Top postal chiefs from around the world have learned at first hand how the online sales boom inAsia is changing demand for logistics services.
This was the key topic at this year’s IPC annual conference entitled ‘The Consumer in 2020’,which took place in Shanghai on May 11. The event attended by 50 senior executives also focused onthe potential for postal operators to respond to changing consumer demands and the opportunity tocreate new logistics business to meet e-commerce delivery demands.
In an ever-evolving digital landscape where consumer behaviour is constantly changing and theboundaries between on- and offline are fading, posts are uniquely positioned through their extendednetwork and delivery capabilities to help meet evolving sophisticated consumer needs, theconference was told. In a globalising economy, international collaboration is also more importantthan ever to thrive into the future and respond to the consumer needs into 2020. However, postsalso need to innovate in the area of new logistics solutions to help e-tailers meetever-more-sophisticated consumer delivery demands.
IPC said that the choice of Shanghai as the conference venue reflected the huge importance ofthe growing consumer base in Asian markets to the world economy, not least in China. There, theevolution of the economy from a production base to a consuming society sees the emergence of anenormous emerging consumer base of digital natives that is driving change in consumer behaviour.
The conference featured two keynote speakers: Daniel Zhang, President of Tmall, the onlineshopping landmark in China with more than 50 per cent share of the country’s business-to-consumer(B2C) online retail market, and Matthew Godfrey, President of the Asia region for Y&R, one ofthe world’s leading marketing communications agencies and a byword for marketing innovation.
Zhang detailed the evolution of the Chinese consumer base, online commerce in China and theunique position of Tmall. In China, online shopping is still experiencing triple-digit year-on-yeargrowth, reflecting the changing consumer demands and shopping behaviour of the new generations, andthis explosive growth is expected to continue in the near future. The boundaries between online andphysical shopping are fading and the future consumer will no longer distinguish between e-commerceand offline retail, but will view e-commerce as an integral part of a holistic shopping experiencethat combines the digital and the physical, Zhang asserted.
In comparison, Zhang highlighted the relatively limited evolution in the Chinese logisticsindustry, where he sees huge potential for posts to work with online platforms such as Tmall asprivileged delivery and logistics partners. Posts, Zhang stated, are uniquely positioned with theirnational networks and last-mile delivery solutions, both of which remain the largest challenges forprivate logistics companies. As Tmall handles 7m packages a day and is still growing, posts need toleverage their key resources to both accommodate these enormous volumes and help consumers accessto services they want. Into 2020, local deliveries will continue to grow and local deliveryservices will become increasingly required, underscoring the huge opportunities for the postalservices to respond to these demands.
Zhang called on posts to develop warehousing solutions to meet the needs of B2C sellers, asthis is the only way he believes it will be possible to meet increasing consumer demand fornext-day delivery. Retailers require logistics service providers to have a number of hubs across amarket to quickly reach all areas: in the example of China, Zhang cited how a logistics providerwould require hubs in Shanghai, Beijing, Guangzhou and Yangzhou to reach consumers across the widehinterlands of those cities. Zhang spoke about how Chinese consumers are demanding not only higherproduct quality but also higher service quality: increasingly, next-day delivery with thecommitment of on-time delivery or compensation. Consumers, Zhang said, are selecting e-commercesites not just for their product range but for the levels of delivery service, and matchingconsumer requirements and service levels is the top priority for Taobao and Tmall today.
In his keynote presentation, Y&R’s Matthew Godfrey provided a critique of three myths hiscompany perceives that currently concern the postal sector in the age of the digital consumer. Thefirst is that we are living in a ‘post-post world’, which Godfrey repudiated, as consumers do notlive just virtually.
The second myth Godfrey debunked was the notion that online consumers could only be reachedthrough the online medium, highlighting several best practices of integrated on- and offlinecampaigns which lead to enhanced consumer involvement and greater success. The ‘experiential model’, Godfrey asserted, is becoming the new premium, overtaking online commodity models. The third mythhe tackled is that effectiveness is measured through the ability to drive sales, whereas recentdevelopments have shown that effectiveness is more accurately measured through the ability tocreate brand affinity. In a world that is in ‘constant beta’, Godfrey pointed out that technologyis no longer of intrinsic value in itself, but merely an enabling medium. This is why, Godfreystates, posts will always have their place in, in delivering stories and experiences, not justmailpieces and packages.
A panel discussion followed, involving both keynote speakers and Frank Appel, CEO fromDeutsche Post DHL and Ahmed Fahour, Managing Director and CEO of Australia Post, which combined thepostal perspective of the consequences for the global postal industry of these changing consumerrequirements into 2020. Appel stated that the big difference between China and mature markets ofEurope and the US is the fear of change. For developing markets, change means hope for a bettertomorrow, in mature markets fear of change is mainly driven by the conviction that things are goodas they are going to get. But, stated Appel, transformation is exactly that hope for a bettertomorrow. Amongst other areas, Fahour discussed the need for posts to invest further in theircompetitive advantage, such as brand recognition, a large physical distribution network and parceldelivery capabilities in the world of e-commerce, in order to achieve successful transformation.
The conference also saw interventions by Huang Guozhong, Deputy Director General of the UPUand Zhang Ronglin, Vice President of China Post. Conference delegates heard how China Post has setan objective to make its postal service website an important consumer channel with rich services,improved functions and standardised operations. China Post launched Ule.com.cn in August 2010, acomprehensive B2C shopping platform integrating online and offline sales. As such China Postintends to become an integrated service provider instead of just a logistics distributor.
IPC said that the 2013 Annual Conference, to be held in Oslo, would builds on this year’stheme and will explore the on-going structural transformation needs of posts to ensure theycontinue to respond to the changing needs of the consumer into 2020 and beyond.
