by Byron Connolly

Australia Post’s digital mailbox investment ‘speculative’: Analyst

Oct 12, 2012 3 mins

Australia Post is being “attacked by the forces of disruptive innovation” and its investment in a new digital mailbox service – a response to online competition – is quite speculative, according to a Gartner analyst.

The organisation yesterday unveiled a $2 billion investment to transform its national logistics network through its purchase of Qantas’ 50 per cent stake in StarTrack, as well as creating a “universal digital platform” to transform its online services.

Australia Post reported a loss of $148 million for its regulated mail business in 2012, a 20 per cent increase over 2011. This is despite an overall group profit of $281 million this year.

Next month, the company will switch on the Australia Post Digital MailBox, an Australian-based cloud service that will enable consumers to securely receive and pay bills and store important documents online.

“They are talking about it, they don’t actually have it yet, there is nothing there and it’s a product in highly competitive marketplace,” said Steve Bittinger, Gartner’s Canberra-based research director.

“Google and everyone else are giving away free mailboxes, and the question is ‘why not use my existing Gmail account of Hotmail of whoever?’” he said. “They [Australia Post] are going to invest money in it and nobody knows if it’s going to pay off at this point, it’s impossible to tell.”

Bittinger also said it’s “impossible to tell” how well Australia Post will compete against the likes of FedEx, DHL and other global parcel delivery companies.

“They are coming in late to the party, it’s a growth area [parcel delivery], riding the back of everyone going online to buy [products and services],” he said.

Australia Post CEO Ahmed Fahour is confident in the organisation’s ability to make the transition to online.

“Just as the traditional letterbox has been a vital part of people’s communications for the past two hundred years, we think the Australia Post Digital MailBox will become an integral part of everyday life,” he said yesterday.

Bittinger likened Australia Post’s transformation to the Federal Government’s service delivery reform where the Department of Human Services (DHS), Centrelink and Medicare are being integrated into a single department.

Bittinger cited a 2011 paper co-authored by Lynelle Briggs, CEO of Medicare Australia (PDF), which suggested that this reform will create a shift from these departments dealing with customers from a transactional to a relationship basis.

“Australia Post is trying to do business model innovation and DHS similarly is trying to look at the foundational changes in the nature of its business.

“It’s a major shift, it will take years to shift the culture of both organisations to that new paradigm,” he said.