Market research firm Forrester shared a case study to show how Australia Post dealt with digital disruption while continuing to leverage core business strengths.
In the digital era, traditional companies must undergo transformation while continuing to leverage existing assets, capabilities, and expertise including physical infrastructure, service offerings, and customer relationships.
CMOs and other business leaders organizations are struggling to embrace digital transformation to serve empowered customers while continuing to provide world-class services in their traditional markets
The research firm notes that there are many things business leaders can learn from Australia Post’s experiences in dealing with digital transformation.
As a government business enterprise, Australia Post must transform its core business and optimize efficiency without selling off or otherwise shutting down unprofitable business units, services, or assets.
Australia Post faced the challenge of managing the decline in letter volume while simultaneously developing the customer-centric attributes and culture necessary for success in the eCommerce market.
Data from Australia Post showed that the letter volume decreased by 9.7 percent in 2016, bringing the cumulative decline since 2007- 2008, when Australia Post’s mail volume peaked, to 43 percent.
In fact, it’s been estimated that without significant business realignment, its losses on letter delivery would total A$1.5 billion over the next five years.3
Further, it needed to expand eCommerce capabilities beyond parcel delivery services. StarTrack, Australia Post’s parcel processing and delivery business, accounts for more than half of its A$6.4 billion revenue.
But continued growth is a challenge, as StarTrack operates in a highly competitive and dynamic market. Startup Sendle offers flat-rate parcel delivery via a network of partner couriers while having no infrastructure of its own.
Amazon partners with ParcelPoint to simplify local delivery and returns. Japan Post acquired Toll Holding, Australia’s largest private logistics, packaging, and freight company, and is poised to make further acquisitions in the region.5 And traditional retailers like Big W and Woolworths offer their retail space as collection points for online purchases.
Australia Post’s digital transformation began in in 2012, when it launched its “Building Future Ready IT” program.
Led by general manager Cameron Gough, Australia Post created a new division, the Digital Delivery Centre (DDC), to lead innovation and integrate digital practices and Agile approaches into traditional processes, culture, and infrastructure.
Over the past three years, the DDC has grown from a team of 12 to more than 350, including 250 engineers and 100 CX and user experience (UX) pros.
Further, Australia Post aggressively expanded from delivering parcels to enabling eCommerce. Asia Pacific is the largest region for online retail sales, containing both the world’s largest market (China) and its fastest-growing market (India).
By 2021, about one-fifth of all retail sales in Asia Pacific will take place online. Expanding beyond parcel deliveries to build eCommerce partnerships is central to Australia Post’s strategy.
Adding to its digital transformation initiatives, Australia Post created a new business unit called Trusted eCommerce Services in 2015 to create digital IDs, simplify and extend access to government services and to deliver information management services.
In the case of digital IDs, Australia Post currently handles more than 90 percent of Australian passports, and 25 percent of Australian citizens use Australia Post for identity services. But most of this is done physically. The challenge lies in enabling a trusted online service for citizens to verify their identity.
Digital transformation impacts
Australia Post’s chief customer officer Christine Corbett told Forrester that digital transformation helped the organisation to increase the value of their existing services like parcel delivery.
With MyPost, Australia Post customers receive a notification the day before delivery to advise them that the parcel is on its way. They can elect to have the parcel left in a safe location of their choosing or redirected free of charge to a parcel locker or alternate address if they know they’re not going to be home.
The transformation helped Australia Post to expand its businesses and services. it now accepts and processes bill payments on behalf of hundreds of companies and government organizations as well as handling everyday banking transactions on behalf of most of Australia’s financial institutions. This includes [email protected], which provides transaction services for more than 70 banks and financial institutions.
Lesson for CMOs and business executives
Australia Post’s digital transformation teaches us not to rely on a bolt-on approach when planning digital transformation. Adding digital capabilities to existing products, services, and processes is only a stopgap measure.
Successful digital transformation requires an enterprisewide commitment to understanding and implementing the customer-obsessed operating model. CMOs and other business leaders can learn from Australia Post’s experience in overcoming massive digital disruption challenges.