Australia Post not a 'digital victim': CEO

Australia Post not a 'digital victim': CEO

Summary: Australia Post will not be a victim of the digital world, thanks to its booming e-commerce business, according to CEO Ahmed Fahour.

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Australia Post will not be a victim of the digital world, thanks to its booming e-commerce business, according to CEO Ahmed Fahour.

Speaking at a Committee for Economic Development of Australia (CEDA) lunch in Sydney today, Fahour did not hide the fact that the government-owned company's 200-year-old letter business was in serious decline, peaking in 2008 and declining in the past three years by 14 per cent. This was expected to decline a further 40 per cent by 2020. Fahour said that in the space of 10 years, the company's monopoly on written communication had dwindled in the face of email and text messaging.

"In the space of one generation, the letter's share of the written communications market has reduced from almost 100 per cent, to a tiny fraction of 1 per cent of the total market," he said.

But while the company lost $90 million in its letter business, it earned a profit of over $300 million in its other commercial activities, and Fahour said that e-commerce is the new core of Australia Post's business.

"While the internet is the worst enemy of Australia Post's letter business, the growth of online shopping means the internet has become our best friend for the parcel business."

A total of 70 per cent of Australia Post's parcel business is generated online, he said, and this accounts for around $1 billion in revenue for the company. Most of this was generated for companies in Australia, Fahour added.

"The reality is that the majority of e-commerce in Australia, despite the popular press view, emanates from domestic Australian retailers. Not necessarily the big retail names, but it's all the SMEs that are starting up online and providing terrific services.

"They're the new big retailers. Names that are not familiar to us. They are making huge inroads."

To meet this demand for parcel delivery, Fahour said that Australia Post was extending opening hours in 300 outlets around the country, and had over 700 outlets open before 9am and after 5pm to catch people who otherwise would not be able to pick up packages. Australia Post now has 2400 outlets open on a Saturday. The company had also begun trialling Smart Lockers and was establishing business hubs to work with small and medium businesses engaged in e-commerce. The first hub was opened in Mount Waverley and Fahour said that 20 more will open around Australia by the end of next year.

The company is also establishing "superstores" around the country that come completely decked out with smart parcel lockers, ATMs, vending machines, iPads and interactive screens.

While all these operational changes were important, Fahour said it was important to have people in the organisation prepared to change the company and quickly.

"The reality is that I never want the term 'snail mail' ever used in Australia Post, let alone 'snail executives'," he said.

"The reality is that you need talented people and a really positive cultural mindset in order to successfully implement a multifaceted change program like this."

He said he believed that the company had hired a strong team both recruited externally and promoted from within. He added that the government under shareholder ministers Stephen Conroy and Penny Wong had been very supportive of Australia Post throughout its change.

"We could not get a more supportive owner than what we have right now ... Rather than to be victims of the digital economy, we decided to actually do something about it and turn it into a source for growth," he said.

"I think many of you know [Conroy] is an out-and-out champion of the digital economy and what digitisation means. Our owner is delighted we're embracing the digital world, they approve our annual plan, they approve our budgets, they approve our moves."

Topics: E-Commerce, Emerging Tech

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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2 comments
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  • If they want to be successful with eShopping and parcel delivery, it'd help if they'd make a little effort getting things like parcel redirection right. I've been paying for mail redirection and not only have they failed to redirect two parcels (which were returned to sender in the USA) but they've refused to cover the re-posting costs caused by their error, simply saying "we've told the branch manager to check more carefully in future".

    I'm not the only one who's found Australia POST's parcel redirection to be a dismal failure, and it's just not good enough when you're paying for redirection.

    Even without redirection involved, AusPost tend to send the odd parcel the very long way around. My girlfriend has had a parcel from Armadale (a Perth suburb) to Queens Park (also a Perth suburb, 20-30km away) take SIX WEEKS to arrive. AusPost refused to investigate the apparently lost parcel because it wasn't registered post.

    Of course, when I've used registered post or express post, some of the time the tracking number has never been activated or hasn't been updated until after delivery. At least AusPost will make some effort to try to find registered parcels if they go astray, instead of just saying "too bad, you should've used registered if you cared about it".

    Combined with fun like contractors forging or making up signatures on registered post items, I'm not that impressed with AusPost at the moment, especially since they charge QUITE A BIT. Mail from New Zealand to Perth is generally cheaper than mail from Sydney to Perth ... and it usually arrives days sooner, too.

    Not impressed - @spelingbee on twitter.
    ringerc-d5785
  • As a small internet seller based in Perth, it is fair to say that this will probably be my last year. I am in the process of moving it offshore to HK, in a large part due to Australia Post costs. It is pretty much impossible to capture any international market, because the cost of international post from Australia.
    The last straw for me came when I found I it is cheaper to post small packages to the next suburb from HK than it is from my local post office. Approx A$0.90 from HK, A$5.50 from my local post office. Delivery from HK 5-7 days, vs 2-3 days AusPost. Since I already buy the products from China (Last sea shipment China-Fremantle A$400 including inland China fees, Fremantle to my business - about 10km, A$900 for Australian fees not including GST charges) it makes much more sense to ship to the end customer direct from Hong Kong.
    Australian internet sales companies have very little choice but to move offshore if they are to prosper.
    stardakev@...