For post and parcel players, the rules of the game have changed. Mail volumes are in long-term decline. And yet more people are shopping online — and requesting home delivery — than ever. New technologies and new customer expectations are dramatically shifting strategic priorities.
Digital transformation is the main driver of changing demand and future value. And the impact is being felt everywhere – in delivery demand and supply, returns, cross-border ecommerce and the universal service obligation.
All the while, the sustainability of the last mile is becoming a key competitive advantage, challenging delivery organizations to radically reduce their carbon footprints.
The new imperatives? Pivot to new business models. Reduce costs. Accelerate growth. Transform sustainability. And deliver real change in customer experience.
Post and parcel services represent a significant part of the global communications infrastructure. Driven by technology, data and the need for a new, hyperpersonalised CX, the marketplace is becoming increasingly competitive and ever more diverse. Key players range from incumbents (national carriers such as Royal Mail and the US Post Office, as well as major postal services, and large international courier businesses), online marketplaces (which are expanding in-house capabilities using smart logistics) and retailers (establishing multiple fulfilment models for consumers) to the disrupters that achieved hyper-growth during the pandemic (by offering a better delivery experience at lower cost) and logistics players that are integrating vertically to provide end-to-end services. We’re also seeing more cloud-based platforms entering the sector, leveraging network effects to gain market share in last-mile delivery.
The pandemic had a major impact on the industry, turbocharging demand for home delivery. Most players rushed to add capacity and even raised rates or introduced surcharges. But that upward growth trajectory has been offset by recent developments. Changes in consumption patterns saw growth for most large players return to more normal levels (8% in 2021 vs up to 24% in 2020). Meanwhile, rising inflation and the need for cost efficiency ended old models of last-mile delivery. Besides these cyclical issues, there have been some key structural changes. First, the dominance of marketplaces and new entrants to B2C delivery seizing market share. Second, supply chains have continued to evolve to focus more on local delivery, driven by the need to lower costs and increase speed, as well as by greater reliance on automation to address high labor costs/labor scarcity. In practice, this means new entrants no longer need a national network to compete in B2C delivery.
Success in the highly competitive B2C last-mile marketplace hinges on post and parcel organizations reinventing themselves as digital, data-driven enterprises. To drive financial and environmental sustainability and compete with disruptive, digital-born competitors, postal organizations recognize that “going digital” across the value chain is a top priority. By leveraging data and automated technology, they can lower operational costs, enable new products and services and provide a better customer experience. As well as investing in building new technological infrastructures to collect, store and harness data to improve their operations, leaders are exploring possible use-cases for new solutions like blockchain, autonomous delivery and metaverse to create next-gen services that will set them apart.