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Innovations in the postal sector: business models revamped

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The postal industry is unique. Its original business model is threatened and the industry is forced to reinvent itself. What can be observed there in terms of innovation is just unique.

I met with Delphine Desgurse in Venice in late January where we use to attend the same marketing conference. Delphine is the vice-president of La Poste, in charge of innovation.

Like two years ago she headed a very interesting and inspiring presentation on innovation, with a special focus on the postal sector, a sector which unlike others is reinventing itself through radical innovations.

The survival of the postal sector is at stake

We’ve dealt with the postal sector on several occasions and it is clear for everyone that it is threatened : traditional mail activities are decreasing at a fast pace and national posts, with their established network and high cost structure, must protect their revenues and find new markets to grow.

The rise of the e-commerce has given them the possibility to grow on parcel distribution and they are now fiercely competing with integrators like DHL, Fedex and UPS. The market share of national posts on the parcel segment remains however small in comparison to mail.

Internationalization is the rule

E-commerce has changed the rules in terms of traffic, forcing national posts to open up to international traffics. They went from a model where collaboration between national posts was the rule (you take care of your territory, I take care of mine) to a model where everyone is hunting clients on each others’ territory. You may not know it but national posts have settled “Extra Territorial Offices of Exchange”, that are basically representations abroad. This allows them to compete on local markets with national posts and make business there on their own.

Obviously this allows to grow but the disadvantage is also that competitors can come on your market and “steal” customers from you.

Innovate to gain loyal and profitable customers

Internationalization has brought with it more competition and for that reason postal operators are not better off. What they need to do is to leverage their existing network, and increase customer loyalty through differentiation.

We’ve been observing for a few years a wave of innovations that are sometimes far away from the core business. A recent report on France 2 shows very well how business models have changed and in particular how integration took place. You’ll find below a link to first list of some emblematic initiatives; we’ll complete it regularly as soon as something new appears on the market.

The economy of sharing

La Poste in France is certainly one of the pioneers in innovation and after the presentation of the new strategic plan for French postal provider La Poste on 28 January 2014, CEO Philippe Wahl has said that the group hopes to create new services. We will deal in the near future in more details with all those ideas but here are already a few: taking photos for insurance companies when a claim needs to be investigated and documented, home visits for the elderly, delivering supermarket orders in rural areas, highway control, EDF meter reading, and identifying necessary home renovation works to improve insulation.

To start this series of innovations allow me to take one very interesting example that Delphine shared with us in Venice. Delphine is very strong on the economy of “sharing”, where the motto is simply to share (for profits) resources that are not utilized by the company (or by an individual) at 100%. If you have spare capacities, the idea is therefore to monetize them. You all know Airbnb, don’t you?

La Poste has, obviously, a pool of cars to deliver the parcels and the mail. These cars are managed by a company owned by La Poste and, as you can imagine, are primarily used from Monday until Friday. Delphine explained that the intention here is to treat the leasing company like a for-profit entity and to monetize cars not used through rentals to individuals. I’m not sure this innovation is already in place (at least I couldn’t find anything on it yet) but Delphine said a partnership has already be made with Maaf (a French insurance company).

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Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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