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Industry trends for Post & Parcel organisations to adapt at speed to the new consumer demands. https://accntu.re/3osDulV

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  1. 1. REINVENTING THE POSTAL & PARCEL INDUSTRY November 2021 Copyright © 2021 Accenture. All rights reserved.
  2. 2. Agenda I. Industry Overview II. Trends and Disruption III. The way forward –Strategic Options
  3. 3. Copyright © 2021 Accenture. All rights reserved. Accenture in the postal and parcel industry We have worked with a wide range of postal and parcel organisations globally, including 38 of the top 40 operators 4000+ Postal projects delivered, helping executives globally 70% of Global Mails & Parcels tracked by systems we worked 2500+ Pool of Postal and Parcel practitioners around the world 38 of 40 of largest parcel organisations are Accenture clients 90% of the Global Postal clients already been served by Accenture 15 years+ of Postal Thought Leadership
  4. 4. Copyright © 2021 Accenture. All rights reserved. A summary of what we are seeing in the Global Postal & Parcel Industry Pre-COVID view Mail volumes declining Many governments deregulating and privatising Parcel volumes increasing thanks to eCommerce Stagnant revenue growth, declining margins Diversification and M&A: limited success Postal Players slowed by legacy IT and culture
  5. 5. Copyright © 2021 Accenture. All rights reserved. Accelerated Parcel Volume Growth & Mail Volume Decline 2020 represented a historic pivot for postal organisations driven by eCommerce and parcel delivery eCommerce and parcel delivery driving growth Note: : Includes Austria Post, Australian Post, Aramex, Bpost, Canada Post, CTT, DPDHL, Fedex, La Poste, POL, Post Italiane, PostNL, Posti, Posten Norge, Post Nord, Royal Mail, Swiss Post, UPS, USPS, Yamato; (2) Other includes revenue from retail, financial services and other value-added services Source: Annual reports; Accenture Client Value Services Industry Revenue Breakdown [FY-12/2016 – FY-12/2020] +$61 bn +$5 bn +$46 bn +$4 bn -$5 bn +$8 bn Parcel Revenue Logistics Revenue Total Revenue Posts & Integrators 2019 $426 bn -$2 bn Others(2) Total Revenue Posts & Integrators 2016 $358 bn Logistics Revenue Total Revenue Posts & Integrators 2020 Mail Revenue -$5 bn Others(2) $469 bn Mail Revenue Parcel Revenue +$68 bn +$44 bn
  6. 6. Copyright © 2021 Accenture. All rights reserved. COVID has also changed the economics with parcels growing more profitably, reversing years of declining margins Y-o-Y Revenue Growth (%) Drivers: Mail Revenue Growth vs Parcel Revenue Growth [FY-12/2018 – FY-12/2020] Note: (1) Excludes Japan Post, NZ Post, POL & AN Post due to unavailability of data Source: Capital IQ, Bloomberg, Company Reports; Accenture Client Value Services -3.9% -6.2% Posts 6.2% 7.2% 14.0% 26.6% Integrators Posts -4.3% -11.8% Posts 1.1% 3.6% Posts Mail Revenue Parcel Revenue 2.8% 5.8% 9.6% 18.9% Integrators Posts 0.8% 0.2% -2.0% 2.8% Integrators Posts 14.1% 10.4% Integrators Posts -26% 8.2% 3.7% 8.8% 6.0% Integrators Posts +0.5% +2.3% Revenue Growth Change in Volume Unit Revenue Growth EBIT Margin Revenue Growth (1) Change in Volume Unit Revenue Growth EBIT Margin Pre COVID-19 (FY 18 - FY 19) During COVID-19 (FY 19 - FY 20) Increased parcel profit margins due to the COVID -19 Pandemic
  7. 7. Agenda I. Industry Overview II. Trends and Disruption III. The way forward –Strategic Options
  8. 8. Copyright © 2021 Accenture. All rights reserved. COVID changed the new normal – there are more online shoppers buying more online than ever 27% 31% 32% 32% 33% 0% 10% 20% 30% 40% 50% 60% 0.0 2.5 2.0 0.5 3.0 1.0 1.5 25% 2023E 2018 2019 2020 2.6 2021E 2022E 1.9 2.1 2.3 2.5 2.5 +12% No of online buyers - worldwide % of population # of online buyers world-wide [2018- 2023E; Bn, % of Population] Highest growth during COVID # of Parcels per household [2018 - 2020, # of parcels](1) 109 108 124 132 165 172 USA China 2020 2018 2019 Note: (1) Computed parcels per household using population and household data from government publications Source: eMarketer; Accenture Client Value Services Grocery ecommerce buyer growth in USA [2018-2020; Mn Buyers, % of Population] 48% 0% 50% 100% 25 100 0 50 75 125 150 76.3 28% 2020 2018 34% 2019 92.3 131.6 +43% Online grocery buyers - USA % of population 50% of groceries’ online sales growth came from people who did not shop online for groceries in the months preceding the crisis 13% Consumer electronics 18% Food & beverage Health & personal care Toys & hobby 36% 74% Furniture 16% 36% 9% 35% 35% 12% 2020 2021E Retail categories that witnessed above average growth during COVID US retail e-commerce sales growth by category [2020 - 2021; % change] Trend 1 - Increase in buyers along with parcels per household and emerging categories during COVID
  9. 9. Copyright © 2021 Accenture. All rights reserved. Consumers’ delivery expectations are high while the propensity to pay for is low overall For Retailers: Speed of delivery has strong positive impact on retail KPIs 4x >50% 2x conversion of product to sale and a significant increase in year-on-year sales has been driven by same day delivery of Target’s digital growth is driven by same day fulfillment options spend by amazon prime members than non-prime members in a year Source: BMO Capital Markets : Delivery Dilemma: How E-Commerce Is Disrupting Last Mile Logistics; Accenture Client Value Services. For Consumers: Same day delivery has high value and high willingness to pay 82% 75% 67% 63% 59% 66% Timing flexibilt y Weekend delivery Delivery tracking Accelerated delivery Same day delivery Easy returns Closer pickup locations 63% Willing to pay Valuable Customers expect visibility free of cost Highest willingness to pay for same day PRICE FREE FAST FREE + FAST CONTROL We are here Trend 2 – Consumers expect fast and free delivery, and it makes sense for retailers to comply
  10. 10. Copyright © 2021 Accenture. All rights reserved. Shift to local fulfillment and micro-fulfilment centres to get faster cheaper eCommerce deliveries Notes: (1) DC: Distribution Center (2) MFC: Micro-fulfilment Center Source: MWPVL.com, amazon.com, The last-mile delivery challenge by Capgemini 2019; L.E.K.; Accenture Client Value Services.; Amazon Fulfillment Centres and Delivery Stations in Europe Instant Delivery Same Day Delivery 12% 57% 12% 20% 15% 19% 43% 24% Warehouse Retail Storefront Retail Backroom Dark store Micro fulfilment poses additional requirements for flexible dispatch schedules and dynamic routing for last mile Organisations’ preferences for fulfilment location for faster delivery Trend 3 – Radical change in retail supply chains with inventory getting closer to consumers
  11. 11. Copyright © 2021 Accenture. All rights reserved. Sustainability is an issue that will lead to new delivery constraints and opportunities that Postal Organisations need to help shape Trend 4 – Sustainability become a key competitive differentiator • There is a potential further drop in congestion and emissions from switching to smaller vehicles and delivery at less congested hours. • After being delivered to the local fulfilment centre, deliveries to customers are made by lower emission vehicles. Source: Accenture’s The Sustainable Last Mile 2021
  12. 12. Copyright © 2021 Accenture. All rights reserved. Congestion from eCommerce deliveries is also a real-life issue especially for large cities and urban centers Trend 5 – Congestion becoming an issue in Cities and Urban centers London Beijing 13,305 31,955 2020 2026 +15.7% 8,197 12,260 2020 2026 +6.9% 99,488 211,136 2020 2026 +13.4% Unsustainable number of delivery trucks would be required to fulfil last mile deliveries in the next 5 years New York Lockers / PUDO Points Low impact / Light vehicles Green City Infrastructure Planning The Transition Cities – Leading by example towards a greener change Vancouver, CA Los Angeles, USA The Transportation 2040 Plan Strategy for efficient movement of goods & services  Low-impact vehicles, such as cargo tricycles and electric or low-emission trucks, are encouraged, as well managing on- and off- street loading spaces to ensure access to homes and businesses  Complementary tools are used, such as zoning, to create more livable neighborhoods, dividing the city into zones of activity  Shifting high volume goods movement to other means of transport. The Green New Deal LA’s GND is an urban green new deal that sets the basis for local production  The California Sustainable Freight Action Plan has been crafted to work toward a sustainable freight system  It requires work to be initiated on corridor-level freight pilot projects within the State's primary trade corridors that integrate advanced technologies, alternative fuels, freight and fuel infrastructure, and local economic development opportunities Source: eMarketer; Statista; Government Reports Accenture Client Value Services. Estimated number of delivery trucks (# , CAGR)
  13. 13. Copyright © 2021 Accenture. All rights reserved. Automated vehicles are expected to streamline costs and convenience if they can overcome real life constraints Trend 6 – Autonomous vehicles and technology on the horizon Source: Accenture Client Value Services. Benefits Autonomous aircrafts will be able to carry packages along direct routes with limited supervision Small autonomous robots will be able to deliver heavier packages with limited supervision Semi-autonomous vehicles will allow drivers to work more efficiently, performing administrative tasks in transit Effective Markets Point to point and rural/remote Campuses and some urban settings All Issues Parcel weight restrictions Airspace regulations Productivity (pilot to drone ratio) Speed and size restrictions Consumer reactions to vehicles (vandalism) Last meter Automotive regulations and labor/oversight Last meter Postal examples Cost $$ $$ $$$ Drones Droids Autonomous vehicles Comments  Drones are 2-5 years away from reaching the plateau as many players have already completed pilot programs. They can serve point-to-point deliveries and may see generalized use for home delivery in late future  Droids are 5-10 years away from reaching the plateau but are still being used by Amazon as pilots  Autonomous vehicles are more than 10 years away from reaching the plateau due to traffic Innovation Trigger Peak of inflated expectations Trough of disillusionment Slope of enlightenment Plateau of Productivity Expectations Time Autonomous Vehicles Droids Drones Global Logistics Visibility Intelligent Connected Infrastructure
  14. 14. Copyright © 2021 Accenture. All rights reserved. 1. INCUMBENTS 2. MARKETPLACES 3. RETAILERS 4. STARTUPS Reinventing themselves to stay competitive Building end-to-end capabilities either in-house or via network Owning the last mile via different models Disrupting the value chain with innovative ideas There has been a constant shift in the strategies followed by major incumbents With a focus on reliable logistics and faster delivery, marketplaces are evolving Brands are expanding into online and want to own the delivery experience Supply chain and logistics tech startups attracted ~$20bn/year globally over the last 3-4 years  Expanding weekend capacity  Rationalising offerings’ portfolio  Strategic partnership to gain eCommerce exposure  Amazon has reduced dependence on 3PLs for more than 50% deliveries  Cainiao promises domestic deliveries at $1 cost, within 24 hours in China through aggregation of 3PLs  Positively reflecting in the growth of online group sales from 4% to 18% in four years, for Target  Walmart spending 70%+ US’ CapEx on eComm, Supply Chain & IT  From time-sensitive deliveries of restaurant food to solving for easy returns  Innovating last-mile through PUDO facilities or drones Competition for parcel delivery and logistics will come from those with deep data and deep pockets Source: Company Reports; CBInsights; Accenture Client Value Services Asset Heavy Asset Light Inorganic Organic Trend 7 – Competition driven by technology, data and online experience
  15. 15. Copyright © 2021 Accenture. All rights reserved. Emerging technological tools and investments are paving the way for innovation in the Post & Parcel industry Trend 8 – All organisations are digital organisations Source: Accenture Client Value Services; Digital Tool Select Use cases Select Start- ups examples Digital Tool Select Use cases Select Start- ups examples Internet of Things  Warehouse automation  Supply chain visibility  Fleet management Robotics  Automation via RPA  Robotics as a Service (RaaS) Warehouse Automation  Automated guided vehicle  Automated storage and retrieval Blockchain  Smart contracts – quicker approvals  Process transparency, item traceability Artificial Intelligence  AI-based demand forecasting  Self-driving AI and smart road technologies Alternate Delivery Models  Technology-backed Parcel Lockers, PUDOs  Drone delivery, autonomous vehicles Data Analytics  Actionable insights for warehouse productivity, fleet management, route optimisation Cloud Computing  Pay-per-use models for logistics companies  Cloud-integrated logistics Non-Exhaustive
  16. 16. Copyright © 2021 Accenture. All rights reserved. Very few Postal players can rival large global integrators and marketplaces in terms of investment power Source: Quarterly and annual reports; Bloomberg; Accenture Client Value Services Parcel & Logistics Revenue Growth [FY-12/2017 – FY-12/2020, USD bn, %, Size of Bubble represents Total Revenue] 0 85% 5 20% 68 25% 7 89 14 28 1 84 23 85 2 24 30% 4 35% 3 29 15 80% 6 83 71 70 69 87 66 88 13 67 27 26 91 65 90 86 -5% 25 0% 16 5% 15% 10% Bpost Austria Post SingPost Poste Italiane PostNL CTT USPS La Poste Post Nord Canada Post Posten Norge Revenue Growth (%) [FY 2017 - FY 2020] Posti Correos Spain China Post Australia Post Aramex Amazon Logistics Revenue [FY 2020] Alibaba Logistics SF Holding Yamato ZTO Express UPS Fedex DPDHL Japan Post Royal Mail Swiss Post Integrator Post Trend 9 – Postal players are losing the scale game
  17. 17. Copyright © 2021 Accenture. All rights reserved. Posts have lagged integrators in the number of Mergers and Acquisitions undertaken Trend 10 – Postal players investing in M&A Source: Annual reports, Bloomberg; Accenture Value Lab Analysis 2 16 9 8 18 21 17 21 13 19 11 2014 2011 2012 2012 2015 2016 2018 2017 2019 2020 2021 11 11 11 11 11 11 10 9 9 9 7 7 7 6 5 4 4 3 3 3 1 1 1 Canada Post DPDHL Poste Italiane Yamato Austria Post Japan Post PostNL AN Post Swiss Post USPS 0 SF Holding CTT La Poste UPS NZ Post ZTO Express Bpost Australian Post Fedex Posten Norge Post Nord SingPost Aramex Royal Mail Posts Integrators M&A: Number of M&A Deals, by Year [FY 2011 – FY 2021] M&A: Number of M&A Deals, by Company [FY 2011 – FY 2021] Peer Median M&A Deals Posts 5 Integrators 9
  18. 18. Agenda I. Industry Overview II. Trends and Disruption III. The way forward –Strategic Options
  19. 19. Copyright © 2021 Accenture. All rights reserved. Developing a postal strategy requires defending the core and pivoting to the new … Postal Growth Strategy B C A ENTERPRISE VALUE TRADITIONAL BUSINESS NEW BUSINESS S-CURVE OF TRANSFORMATION TIME TRADITIONAL POSTAL GROWTH STRATEGY
  20. 20. Copyright © 2021 Accenture. All rights reserved. Retail Digital Services Others … But selecting the right opportunities has become more complex Verticalization & Diversification Mail Parcel and Logistics e-Citizen Upstream Integration Traditional Operational Value Chain Collection Sortation Linehaul Delivery Digital Identity Printing Services Direct Marketing Targeting Mail Digitalisation Digital Mail New Traditional Digital Marketing Informed Delivery Cross-channel Marketing Omnichannel Marketing Expansion of Services Freight LTL FTL Brokerage White Glove Service B2C Ecommerce Platform Portal Marketplace Payments FBA Type Service Time Definite Same Day On Demand Local Delivery Deep Induction Urban Delivery Store Pick Up Expanded OOH Delivery Parcel Locker PUDOs Urban Logistics Micro fulfillment Public Transportation Delivery Options Proximity Services Elderly Support Meal Delivery Prescription Drugs Real Estate Photography eCommerce Logistics Order Management Warehousing Fulfillment Reverse Logistics Cross-Border Freight Forwarding Customs Clearance Freight Air Line Haul Oversized Financial Services Loans Banking Remittance Insurance Merchandise Office Supplies Packing Supplies Telco / Cards Ancillary Services Office Supplies Bureau de change Travel Citizen Services Property Management Industrial Commercial Utilities Water Gas Electricity Healthcare E-Pharmacy Telemedicine New Services Ticketing Lottery Addressing Address Validation Address Cleansing Data Monetisation Security Prospecting Consumer Behavior Identity Management Fraud Detection OOH Management Parcel Locker Management PUDO Management Non-Exhaustive Elections Vote by Mail Others IT Services MVNO
  21. 21. Copyright © 2021 Accenture. All rights reserved. Citizen Services Growth of shareholder value requires a combination of new products and services, new target segments and new geographies Postal Growth Strategy – The basics 1 2 3 NEW PRODUCTS AND SERVICES NEW MARKET SEGMENTS NEW GEOGRAPHIES Financial Services National 3PL/ 4PL Market Segments Products and Services 1 2 3 Telco Proximity Services Pharma/Health C2C Retail B2B Same Day Regional Select countries Global
  22. 22. Copyright © 2021 Accenture. All rights reserved. However here are some ideas for collective discussion ranging from the Traditional to the NEW Examples of Strategic Plays Regional Player eCommerce Integration Local / Urban Services Digital Citizen Hub Become the regional postal and parcel delivery player by expanding geographically and focusing on cross- border and regional markets Become the on-stop- shop for eCommerce delivery and also for fulfilment and payments to Retailer and Consumers Leverage the retail network and digital platforms to become the on-stop-shop between consumers and business (utilities, eCommerce and government) Leverage existing and new delivery models to offer better urban delivery and new local and home services Who Why • Alibaba becomes shareholder • Growth in cross-border delivery • Flagship airline with freight capacity • Favourable UPU transfer pricing • Growth in eCommerce • Growth in cross-border delivery • Trusted brand with local merchants • Strong retail network, fully owned • 80% of revenue comes from financial services • Favourable government policies • Dominant position in France • Growth in urban and local delivery • Need to leverage existing workforce Investments • Acquisition of a number of freight forwarding and logistics • Investments in Singapore as a hub • Acquisition of payment platform • Investment in fulfilment centre • Focus on domestic market and local products to China • Developing a digital platform • Focus on retail experience and added services • Expansion into utilities and government services • Acquisition of companies including start-up (ex.Stuart) • Investments in mobile technology • New delivery models Shareholder Value • Strong growth of cross-border • Significantly impacted by COVID • Challenges with the acquisitions • Strong growth in eCommerce • Struggling with fulfilment • New competition from marketplaces • Moderate revenue growth • High margins • Limited potential beyond Italy • Strong market position across Europe • Low margins in same-day • High growth potential What
  23. 23. Andre Pharand About Accenture Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialised skills across more than 40 industries, we offer Strategy and Consulting, Interactive, Technology and Operations services—all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Our 624,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities. Visit us at www.accenture.com. andre.pharand@accenture.com Managing Director – Consulting, Post and Parcel LI / TW André Pharand is the Managing Director for Accenture’s Post and Parcel Industry. André has over 25 years of experience in the postal, express, logistics, retail, ecommerce and fulfilment industries. He has worked with over 20 postal and parcel players globally to develop new strategies, drive innovation, implement change and manage costs. André leads our thought leadership and monitors trends and disruptions impacting the industry. Copyright © 2021 Accenture. All rights reserved.
  24. 24. Thank you

Description

Industry trends for Post & Parcel organisations to adapt at speed to the new consumer demands. https://accntu.re/3osDulV

Transcript

  1. 1. REINVENTING THE POSTAL & PARCEL INDUSTRY November 2021 Copyright © 2021 Accenture. All rights reserved.
  2. 2. Agenda I. Industry Overview II. Trends and Disruption III. The way forward –Strategic Options
  3. 3. Copyright © 2021 Accenture. All rights reserved. Accenture in the postal and parcel industry We have worked with a wide range of postal and parcel organisations globally, including 38 of the top 40 operators 4000+ Postal projects delivered, helping executives globally 70% of Global Mails & Parcels tracked by systems we worked 2500+ Pool of Postal and Parcel practitioners around the world 38 of 40 of largest parcel organisations are Accenture clients 90% of the Global Postal clients already been served by Accenture 15 years+ of Postal Thought Leadership
  4. 4. Copyright © 2021 Accenture. All rights reserved. A summary of what we are seeing in the Global Postal & Parcel Industry Pre-COVID view Mail volumes declining Many governments deregulating and privatising Parcel volumes increasing thanks to eCommerce Stagnant revenue growth, declining margins Diversification and M&A: limited success Postal Players slowed by legacy IT and culture
  5. 5. Copyright © 2021 Accenture. All rights reserved. Accelerated Parcel Volume Growth & Mail Volume Decline 2020 represented a historic pivot for postal organisations driven by eCommerce and parcel delivery eCommerce and parcel delivery driving growth Note: : Includes Austria Post, Australian Post, Aramex, Bpost, Canada Post, CTT, DPDHL, Fedex, La Poste, POL, Post Italiane, PostNL, Posti, Posten Norge, Post Nord, Royal Mail, Swiss Post, UPS, USPS, Yamato; (2) Other includes revenue from retail, financial services and other value-added services Source: Annual reports; Accenture Client Value Services Industry Revenue Breakdown [FY-12/2016 – FY-12/2020] +$61 bn +$5 bn +$46 bn +$4 bn -$5 bn +$8 bn Parcel Revenue Logistics Revenue Total Revenue Posts & Integrators 2019 $426 bn -$2 bn Others(2) Total Revenue Posts & Integrators 2016 $358 bn Logistics Revenue Total Revenue Posts & Integrators 2020 Mail Revenue -$5 bn Others(2) $469 bn Mail Revenue Parcel Revenue +$68 bn +$44 bn
  6. 6. Copyright © 2021 Accenture. All rights reserved. COVID has also changed the economics with parcels growing more profitably, reversing years of declining margins Y-o-Y Revenue Growth (%) Drivers: Mail Revenue Growth vs Parcel Revenue Growth [FY-12/2018 – FY-12/2020] Note: (1) Excludes Japan Post, NZ Post, POL & AN Post due to unavailability of data Source: Capital IQ, Bloomberg, Company Reports; Accenture Client Value Services -3.9% -6.2% Posts 6.2% 7.2% 14.0% 26.6% Integrators Posts -4.3% -11.8% Posts 1.1% 3.6% Posts Mail Revenue Parcel Revenue 2.8% 5.8% 9.6% 18.9% Integrators Posts 0.8% 0.2% -2.0% 2.8% Integrators Posts 14.1% 10.4% Integrators Posts -26% 8.2% 3.7% 8.8% 6.0% Integrators Posts +0.5% +2.3% Revenue Growth Change in Volume Unit Revenue Growth EBIT Margin Revenue Growth (1) Change in Volume Unit Revenue Growth EBIT Margin Pre COVID-19 (FY 18 - FY 19) During COVID-19 (FY 19 - FY 20) Increased parcel profit margins due to the COVID -19 Pandemic
  7. 7. Agenda I. Industry Overview II. Trends and Disruption III. The way forward –Strategic Options
  8. 8. Copyright © 2021 Accenture. All rights reserved. COVID changed the new normal – there are more online shoppers buying more online than ever 27% 31% 32% 32% 33% 0% 10% 20% 30% 40% 50% 60% 0.0 2.5 2.0 0.5 3.0 1.0 1.5 25% 2023E 2018 2019 2020 2.6 2021E 2022E 1.9 2.1 2.3 2.5 2.5 +12% No of online buyers - worldwide % of population # of online buyers world-wide [2018- 2023E; Bn, % of Population] Highest growth during COVID # of Parcels per household [2018 - 2020, # of parcels](1) 109 108 124 132 165 172 USA China 2020 2018 2019 Note: (1) Computed parcels per household using population and household data from government publications Source: eMarketer; Accenture Client Value Services Grocery ecommerce buyer growth in USA [2018-2020; Mn Buyers, % of Population] 48% 0% 50% 100% 25 100 0 50 75 125 150 76.3 28% 2020 2018 34% 2019 92.3 131.6 +43% Online grocery buyers - USA % of population 50% of groceries’ online sales growth came from people who did not shop online for groceries in the months preceding the crisis 13% Consumer electronics 18% Food & beverage Health & personal care Toys & hobby 36% 74% Furniture 16% 36% 9% 35% 35% 12% 2020 2021E Retail categories that witnessed above average growth during COVID US retail e-commerce sales growth by category [2020 - 2021; % change] Trend 1 - Increase in buyers along with parcels per household and emerging categories during COVID
  9. 9. Copyright © 2021 Accenture. All rights reserved. Consumers’ delivery expectations are high while the propensity to pay for is low overall For Retailers: Speed of delivery has strong positive impact on retail KPIs 4x >50% 2x conversion of product to sale and a significant increase in year-on-year sales has been driven by same day delivery of Target’s digital growth is driven by same day fulfillment options spend by amazon prime members than non-prime members in a year Source: BMO Capital Markets : Delivery Dilemma: How E-Commerce Is Disrupting Last Mile Logistics; Accenture Client Value Services. For Consumers: Same day delivery has high value and high willingness to pay 82% 75% 67% 63% 59% 66% Timing flexibilt y Weekend delivery Delivery tracking Accelerated delivery Same day delivery Easy returns Closer pickup locations 63% Willing to pay Valuable Customers expect visibility free of cost Highest willingness to pay for same day PRICE FREE FAST FREE + FAST CONTROL We are here Trend 2 – Consumers expect fast and free delivery, and it makes sense for retailers to comply
  10. 10. Copyright © 2021 Accenture. All rights reserved. Shift to local fulfillment and micro-fulfilment centres to get faster cheaper eCommerce deliveries Notes: (1) DC: Distribution Center (2) MFC: Micro-fulfilment Center Source: MWPVL.com, amazon.com, The last-mile delivery challenge by Capgemini 2019; L.E.K.; Accenture Client Value Services.; Amazon Fulfillment Centres and Delivery Stations in Europe Instant Delivery Same Day Delivery 12% 57% 12% 20% 15% 19% 43% 24% Warehouse Retail Storefront Retail Backroom Dark store Micro fulfilment poses additional requirements for flexible dispatch schedules and dynamic routing for last mile Organisations’ preferences for fulfilment location for faster delivery Trend 3 – Radical change in retail supply chains with inventory getting closer to consumers
  11. 11. Copyright © 2021 Accenture. All rights reserved. Sustainability is an issue that will lead to new delivery constraints and opportunities that Postal Organisations need to help shape Trend 4 – Sustainability become a key competitive differentiator • There is a potential further drop in congestion and emissions from switching to smaller vehicles and delivery at less congested hours. • After being delivered to the local fulfilment centre, deliveries to customers are made by lower emission vehicles. Source: Accenture’s The Sustainable Last Mile 2021
  12. 12. Copyright © 2021 Accenture. All rights reserved. Congestion from eCommerce deliveries is also a real-life issue especially for large cities and urban centers Trend 5 – Congestion becoming an issue in Cities and Urban centers London Beijing 13,305 31,955 2020 2026 +15.7% 8,197 12,260 2020 2026 +6.9% 99,488 211,136 2020 2026 +13.4% Unsustainable number of delivery trucks would be required to fulfil last mile deliveries in the next 5 years New York Lockers / PUDO Points Low impact / Light vehicles Green City Infrastructure Planning The Transition Cities – Leading by example towards a greener change Vancouver, CA Los Angeles, USA The Transportation 2040 Plan Strategy for efficient movement of goods & services  Low-impact vehicles, such as cargo tricycles and electric or low-emission trucks, are encouraged, as well managing on- and off- street loading spaces to ensure access to homes and businesses  Complementary tools are used, such as zoning, to create more livable neighborhoods, dividing the city into zones of activity  Shifting high volume goods movement to other means of transport. The Green New Deal LA’s GND is an urban green new deal that sets the basis for local production  The California Sustainable Freight Action Plan has been crafted to work toward a sustainable freight system  It requires work to be initiated on corridor-level freight pilot projects within the State's primary trade corridors that integrate advanced technologies, alternative fuels, freight and fuel infrastructure, and local economic development opportunities Source: eMarketer; Statista; Government Reports Accenture Client Value Services. Estimated number of delivery trucks (# , CAGR)
  13. 13. Copyright © 2021 Accenture. All rights reserved. Automated vehicles are expected to streamline costs and convenience if they can overcome real life constraints Trend 6 – Autonomous vehicles and technology on the horizon Source: Accenture Client Value Services. Benefits Autonomous aircrafts will be able to carry packages along direct routes with limited supervision Small autonomous robots will be able to deliver heavier packages with limited supervision Semi-autonomous vehicles will allow drivers to work more efficiently, performing administrative tasks in transit Effective Markets Point to point and rural/remote Campuses and some urban settings All Issues Parcel weight restrictions Airspace regulations Productivity (pilot to drone ratio) Speed and size restrictions Consumer reactions to vehicles (vandalism) Last meter Automotive regulations and labor/oversight Last meter Postal examples Cost $$ $$ $$$ Drones Droids Autonomous vehicles Comments  Drones are 2-5 years away from reaching the plateau as many players have already completed pilot programs. They can serve point-to-point deliveries and may see generalized use for home delivery in late future  Droids are 5-10 years away from reaching the plateau but are still being used by Amazon as pilots  Autonomous vehicles are more than 10 years away from reaching the plateau due to traffic Innovation Trigger Peak of inflated expectations Trough of disillusionment Slope of enlightenment Plateau of Productivity Expectations Time Autonomous Vehicles Droids Drones Global Logistics Visibility Intelligent Connected Infrastructure
  14. 14. Copyright © 2021 Accenture. All rights reserved. 1. INCUMBENTS 2. MARKETPLACES 3. RETAILERS 4. STARTUPS Reinventing themselves to stay competitive Building end-to-end capabilities either in-house or via network Owning the last mile via different models Disrupting the value chain with innovative ideas There has been a constant shift in the strategies followed by major incumbents With a focus on reliable logistics and faster delivery, marketplaces are evolving Brands are expanding into online and want to own the delivery experience Supply chain and logistics tech startups attracted ~$20bn/year globally over the last 3-4 years  Expanding weekend capacity  Rationalising offerings’ portfolio  Strategic partnership to gain eCommerce exposure  Amazon has reduced dependence on 3PLs for more than 50% deliveries  Cainiao promises domestic deliveries at $1 cost, within 24 hours in China through aggregation of 3PLs  Positively reflecting in the growth of online group sales from 4% to 18% in four years, for Target  Walmart spending 70%+ US’ CapEx on eComm, Supply Chain & IT  From time-sensitive deliveries of restaurant food to solving for easy returns  Innovating last-mile through PUDO facilities or drones Competition for parcel delivery and logistics will come from those with deep data and deep pockets Source: Company Reports; CBInsights; Accenture Client Value Services Asset Heavy Asset Light Inorganic Organic Trend 7 – Competition driven by technology, data and online experience
  15. 15. Copyright © 2021 Accenture. All rights reserved. Emerging technological tools and investments are paving the way for innovation in the Post & Parcel industry Trend 8 – All organisations are digital organisations Source: Accenture Client Value Services; Digital Tool Select Use cases Select Start- ups examples Digital Tool Select Use cases Select Start- ups examples Internet of Things  Warehouse automation  Supply chain visibility  Fleet management Robotics  Automation via RPA  Robotics as a Service (RaaS) Warehouse Automation  Automated guided vehicle  Automated storage and retrieval Blockchain  Smart contracts – quicker approvals  Process transparency, item traceability Artificial Intelligence  AI-based demand forecasting  Self-driving AI and smart road technologies Alternate Delivery Models  Technology-backed Parcel Lockers, PUDOs  Drone delivery, autonomous vehicles Data Analytics  Actionable insights for warehouse productivity, fleet management, route optimisation Cloud Computing  Pay-per-use models for logistics companies  Cloud-integrated logistics Non-Exhaustive
  16. 16. Copyright © 2021 Accenture. All rights reserved. Very few Postal players can rival large global integrators and marketplaces in terms of investment power Source: Quarterly and annual reports; Bloomberg; Accenture Client Value Services Parcel & Logistics Revenue Growth [FY-12/2017 – FY-12/2020, USD bn, %, Size of Bubble represents Total Revenue] 0 85% 5 20% 68 25% 7 89 14 28 1 84 23 85 2 24 30% 4 35% 3 29 15 80% 6 83 71 70 69 87 66 88 13 67 27 26 91 65 90 86 -5% 25 0% 16 5% 15% 10% Bpost Austria Post SingPost Poste Italiane PostNL CTT USPS La Poste Post Nord Canada Post Posten Norge Revenue Growth (%) [FY 2017 - FY 2020] Posti Correos Spain China Post Australia Post Aramex Amazon Logistics Revenue [FY 2020] Alibaba Logistics SF Holding Yamato ZTO Express UPS Fedex DPDHL Japan Post Royal Mail Swiss Post Integrator Post Trend 9 – Postal players are losing the scale game
  17. 17. Copyright © 2021 Accenture. All rights reserved. Posts have lagged integrators in the number of Mergers and Acquisitions undertaken Trend 10 – Postal players investing in M&A Source: Annual reports, Bloomberg; Accenture Value Lab Analysis 2 16 9 8 18 21 17 21 13 19 11 2014 2011 2012 2012 2015 2016 2018 2017 2019 2020 2021 11 11 11 11 11 11 10 9 9 9 7 7 7 6 5 4 4 3 3 3 1 1 1 Canada Post DPDHL Poste Italiane Yamato Austria Post Japan Post PostNL AN Post Swiss Post USPS 0 SF Holding CTT La Poste UPS NZ Post ZTO Express Bpost Australian Post Fedex Posten Norge Post Nord SingPost Aramex Royal Mail Posts Integrators M&A: Number of M&A Deals, by Year [FY 2011 – FY 2021] M&A: Number of M&A Deals, by Company [FY 2011 – FY 2021] Peer Median M&A Deals Posts 5 Integrators 9
  18. 18. Agenda I. Industry Overview II. Trends and Disruption III. The way forward –Strategic Options
  19. 19. Copyright © 2021 Accenture. All rights reserved. Developing a postal strategy requires defending the core and pivoting to the new … Postal Growth Strategy B C A ENTERPRISE VALUE TRADITIONAL BUSINESS NEW BUSINESS S-CURVE OF TRANSFORMATION TIME TRADITIONAL POSTAL GROWTH STRATEGY
  20. 20. Copyright © 2021 Accenture. All rights reserved. Retail Digital Services Others … But selecting the right opportunities has become more complex Verticalization & Diversification Mail Parcel and Logistics e-Citizen Upstream Integration Traditional Operational Value Chain Collection Sortation Linehaul Delivery Digital Identity Printing Services Direct Marketing Targeting Mail Digitalisation Digital Mail New Traditional Digital Marketing Informed Delivery Cross-channel Marketing Omnichannel Marketing Expansion of Services Freight LTL FTL Brokerage White Glove Service B2C Ecommerce Platform Portal Marketplace Payments FBA Type Service Time Definite Same Day On Demand Local Delivery Deep Induction Urban Delivery Store Pick Up Expanded OOH Delivery Parcel Locker PUDOs Urban Logistics Micro fulfillment Public Transportation Delivery Options Proximity Services Elderly Support Meal Delivery Prescription Drugs Real Estate Photography eCommerce Logistics Order Management Warehousing Fulfillment Reverse Logistics Cross-Border Freight Forwarding Customs Clearance Freight Air Line Haul Oversized Financial Services Loans Banking Remittance Insurance Merchandise Office Supplies Packing Supplies Telco / Cards Ancillary Services Office Supplies Bureau de change Travel Citizen Services Property Management Industrial Commercial Utilities Water Gas Electricity Healthcare E-Pharmacy Telemedicine New Services Ticketing Lottery Addressing Address Validation Address Cleansing Data Monetisation Security Prospecting Consumer Behavior Identity Management Fraud Detection OOH Management Parcel Locker Management PUDO Management Non-Exhaustive Elections Vote by Mail Others IT Services MVNO
  21. 21. Copyright © 2021 Accenture. All rights reserved. Citizen Services Growth of shareholder value requires a combination of new products and services, new target segments and new geographies Postal Growth Strategy – The basics 1 2 3 NEW PRODUCTS AND SERVICES NEW MARKET SEGMENTS NEW GEOGRAPHIES Financial Services National 3PL/ 4PL Market Segments Products and Services 1 2 3 Telco Proximity Services Pharma/Health C2C Retail B2B Same Day Regional Select countries Global
  22. 22. Copyright © 2021 Accenture. All rights reserved. However here are some ideas for collective discussion ranging from the Traditional to the NEW Examples of Strategic Plays Regional Player eCommerce Integration Local / Urban Services Digital Citizen Hub Become the regional postal and parcel delivery player by expanding geographically and focusing on cross- border and regional markets Become the on-stop- shop for eCommerce delivery and also for fulfilment and payments to Retailer and Consumers Leverage the retail network and digital platforms to become the on-stop-shop between consumers and business (utilities, eCommerce and government) Leverage existing and new delivery models to offer better urban delivery and new local and home services Who Why • Alibaba becomes shareholder • Growth in cross-border delivery • Flagship airline with freight capacity • Favourable UPU transfer pricing • Growth in eCommerce • Growth in cross-border delivery • Trusted brand with local merchants • Strong retail network, fully owned • 80% of revenue comes from financial services • Favourable government policies • Dominant position in France • Growth in urban and local delivery • Need to leverage existing workforce Investments • Acquisition of a number of freight forwarding and logistics • Investments in Singapore as a hub • Acquisition of payment platform • Investment in fulfilment centre • Focus on domestic market and local products to China • Developing a digital platform • Focus on retail experience and added services • Expansion into utilities and government services • Acquisition of companies including start-up (ex.Stuart) • Investments in mobile technology • New delivery models Shareholder Value • Strong growth of cross-border • Significantly impacted by COVID • Challenges with the acquisitions • Strong growth in eCommerce • Struggling with fulfilment • New competition from marketplaces • Moderate revenue growth • High margins • Limited potential beyond Italy • Strong market position across Europe • Low margins in same-day • High growth potential What
  23. 23. Andre Pharand About Accenture Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialised skills across more than 40 industries, we offer Strategy and Consulting, Interactive, Technology and Operations services—all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Our 624,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities. Visit us at www.accenture.com. andre.pharand@accenture.com Managing Director – Consulting, Post and Parcel LI / TW André Pharand is the Managing Director for Accenture’s Post and Parcel Industry. André has over 25 years of experience in the postal, express, logistics, retail, ecommerce and fulfilment industries. He has worked with over 20 postal and parcel players globally to develop new strategies, drive innovation, implement change and manage costs. André leads our thought leadership and monitors trends and disruptions impacting the industry. Copyright © 2021 Accenture. All rights reserved.
  24. 24. Thank you

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