Xvi) Australian Post

It was a government-owned (Commonwealth of Australia) but self-funded corporation whose traditional role was delivery of letters and parcels.

It celebrated its 200th anniversary in 2009.

In 1901 the different colonial mail postal systems were merged into the Postmaster-General's Department (PMG). They were also responsible for telegram and domestic telephone operations.

In 1967 the first large-scale mechanical mail sorting system was introduced and coincided with the introduction of the current system of 4 digit postcodes

In 1975 the Australian Postal Commission (trading as Australia Post) was established and its core business was around providing postal services including telegrams; it also developed limited non-core activities such as selling stationery, handling payment of bills like utilities, council rates, telephone, etc, handling some banking facilities like money transfers, savings bank deposits and withdrawals, etc

Since the late 1990s, Australia Post has broadened its product and service range and invested in major technology-based infrastructure programs plus changed its business model to a more franchise-orientated organisation. It operates in 3 core areas, ie

i) letters and associated services

ii) retail merchandise and agency services

iii) parcels and logistics

It offers delivery services (normal mail delivery as well as express courier), retail products, financial services (including insurance, passports, etc), direct marketing and database management services.

It also has a number of subsidiaries and joint ventures including a joint-venture in China established in 2005.

It has community service obligations, ie to provide an accessible, affordable and reliable letter service to all Australians wherever they reside. The corporation reaches more than 10 m Australian addresses; operates 4,419 postal outlets; serves more than 1 m customers in postal outlets every day.

It has a monopoly on letters up to 250g as its competitors have to charge 4 times the basic postage rate. Otherwise all other goods and services sold by Australia Post are sold in a fully competitive market place.

In recent times, with the increase in buying on the Internet, its parcel delivery area, ie delivering items purchased on the Internet, is more profitable than its mail delivery activities. Its mail delivery services are losing hundreds of millions of dollars per year and it is delivering fewer letters, eg in 2012 it was delivering 1 billion fewer letters (30% less) than in 2007. On the other hand, over the same period its parcel and pick up delivery has grown by 24% but it faces fierce competition from the private sector.

It is proposed to separate the mail delivery into 2 categories: a premier 5-days-a-week service & a regular service that will be 1 to 2 days slower and cheaper. Also, the organisation aims to diversify its retail business by taking over the process of health payments for the government.

One of the challenges facing Australia Post is the competitive pressure from the private sector as most of its services are being, or can be, provided by the private sector, eg courier, office supplies, payment facilities, passport applications, gifts, etc

With its core business, ie letters, under threat, Australia Post has used digital commerce to re-invent itself.  Also, the Australian government, which owns Australia Post, has agreed to increase the price of stamps and to cut back delivery services.

Owing to e-commerce, its parcel business has significantly increased in size and profitability. On the other hand, Australia Post cannot relax

"...the pace of change and competition is so brutal, the moment you get to the top you look over your shoulder.  You've got to change and got to think rapidly...."
Ahmed Fahour as quoted by Joanna Gray 2016c

Thus Australia Post is developing a digital identity business, ie aiming to make its identity service an integral part of online transactions so that it can charge a fee every time identity verification is used

"...the new beta version of its service is gaining traction with banks and government agencies.  By speeding up identity verification, it can cut the cost of doing business and encourage more transactions. About half of all online transactions are started and not completed because of complication and delays in filling in identity information..."
Joanna Grey 2016c

It is also including block chain technology to store the identity data.

People are becoming more concerned about the data they give to online organisations.

Some of the lessons learnt by Australia Post include

i) Post People First (investing, supporting, motivating the workforce to do the best and to reach their potential to help customers interact with the company)

"...happy staff leads to happy customers which leads to happy community and shareholders..."
Joanna Gray 2016d

You don't need to start with the customer

"...don't start with the customer.  The customer clearly is really important, but what you do as a leadership team, you start to build a culture and a trust and a level of relationship with the workforce who are delivering the service and the product..."
Ahmed Fahour as quoted by Joanna Grey 2016d

NB the workforce were very unionised and 45% of the staff are over 50, ie in the twilight years of their careers

"...people are paramount in any organisation. How they treat customers and each other creates a culture that is crucial to the successful implementation of strategy...... dedication to service is deep in our workforce base. Who is the person innovating here?  It's your employee in a way that they interact with their customer, in the way they interact with the eco-system, the way they interact with their suppliers.  The way they interact with each other..."
Ahmed Fahour as quoted by Joanna Gray 2016d

Currently the is dominated by white Anglo-Saxon middle-aged men; there is a need for greater diversity.  Until several years ago there were no women in senior management, and only 19% of management positions were held by women. In mid 2016

"...33% of managers are women and 37% of senior management are women......20% of managers are from non-Anglo backgrounds..."
Ahmed Fahour as quoted by Joanna Gray 2016d

ii) identify early the threats and opportunities like the Internet

As the parcel business is growing at around 8% annually, Australia Post is looking at using drones as delivery mechanisms. Other new businesses include digital identity and block chain (see above for more detail).  The aim is to

"...empower customers and citizens to own and control what they do with their data and their identity, and build another new steady income stream..."
Joanna Gray 2016d

iii) How to handle when core business is under threat

"...its core business of delivering letters has slumped over 50% in a decade..."
James Dunn, 2017a

To handle this, it went back to basics, ie customer relationship. Also, it realised that it had new opportunities as it had a large retail network, ie
- 4000+ post offices (storefronts)
- 77 superstores
- 50,000+ workforce
- 20,000 total customer lodgement points
- it possessed the largest parcel, freight, delivery and retail network in Australia with a
large customer base of around 12 million addresses across Australia
- it was one of Australia's most trusted brands
- interacted with around 11 m. Australians every day.

It was in a unique position to provide a range of services as more services moved online, ie
"...with more Australians buying and selling goods online, there are more parcels than ever to be delivered. And with so many transactions being moved online, there is an increasing demand to make sure interactions are secure, quick and convenient......Australia Post moved to secure its future by competing in the global parcels and trusted e-commerce services market..."
James Dunn, 2017a

One of the challenges it had was being a large organisation where scale is important but it still had to solve individual customer problems. One such approach involved its Australia Post's iD solution
"...it offers people a convenient way to verify their identity online and access important services from business and government agencies, and its secure PostPay service, which enables online transactions, with Australia Post holding its customers' funds until they receive & pay for their delivery. Digital iD allows Australians to verify safely and securely who they are - in person, or online through the platform's smart phone app - without needing multiple forms of identification. The service is helping with financial services, e-commerce and property transferred - even police identification..."
James Dunn, 2017a

Other projects include its Snap It app & issuing tablet devices to all corporate post offices to help improve customer experience.

Ahmed Fahour era

The $A 126m. profit Australia Post declared in August 2017 was the result of the changes introduced by departing CEO (Ahmed Fahour) during his 7 years tenure; 2 years earlier the company had lost $A 222m. He basically changed the focus of the business from delivering letters into a parcel delivery service. The former is a monopoly while the latter is very competitive.
"...building one of the most profitable parcel businesses in the world......lifted the proportion of revenue from e-commerce from 45% to 70%..."
Patrick Durkin, 2017

The decline in postal services (delivering letters) is mainly a function of the technological advances in e-communications, like e-mails, texts, etc that has significantly reduced the need of postal communications.

"...has transitioned that business away from a declining and loss-making sector being its traditional market and created new e-commerce and lines of business which delivered profits accordingly......have set the business up for a possible lucrative privatisation......he is seen as a pretty hard-headed banker who was working for a people-focused business built around a feeling good factor of your local friendly postie and having a sense of nostalgia and he took a very different view about KPIs and the numbers......his personal style has taken away from the emotional appeal of the brand and achieve a pretty positive set of numbers driven by his innovation..."
Paul Nelson as quoted by Patrick Durkin, 2017

He was known as a strong and inspirational leader who was a natural deal-maker and media operator. He was selected for the job as the organisation needed a major shakeup and he was a change agent with experience in the banking and management consulting industries.

NB Australia Post was a 200-year-old business facing potential extinction with its core mail business dying; it needed to reinvent itself. Fahour achieved this as the short-term financial performance showed. What is less clear is his impact on the organisation's culture and the sustainability of the changes.

The new CEO (Christine Holgate) is very different from Fahour, eg she is

- paid less than half of what Fahour was being paid

- less of a media operator

- into meditation

Some recent developments

- in 2019 Australia Post continue to diversify by acting like a branch for some 70 Australia financial institutions. Many of these financial institutions are closing local branches. Thus Australia Post is allowing people to do normal banking transactions at their 3,500 offices around Australia.

- in 2020 it reduced letter delivery service from daily to every second working day in urban areas.

NB In late 2020 Christine Holgate was forced to resign after rewarding some senior executives with luxury watches.


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