In good company

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They used to exist as totally separate entities, but increasingly postal operators and e-retailers are partnering and reaping the benefits that such collaborations can bring.

If you look at the current state of the market it seems to be an increasingly popular trend, so is this truly the way forward? Must postal operators partner with large e-retailers to survive and thrive in an otherwise declining market of traditional postal services?

“There are great benefits to e-retailer/postal partnerships,” says Brody Buhler, global postal industry lead at Accenture. “Posts get tighter integration with key partners and better insight into volumes and workload. This insight drives efficiencies and the ability to communicate with consumers to create a seamless experience. To truly grow market share, posts will have to continue to evolve their offerings to address the demands of e-retailers. This type of collaboration accelerates that evolution as they develop tailored solutions that can then be applied to other customers.”

Certainly the actions of Chinese e-commerce giant Alibaba Group, the largest online and mobile commerce company in the world in terms of gross merchandise volume, suggest that partnerships are the way forward. The company has made a number of strategic investments and agreements in recent months as it continues to build relationships with the postal operators that can help support its business.

Left: SingPost and Alibaba have formed a strong e-commerce relationship in southeast Asia

Lead by example

In May Alibaba announced a S$312.5m (US$252.5m) investment to take a 10.35% share in Singapore’s national postal service provider and e-commerce logistics provider SingPost. The deal also saw the signing of a memorandum of understanding (MoU) to build a joint venture in international e-commerce logistics, allowing the duo to tap into e-commerce opportunities in southeast Asia and beyond.

At the time of the announcement, Dr Wolfgang Baier, CEO of SingPost, said that the investment would allow it to be prepared for further growth in Asia as well as recognizing the need to find new routes for growing its business. “It enables us to scale up our e-commerce logistics business and build new capabilities as we are poised for growth in the region,” he said.

Alibaba’s chief operating officer, Daniel Zhang, meanwhile spoke of the “concrete benefits for our overseas buyers and sellers by enhancing the user experience and providing greater access to a suite of international e-commerce logistics solutions and products”.

Only days after its tie-up with SingPost, Alibaba also forged a closer relationship with Australia Post. “The agreement with the Alibaba Group means that local businesses can partner with Australia Post to access the online marketplace [part of the Alibaba Group]to sell to over 500 million registered Chinese consumers. It will also make it easier for Australian consumers to purchase items direct from China via and the Taobao Marketplace using Alipay [an online payment escrow service],” says a spokeswoman for Australia Post.

Like SingPost, Australia Post is recognizing what it needs to do to future-proof its business model, and partnering with e-retailers helps to provide that security. “Australia Post has been evolving and changing for 200 years in response to new demands from our customers, new technology and new markets,” comments the spokeswoman. “This is another way Australia Post is leveraging its domestic expertise in e-commerce to support online retailers in Australia.”

Australia Post is focusing on a having a range of e-commerce partnerships with international postal organizations, e-commerce marketplaces and global businesses operating in the Asia-Pacific region, as it says this is key to opening doors for Australian small businesses around the globe. “Local businesses can tap into the growing demand for authentic Australian products in Asia. By partnering with Australia Post, local businesses can increase awareness of their brand, business and products through representation in the Australia Post store on,” explains the spokeswoman.

In addition to its partnerships with SingPost and Australia Post, Alibaba has also signed agreements with China Post and Correios Brazil. The agreement with China Post, which was announced in June this year, is part of plans to open up warehouses, processing centers and delivery resources to each other, building an e-commerce logistics platform that will serve third-party couriers in China in an effort to develop new business and new markets.

The agreement with Correios will help micro, small and medium-sized enterprises in Brazil to access the Chinese market through Alibaba’s platforms (, AliExpress and and Alipay, as well as improve the logistics arrangements between the two countries.

Global attraction

Alibaba isn’t the only company that has recognized the need for closer working relationships in the e-commerce industry. China Post, for example, has partnered with TOM Group, a Chinese-language media company, to launch and operate, which sells a range of products to Chinese consumers on behalf of retailers from China and worldwide.

In June 2014, Lithuania Post signed agreements with international logistics and transport company CLEVY to cooperate on the delivery of items originating from China to European countries covering the EU member states, Russia, Belarus and other countries. Since CLEVY also works with to deliver goods in China, it means that under the agreement, CLEVY will deliver goods purchased on via Lithuania Post.

Lina Minderiene, CEO of Lithuania Post, says the company has recognized the need for a new strategy. “In order to survive in a declining letter mail market, we must change and offer our customers new services that meet their needs. Thus we see the future of the company related to delivery of items generated by e-commerce,” she says.

Minderiene adds that the partnership will stimulate international growth for Lithuania Post. “When thinking about the future of Lithuania Post, we saw it not only in Lithuania, but in other countries as well, so we were searching for markets to expand to,” she says.

Its growth forecasts are impressive. “We have already received the first items from China. According to our estimates, this year the agreements will increase mail from China by 1.5 million items in comparison with last year, and we estimate that the figure will reach three million during 2015,” says Minderiene.

Finnish post Itella has also developed a post/e-tailer partnership, forming a relationship with e-commerce marketplace Mitä (, a grouping of 200 e-commerce merchants offering 35,000 products through its website. “The alliance will offer online merchants selling via a market platform and logistics service as a single solution, including better customer service and faster delivery times for participating merchants,” says Frank Cianciullo, founder and lead consultant of strategic and postal franchising consultancy LeapFrog Business Consulting. “This follows increased investment in warehousing, automated e-commerce fulfillment processes and delivery systems,” he adds.

Posts are also working together to support cross-border e-commerce. Looking again at the Asian e-commerce market, Australia Post, New Zealand Post, Post Danmark, Deutsche Post, Poste Italiane and others also have agreements with China Post to support their own countries’ e-retailers, who want access to Chinese consumers. “These posts are all attempting to fundamentally increase the number of shipments exported from their country,” says Cianciullo.

Left: Frank Cianciullo, founder and lead consultant, LeapFrog Business Consulting

Words of advice

Cianciullo believes that by focusing on cross-border e-commerce through the development of close partnerships with operators and e-retailers, posts will increase their chances of competing in the changing postal environment.

He believes the Alibaba model is one that others should be looking to emulate. “Alibaba seems to be putting forth an impressive global strategy of forming joint ventures with posts that have warehousing and logistics infrastructures and are well positioned as regional hubs to serve a growing e-commerce market,” he says.

Martin Newman, CEO of multichannel consultancy Praticology, adds, “Perhaps the biggest win for both parties from such a tie-up is that both become more committed to innovating around the fulfillment proposition. Online retailers often gripe that fulfillment providers are not innovative enough in the services they provide – for instance being slow to introduce timed delivery slots, evening slots, delivery lockers and services such as SMS rearranging, etc. At the same time, fulfillment providers argue that with the price online retailers want to pay for delivery there is very little margin for them to innovate,” he says.

Partnerships between e-retailers and posts mean the objectives of both sides are more closely aligned. “It can be easier to create a model where both sides participate in the risks and rewards associated with innovating to meet changing consumer requirements,” continues Newman.

Elmar Toime, director of E Toime Consulting, agrees and believes that the development of a successful partnership is the ultimate goal in any commercial relationship: “It evokes a high degree of sharing, such as strategy, risks, and winning and losing together. But before you get there you have to be a good supplier of services. Until you are a good supplier, you can’t expect to be a good partner,” he explains.

Toime says that although key partnerships will help bring the operator additional mail flow, the key still lies in providing the right service for the customer, which in this case is the e-retailer. “The growing sophistication of e-retailers means that they have the tools to choose the best carrier for each individual parcel,” he says. “Even with such partnerships, the e-retailer’s priority is with its customers and it will still choose the best delivery arrangements to meet their needs. This added pressure, however, may help the post operator concerned to lift its own game.”

Cianciullo says posts must grab the bull by the horns and decide now how to survive in the e-retail world. “Posts have the option of staying on the sidelines, setting up portals and being the aggregator of their country’s e-retailers, or partnering with large e-retailers who are the aggregators,” he explains. He believes posts should move quickly to sign partnership agreements or joint ventures with large e-retailers.

“Large, global e-retailers are more likely to form key alliances with a few well-positioned posts. Then they will use these posts as the hub or springboard to deliver products to key strategic regional consumer markets. Only posts that have warehousing and logistics infrastructure, and are well positioned and nimble, will succeed,” adds Cianciullo.

However Newman points out that it isn’t a model that will suit everyone. “Some online retailers purposely choose to work with a large variety of fulfillment partners to give them flexibility and scale at peak trading times, and that won’t change anytime soon,” he says.

Toime shares a few final words of caution for posts looking to partner with e-retailers. “In many respects, posts can’t afford to lose their neutrality and their ability to service a range of e-retailers,” he explains. “They need the volumes, so they should be sure that partner agreements don’t limit what they can do or divert attention away from other growth initiatives. Also, e-retailers can be greedy. They demand a lot from their service providers, and if the post isn’t careful with pricing it may find it is subsidizing the shipper. Another risk is that the postal operator neglects its other customers. If that happens, it’s a downward spiral.”

August 13, 2014

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, editor-in-chief

Helen has worked for UKi Media & Events for nearly a decade. She joined the company as assistant editor on Passenger Terminal World and since progressed to become editor of five publications, covering everything from aviation, logistics and e-commerce to meteorology. She has a love for travel and property and has redeveloped three houses in three years. When she’s not editing magazines, she’s running around after her two boys and their partner in crime, Pete the pug.

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