenture All rights reserved.
Success in the mail business is driven both by cost control as well as
adding value to mail through innovation.
Top 5 Bottom 5Lagging 5Middle 10Next 5
3.23.23.8
0.9
2.63.3
0.60.6
3.3
-1.6
-3.8
-1.7 -1.7-1.7-2.4
-10
-5
0
5
10
15
Revenue growth
2011-2012
5 year revenue
CAGR
3 year revenue
CAGR
Middle 10Next 5 Lagging 5 Bottom 5Top 5
High performers have achieved scale and market dominance in two
diversified market areas.
Finding 1: High performers achieve core business excellence
with diversification at scale
Copyright © 2014 Accenture All rights reserved. 8
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
Evolution of Mail and Non-Mail
Revenue, 2009-2012, B Euros
Diversification Areas by Performer
Group
21018
19791
106
Revenue
Growth
’09-’12
-4
Total
Revenue
’09
Non-Mail
Revenue
Growth
’09-’12
Total
Revenue
’12
Non-Mail
Revenue
’09
Revenue
’09
6.09% growth in
CAGR came from
non-mail revenue
-1.36% decline in
CAGR came from
Mail revenue
2.4
11.6
2.4
6.4
2.0
8.1
1.2
6.6
1.2
7.0
0
5
10
15
Dominant Areas of
Diversification(1)
Total Areas of Diversification
Bottom 5Next 5 Lagging 5Middle 10Top 5
Our research shows that digital as a channel works, digital as a product
does not.
Finding 2: High performers are evolving into digital businesses
Copyright © 2014 Accenture All rights reserved. 9
Digital Business
Exploit Mobile
Consumer Relationship
eCommerce Ecosystem
Enabling Self-Service
Source: Accenture Technology Vision 2014
Tracking
Notifications
Deliveryscheduling
Accelerateddelivery
DeliveryinstructionsSecure delivery/
retrieval
Manage returns
Releaseauthorization
Alternate recipient authorization
Redirect
40%
50%
60%
70%
80%
90%
10% 20% 30% 40% 50% 60% 70% 80%
Our research shows that establishing a relationship with the consumer can
give a differentiated competitive advantage over the next three years.
Finding 2: High performers are evolving into digital businesses
High value, low frequency
Low value, high frequencyLow value, low frequency
Valu
e to
consu
mer
Frequency of use
* Size of bubble:
Consumer willingness to pay
High value, high frequency
Package related services—internationalValue vs. frequency vs. willingness to pay*
10Copyright © 2014 Accenture All rights reserved.
High performers are able to operate using a commercial versus a political
decision-making process.
Finding 3:
High performers operate with a strong commercial focus
Copyright © 2014 Accenture All rights reserved.
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
Commercial Focus Social Focus
Government intervention Limited government
intervention in postal
activities or decisions –
government outlines
commercial mandate.
Political considerations and
intervention in operations
favor a specific policy
or social mandate.
Strategic decision making Driven by Board and
executive committee.
Driven by department
and regulator.
Strategic focus Achieve profitability and
long-term financial
sustainability.
Focused on revenues and
delivering public service.
Mergers and acquisitions Conduct mergers and
acquisitions to grow
inorganically and seize
opportunities.
Limited ability to conduct
mergers and acquisitions –
require department or
regulator approval.
Talent management Able to hire at market rates
and attract talent from other
sectors of interest and build
and maintain centers
of excellence.
Government salary and
banding policies apply to the
postal operator and limit the
ability to attract and retain
talent.
Performer groups 2014
0.0
0.2
0.4
0.6
0.8
1.0
0.0 0.2 0.4 0.6 0.8 1.0
Deg
ree
of
liber
aliza
tion
Degree of private ownership
Bottom 10
Middle 10
Top 10
11
Parcel volumes continue to climb and are a strong driver of growth.
Finding 4: High performers are transforming their parcel
networks to seize market share
Copyright © 2014 Accenture All rights reserved.
Note: Parcel revenue is based on annual report data and may not include all express and courier volume.
Source: Accenture Analysis, Annual Reports
42.1
9.8
7.5
5.6 5.6 5.54.7
4.33.7 3.7 3.4 3.2 3.2
2.5 2.5
-2.3 -2.5-3.1
-4.8-6
-4
-2
0
2
4
6
8
10
12
14
India
Post
DPD
HL
USPS
Post
NL
Yam
ato
La P
ost
e
bpost
Roya
l M
ail G
roup
Post
e It
aliane
Sw
iss
Post
Itel
la
Aust
rian P
ost
Gro
up
UPS
Fed
Ex
CPC
Japan P
ost
CTT
Post
en N
org
e
Corr
eos
43
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
• 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.
Copyright © 2014 Accenture All rights reserved.
Note: “Competing with the Customer “ The Next Threat to Postal Survival,” Accenture, 2013.
Source: Wik Consulting Reports, Annual Reports, Accenture Analysis
42.1
37.1
21.6
36.7
25.0
17.2
0
10
20
30
40
50
60
70
CEP as a percentage of total
revenue 2012
CEP market share (domestic)
Top 10 Middle 10 Bottom 10
Performer groups
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.
On the horizon
Copyright © 2014 Accenture All rights reserved. 15
Global Integrators
Domestic Competitors
eTailers/Retailers
• Expanding network to add new lanes• Leveraging domestic carriers for extended last mile• Negotiating global terms which simplifies integration
• New domestic or regional carriers growing quickly• Experimenting with last mile solutions• Range from full-service solutions to niche services (ie same day)
• Experimenting with click-and-collect/ship-to-store solutions• Intend to own delivery in key markets• Aggressively pursuing alternatives (eBay buys Shutl, Amazon
drones)
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 single-
click 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.
Copyright © 2014 Accenture All rights reserved.
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
17Copyright © 2014 Accenture All rights reserved.
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