For Pos Malaysia, internet goes from bane to boon

According to Pos Malaysia, e-commerce deliveries have contributed to double-digit growth for the company in recent years, helping it keep the traditional postal service and network afloat. ― Bernama pic

KUALA LUMPUR, July 18 — When the internet and email arrived, there had been fears that “snail mail” and postal services that carried these would be consigned to a slow but inevitable demise.

The ease with which letters and greetings could be fired off online — and for free — understandably led to a mass shift from traditional mail, making postal services appear superfluous and archaic.

But yet another development of the internet’s growing popularity — e-commerce — has changed all that. While you can send an email much easier than write a letter, sending a package is still no easier than it was before online shopping existed.

While postal services across the world, Pos Malaysia included, are still grappling to stay relevant in the digital world, e-commerce shipping has at least given them a lifeline.

According to Pos Malaysia, e-commerce deliveries have contributed to double-digit growth for the company in recent years, helping it keep the traditional postal service and network afloat.

Up until five years ago, traditional postal service still constituted upwards of 60 per cent of Pos Malaysia’s revenue base.

This had also been declining by at least 4 per cent each year as people shift to more digital means of communications, but was offset by e-commerce shipments, including by the Poslaju courier arm, that was expanding at the rapid pace of 20 per cent annually.

Pos Malaysia’s e-commerce revenue eclipsed traditional mail revenue for the first time in the company’s long history in the latest financial year ending March 31, 2017.

“Last year, about 30 per cent of Poslaju’s items were actually delivered by normal postmen,” Pos Malaysia Bhd group chief executive officer Datuk Shukrie Mohd Salleh told Malay Mail Online in an interview.

Shukrie said despite the growth of the e-commerce sector, and Poslaju by extension, postmen who are connected to the traditional mail network are also used to do courier deliveries to offset the dwindling traditional mail volume, while keeping the network alive.

E-commerce’s lead in 2017 also resulted in Pos Malaysia’s pre-tax profit climbing 42 per cent to RM131.4 million, and its total revenue breached RM2 billion following some key acquisitions in its logistics sector.

But by leveraging on the traditional postal network, Pos Malaysia is establishing a model to integrate both its major revenue streams while staying ahead of its competitors in the e-commerce sector.

This was aided by Pos Malaysia’s competitive rates, albeit at less expedient delivery times.

“When people buy things online, they do not necessarily want it the very next day, it depends on the preference of the buyer. There are sizeable number of people who do not mind receiving [the product] later,” he said.

As such, Pos Malaysia is able to leverage its network of postmen and post offices to execute e-commerce deliveries and alleviating the demand on its courier arm, offsetting the drop in volume and revenue from traditional mail.

This also negates their need to hire more courier service delivery staff in the event unusually large or bulky consignments that would otherwise require more manpower.

“This is the way forward: it is about how we manage to increase our profitability while the risk for postmen losing their jobs has been well mitigated. The infrastructure can be combined, and we can always balance out the drop in mail volume,” he said.

Pos Malaysia currently has a market share of almost 40 per cent in the e-commerce sector, almost twice as large as its nearest competitors in a competitive marketplace that has around 30 players.

Earlier this year, the company signed a memorandum of understanding with Lazada (Malaysia) Sdn Bhd to develop an e-commerce regional distribution centre in Sepang.

The deal is part of Pos Malaysia’s foray into becoming an integrated end-to-end logistics provider with a network to deal with regional transportation, which in turn is expected to further spur the e-commerce segment of the company.

While its e-fulfillment sector is expected to be supported by its logistics and warehouse offering, the company still aims to make the best out of all the existing infrastructures that once served the traditional mail industry.

That includes post offices, which last year managed to sell insurance products and policies worth RM500 million, adding a sizeable revenue to the company in terms of commissions.

Similarly, there are plans to introduce a digital mailbox, where the convergence of paying monthly bills from various service providers and corporations can now be done online and not just physically at a post office.

“There is still opportunity to further grow the traditional mail sector with innovation,” Shukrie said.