The future of mail services

The opportunities and challenges of the future

The shrinking mail market is probably the biggest challenge facing companies in the postal market. In Germany, for instance, the market decreased by 3 percent in 2006. The reason: Electronic forms of communication like e-mails and text messages are increasingly replacing the traditional letter. In addition, the companies will face increasing liberalization in the years ahead. This will fuel internationalization and intense competition on the market for business customers.

The liberalization of the mail market

Since January 1, 2008, the German mail market is fully liberalized. Still, Deutsche Post must provide an adequate number of postal retail outlets and mailboxes. Certain quality requirements also apply to services.
As part of the incremental opening of the market, many companies have entered the mail market: there were up to 750 postal companies in the market. In future years, a wave of consolidation is expected as a result of distinct economies of scale on the deliverers’ side, falling rates and customers’ desire for full-service providers. In the long term, only two to three major providers are expected to operate in this market. Two factors viewed as essential for a postal company’s survival are a national presence and its own network.
It can also make sense for the service provider to offer some services in production - e.g., delivery, sorting or mailbox emptying.

The internationalization of the mail market

Another postal-market trend is internationalization: Major postal companies launch subsidiaries globally. In a reflection of this, Deutsche Post already has subsidiaries in the United Kingdom, Japan, Australia and the Netherlands. Because many postal markets are similarly structured around the world, the option of expanding abroad to minimize reliance on the domestic market will remain attractive for postal companies. It can also make sense to invest in countries where liberalization of the postal market is about to occur so that a company can be well positioned for the opening.

Tailor-made products for business customers

The postal market for business customers is expected to remain intensely contested in years to come. To compete successfully on the market in the future, it will become increasingly important for a company to know its target group well in order to offer tailor-made products to it. Of course, the quality of service will play a critical role as well.
Given that rates are expected to fall, success factors like order volume, flexibility and personnel costs will move to the forefront.
Additional services such as shipment of letters including lettershop jobs and stamp-rate optimization continue to gain significance. Other increasingly used options for creating competitive edges could also be special services such as shipment monitoring.

Innovative mail products for private customers

The market for private customers plays a minor role for postal companies at the moment. This is because private customers were primarily acting as passive recipients. Postal companies are expected to increase their investments in this area in the future in order to sidestep the intensely competitive market for business customers. A first step in this trend is the personalized post card, which can be individually designed by the customer. After all, modern sorting equipment has become so flexible that it can sort and transport non-standard formats. Plans are also being drawn up to expand local presence for the private customer. In a reflection of this effort, Deutsche Post is expanding its retail-outlet network to more than 13,000 points that offer customers a wide variety of letter and parcel services.
Integrating the Internet into business with private customers is becoming increasingly important as well.

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