Av Mikael Wällstedt | Article | July 1, 2018

Innovate with New Business Models in the Postal and Parcel Industry

The situation in the Postal and Parcel business is changing fast. The demand for distribution of letters, which in fact has been core business for most Postal companies since hundreds of years back, is declining. At the same time the demand for parcel delivery is rising fast. A new business logic may be required.

Traditionally, the postal letter business model is a push model. The sender is, in this case the customer. In a normal case, he would purchase the stamp, put his letter in the box and let the Postal company deliver. When it comes to parcel delivery, it is rather a pull case. Here the receiver is the prime customer. A common case is of course when a consumer order goods online via an ecommerce site. Key requirements are of course to keep delivery costs low, while developing new and more efficient ways to fulfil deliveries.

As the situation is changing, it means that the Post and Parcel Industry effectively must exploit new ways to make business. From where should the money streams come? Here are some ideas of value creation?

Subscription model

As a front runner in the field, Amazon has since long time been very successful with the prime model. This a subscription-based model, where one pays a fixed monthly for all deliveries. A key benefit is that it promotes loyalty, while a major down side is the dependency on volume.

Last Mile Delivery Personalization

When talking about home delivery, a very important part is to agree and communicate the correct ETA delivery time. Most recipients prefer very narrow time windows as they want to do other things than waiting for the delivery. Here is a business opportunity for the courier company that leverage routing optimization to generate very precise delivery ETA. As an example, a delivery company could offer an eight-hour delivery time windows for free, while charging extra for a specific one-hour window.

Returns and collections

Many e-commerce vendors offer free returns, as this is almost de facto in the business. For some vendors return rates are as high as 50%. Consequently, there is a huge job to effectively manage these returns. For the logistics provider that can adjust their workflows to include a good return handling, this means new business opportunities.

Value added services

In addition to deliveries, why not do more when you are at the customer anyway? Many Postal and Logistic Service Providers are exploiting how to offer extra services. For example, this could involve simple installations or bring back wrapping.

Other exciting new business models in the Postal and parcel industry involves crowd sourcing, smart payment mechanism, usage of robots, drowns and extensive partnerships.

Here are some interesting links for further information on the subject:

Finding value in disruption – The new post and parcel industry

We need a new business model for the postal market

The new delivery reality [PDF]

Turning the postal business model by 180 degrees

The Future of Postal Services: Digital Transformation Driving new Business Models