Australia Post, E-Commerce and E-Parcel

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Background

Australia Post suffers a real challenge in as far as the decision on its future business is concerned. Despite being a public listed company and the sole supplier in its core business of letter delivery, all is not well as competition is becoming stiffer. The Australia Post has grown and expanded gradually from its initial humble beginning that spans over 200 years to become one of the reputable firms across the globe in its industry of operation. In all regions where it operates, the company enjoys a significant competitive edge over its private rivals, especially with regard to infrastructure and heritage.

Introduction

Although Australia Post has managed to maintain its position in the market, there are clear indicators that its core area of operation-the mail- is slowly being threatened by technology. Email usage has had an impact on post although the impact has been rather gradual, resulting in slowed growth of Australia Post rather than sent it into inescapable decline. However, with the new phase of technology, especially mobile phones, a major decline is expected if it has not already set in. From the perspective of a modern world, such a procedure appears to be an old fashioned mode of communication.

Problem, Scope and Limitations

The annual financial performance for Australia Post clearly indicates that the technological switch is underway. In 2008 fiscal year, the volume of items sent through post stood at 5.3 billion, representing a 0.3 billion decline from the 2007 figure. The volume of letters sent declined by a whole four per cent. Although the adverse effects of the financial crisis may have contributed to this decline, it is unlikely that the company will recover its traffic. As companies look for cost-saving strategies, items that can be sent electronically will be increasingly be done so. Consequently, the purpose of this report is to analyse and recommend on how the company can make use of change management strategies including technology in its letters and associated services that include retail merchandise, agency services, parcels and logistics services to remain relevant in the competitive business landscape.

Sources and Methods

The paper will carry out a literature search on change management from various sources, including academic and non-academic sources. This will include: Australia Post websites, media websites, and library sources. The objective is to come up with detailed information that will inform the recommendations made to Australia Post on the best change management process (Black & Hal 2002, p. 22).

Benefits of Internet Trends in Parcel Delivery for Australia Post

Australia Post can make use of the change management strategy to tap into the benefits provided by the internet trends. According to the BBC (2006, p. 1), the internet has resulted in a greater concentration of businesses online. In addition, it has significantly reduced transaction costs more so within the services sector where Australia Post belongs. The modern consumer often checks the availability of the product or service online before making a purchase decision.

As Mills (2011, p. 1) reports, business that have chosen to remain in brick and mortar style are losing revenue to those that have embraced technology. Companies like Australia Post that are directly involved in distribution are strategically placed to benefit from the changing consumption patterns (Waddell & Worley 2011, p. 88). Like any other distribution chain, the retailer controls the distribution chain that delivers the service and product to the consumer in a secure and accurate manner, but most importantly, the distribution system must have a tracking system that permits not only the customer but also the company to track the delivery real-time (John 2009, p.1).

E-Commerce

Australia Post is one of the major players within the distribution industry. Even though the company has for decades enjoyed significant monopoly power in the delivery of letters, it lacks the same in parcel delivery although it has the best infrastructure in the industry (Mills 2011, p. 2). Given that the companys profits have already been affected by email and other modes of electronic communication, the future success of the business lies in its ability to adequately capture the parcels market. According to Mills (2011, p.2), 2010 saw a 4.2% decline in the volume of letters sent with revenues declining by 2.3% and pre-tax profits by a significant 73%. On the other hand, the parcel segment registered significant growth with a 4.2% in volume. Interestingly, out of over 100 million parcels Australia Post delivered, 70 million originated from e-commerce (Anne 2004, p. 8). This is enough evidence that is a significant technology component that will shape the future of Australia Post.

E-parcel

This is a mode for sending parcels using internet technology. All it requires is an internet connection, and the user can deliver large volumes of data electronically using a simple email transmission. Australia Post is already a step ahead in this regard. The company offers e-parcel to both individual and business customers who dispatch over 1000 parcels per year. In addition, it offers parcel tracking services. However, the company has not fully captured the potential that this technology offers. The delivery process remains largely physical, with only order placements done online (Auspost 2012, p.1). The company can enhance its revenues by offering direct online e-parcel delivery. In addition, there is need for business to business partnerships with companies specializing in online market for example eBay that will permit eBay sellers to access services offered by Australia Post (Mills 2011, p. 2). Similarly, the company should target small and medium enterprises that are not in eBay but still engage in retail services (Joint Ventures 2011, p. 20). To make the e-parcel more attractive, the service should be accompanied with an online tracking system that will permit the sender and the recipient to trace the location of the parcel until it finally reaches the intended location (Axelrod 2000, p. 7).

Using Internet to Link Farmers to the Market

Australia Post has taken advantage of the potential provided by internet technology to link various farm producers to their customers. Through this method, consumers can meet the producers virtually, inspect their produce and purchase them online. The platform has significant advantages to the farmer because it is the farmer who determines the price (Internetretailer.com 2012, p. 1). With its retail infrastructure all over Australia, Australia Post is in a position to deliver the produce ordered. It is estimated that on average, the company services approximately 10.7 million addresses and it has developed the most expansive delivery network with local producers. Through this strategy, Australian consumers need not to worry about supply and producers should not be worried about demand as the company acts as an intermediary between the two (Kaplan & Norton 2000, p. 29). Already the company has partnered with 70 local producers with approximately 680 different products being traded through the platform (Changarathil 2012, p. 1)

Farmers can easily visit the company online market (Farmhouse Direct), create an account, set up their shop and determine their own prices at no cost. For the consumers, the website can be explored by product types, the customers region, produce and even the name of the local market with the objective of placing an online order. Once an order is made, farmers arrange for the shipment. Australia Post is charged with the responsibility of delivery. It either picks up the shipment from the farmers location or from a depot and delivers it to the final consumer. While the company has benefited from significant revenue streams from this venture, producers have equally benefited as it has given them an online presence. Small farmers in particular have benefited from this initiative at a reduced cost (Changarathil 2012, p. 1)

With the initial success of the program, it is expected that many farmers would wish to join the platform and this will be a significant business for the company. This is because traditional marketing channels often consume much of the profits that should be going to the producers. In addition, the buyers pay high prices because of the costs associated with bringing the product to the market and the high profits that middle men charge. It is expected that the platform will offer significant advantages to the consumers in form of reduced prices, timely delivery and access to fresh products. Similarly, unlike other online initiatives that link consumers to the market, the platform offered by Australia Post is significantly different as the company does not act as a middle man (Changarathil 2012, p. 1)

Despite the success, there are other areas where the company needs to improve. As a way of marketing the platform, video footage on how the consumers meet the producers need to be uploaded in the order website. In addition, the company must offer a method through which buyers can aggregate their orders through a single checkpoint. Through this technique, the company will facilitate the buyers in knowing whether a single producer can supply more than one product range so that it reduces the cost associated with separate deliveries to the same consumer (Sydney Morning Herald 2012, p.1). Similarly the company can expand the model to include exports. Given that the business is done online, foreign consumers can easily identify products that suit their needs. Australia Post will then act as a link through which these products be exported to other countries resulting in higher incomes for the company, the producers, and foreign exchange for the country.

The Peoples Bank idea and the Referral Scandal

Given the domination of the big four commercial banks in Australia, it would not be prudent for Australia Post to venture into the banking industry. This is because the existing players have substantial financial power and they can use this to their advantage. Secondly, given that it is a state corporation, its entry into the banking industry will be viewed as an attempt by government to venture into business activities. With the wave of globalization, governments are charged with the responsibility of providing a conducive environment for businesses to thrive but they should not be directly involved in trade activities. Concerns have been raised that an attempt by Australia Post to venture into banking, will water down the level of service delivery in its letter advertisements parcel delivery segment (Kotter & Cohen 2002, p. 45).

In terms of referring customers to third party financial providers, the company ought to stop immediately. Already it has fallen into trouble with the law enforcement authorities who are accusing the company of heating citizens in signing contracts that they do not intend to. Even in the absence of legal challenges, such a model of business cannot yield significant profitability to the company. It would be better if the company can concentrate in its core is of operation.

Australian Post Strategy in Referring Customers to Third Party Financial Services Providers

Australia Post stands accused by the Australian Securities and Investment Commission of its involvement in direct selling of financial service products. Using its lifestyle survey, the company refers its respondents to third party companies that offer financial services. Among the companies it referred respondents to include: ANZ, NAB, Commonwealth Bank and AMP. Similarly, an insurance company Australian Insurer Tower has been linked to a deal in which it donates the leads that Australia Post implements. This is a sign that the company has intentions of venturing into the general insurance sector (Amal 2009, p.1). There are concerns that advertising and marketing campaigns undertaken by Australia Post have significant influence on decisions made on investment. Direct selling of financial services promotes risky investment decisions among consumers because they are motivated to invest without seeking appropriate investment advice.

According to Australia Post, the main reason why it undertook the survey was to ascertain if respondents attach a greater value to products such as investment funds under management, margin loans, and life insurance products. By responding to the surveys through filling out the survey form, consumers are provided with prices and estimates of gains they will make if they invest in the products (Jorgensen & Neus 2008, p. 36). Depending on how the consumers respond to the questions, the company gives the respondents offers on several monetary products but does not offer any financial or investment advice. The survey in itself is not unethical but it would be much fair if a tick box would have been included in the survey that would require the respondents to tick whether they wish to be contacted or not. In the absence of this, there are chances that firms will encounter problems dealing with clients who have no clear understanding about the outcomes of their contracts. People who participated in the survey were surprised when they were later contacted by third party companies. It is a fact that many Australians are not insured. If Australia Post is to address this, then it has to deliver the right insurance products that match the needs of the specific consumers. It is therefore wrong for the company to sell financial products wholesale without taking into account unique individual circumstances (Weisbord & Janoff 2000, p.17).

Australia Post’s Structural Adjustment Program as a Means to Transform the Company

One of the most ambitious programs that Australia Post has undertaken in an effort to bring change to the organization is the Structural Adjustment Program (SAP). Using this program, the company intends to make changes to its operations to provide more relevant services in an era when digital and electronic delivery of information is shaping the industry. The company appreciates the fact that unless it moves in now to initiate change, its profits will continue to decline. One of the most important SAP components that the company intends to undertake is the analysis and monitoring of its data to enhance efficiency in the entire organisation. This is the first stage in a four-stage transformation process within the SAP program. The success of this project will result in a complete restricting of Australia Post to be in a position to offer more customer cantered services in line with the digital age (Watkins & Mohr 2001, p. 62).

The organisation shall be divided into four separate segments that include: retail services, e-services, postal services and the express distribution services. The SAP is equally expected to enhance efficiency across the organisation. Among the organisational elements that SAP will address are compliance, governance, and risk components of the organisation using SAP software. As part of the change management, it’s processing and payment systems will be identified and documented. In addition, the process that Australia Post employs in its dealings with the suppliers will equally be analysed and documented.

In the second phase, the SAP system will be used in monitoring and analysis of data to bring in efficiency not only in the purchase contracts but also in making payments. To do this, the Australia Post must first gather the baseline and then use the collected data as the basis for measuring the process and identify weak areas that require improvement. A similar strategy will be employed in the corporate risk segment. Once completed, the SAP software is expected to result in increased efficiency in corporate risk reporting and achieve the postal service vision (Australia Post 2011, p.5).

Evaluation of Alternatives

Australia Post has various alternatives through which it can manage its change process. However the various alternatives have their own advantages and disadvantages.

Ecommerce and e-Parcel

E-commerce and e-parcel is one of the most viable alternatives that the Australia Post can use. As already noted, the post has already registered significant growth in its profitability through this channel. The second major advantage is that this strategy has already been rolled and no excessive capital outlays may be required compared to the others. Similarly, with the growing trend in internet usage, e-commerce will offer several other opportunities to the company that will widen the revenue base. E-parcel will also offer significant revenues from companies that send letters in bulk each year. However, given that the company is not the pioneer in this area, stiff competition is expected. The company must remain innovative for this strategy to succeed.

The Referral Strategy, the People’s Bank

Given the significant legal challenges that the company is already facing with regard to its referral of respondents to third party financial providers, the company cannot proceed with this strategy. On the other hand, the peoples bank idea may be great but the big four companies have already dominated the market and it would be difficult to gain a share of the market.

Recommendation

Based on the evaluation of alternatives that Australia Post has its disposal, it is clear that the company will benefits from other options more than others. The E-commerce and e-parcel are particularly recommended for the company as it will put the company on a long-run sustainable footing and secure business in the contemporary digital age. The adoption of internet technology in its operations should be viewed as a way of transforming its business and consolidating its branch infrastructure. With such levels of technology, the company can achieve significant expansion in the range of activities it offers without necessarily having to build brick and mortar retail outlets. This can only be achieved if the government grants the corporation sufficient flexibility in its operations especially in terms of decision making. The change management technique selected should be on that pays greater attention to the needs of the consumers in terms of the services it delivers

Conclusion

Australia Post has evidently undertaken major steps that will ensure it remains relevant in the current competitive business landscape. The company is undertaking ambitious reform programs that include use of e-commerce, e-parcel, generating leads for banking and insurance institutions and its SAP model. While these changes may be necessary and are generally geared toward to the right direction, there is concern on the delivery and detail for some of the programs. Given the many reforms projects it is undertaking at ago, the bank may suffer financial challenges resulting in a failure to achieve its objectives. Based on the situation analysis and evaluation of the various alternatives, it is recommended that Australia Post undertakes E-commerce and e-parcel projects and postpone the others. This will ensure the company gets the best results in its change management given that these two segments are already generating significant returns to the company.

List of References

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Anne, P 2004, ‘Direct mail delivers high profits for Australia Post’, Precision Marketing, vol. 17, no. 3, pp. 9-9.

Auspost.com.au 2012, eParcel -Australia Post. Web.

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BBC 2011, How the internet transformed business. Web.

Black, J & Hal, B 2002, Leading strategic change, Financial Times Prentice Hall, New Jersey.

Changarathil, V 2012, Australia Post teams up with Aussie farmers, Herald Sun. Web.

Internetretailer.com 2012, Platform for change-internet retailer. Web.

John, D 2009, Bank on big changes at Australia Post, FairFax Mail. Web.

Joint Ventures 2011, Australia post and quantas reconfigure express freight joint venture, Diesel, vol. 11, no. 3, pp. 20-20.

Jorgensen, H, Owen, L & Neus, A 2008, Making change work study, IBM Global Services. Web.

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Mills, K 2011, Trend: the internet redistributes revenue, BRW. Web.

Sydney Morning Herald 2012, AustraliaPost’s online deal a ‘kick in the guts’ to traditional retailers, Sydney Morning Herald. Web.

Waddell, D, Cummings, T & Worley, C 2011, Organisational change: development and transformation, Cengage Learning, South Melbourne.

Watkins, J & Mohr, B 2001, Appreciative Inquiry: change at the speed of imagination, Wiley, San Francisco.

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