12 September 2019 | Ilya Aristov
How the Post & Parcel Industry can Stay Relevant
Advances in technology and increased consumer expectations have caused revenue and client satisfaction for the postal and parcel industries (P&P) to drop steadily over the last ten years. For companies, prioritizing e-commerce development to meet the changing demands of their client-base has become the only logical choice. Likewise, in 2020, postal organizations need to embrace flexibility, adaptability, and creativity if they want to remain relevant.
The traditional business model is changing, and for some businesses, it is already unrecognizable. Market players need to identify consumer and market trends early. Going forward, understanding the macro and micro needs of their customers, along with digitalizing their business, will help keep P&P afloat.
The Matter of Choice
Having researched how people interact with brands, DataArt discovered a number of trends:
- A growing share of revenues is coming from infrequent, new, accidental, and impulse buyers, who make purchases based on brand popularity.
- Brand diversity is uncommon, leading to fierce competition. Market share depends on the popularity of a brand and is heavily influenced by factors like technology and adaptability.
- To grow in size and popularity, brands must work on both physical and mental availability. Increased availability means increased market share, but innovation and differentiation help as well–even after competitors copy their approach.
“Companies should strengthen their brand (their company or their product must stand out) while keeping the costs of reaching inactive buyers relatively low. They need to know how their brand is different, how customers acquire their brand, when and how they think about it, and its role in their lives. These factors will help determine how and where to sell.”
Iliya Aristov, Head of Digital Transformation at DataArt
The Current Market
- 67% of retailers consider the growth of e-commerce sales to be one of their top priorities.
- In response to rising shipping costs, postal operators use new operating models–in 2018, more than 90% of the post offices in three different European postal organizations outsourced a significant part of their operations.
- Small brands and retailers are exploring alternative models–73% of Gen Z buyers expressed interest in custom monthly clothing subscriptions.
- Cross-border activity doubled, accounting for 29% of the CAGR in the cross-border e-commerce market.
- Since buyers are three times more likely to return internet purchases than those made in a physical store, mail and parcel delivery organizations should strive to partner with online retailers.
Trends in Post & Parcel Industry
Returns: The Value Conundrum
The most common reasons for returns: 61% - Defective; 43% - Need is gone; 33% - Product differs from stated; 39% - Other.
Most returned goods bought by online users: 82% - Clothing; 31% - Electronics; 32% - Footwear; 16% - Cosmetics; 15% - Sports equipment.
The Changing Last Mile
Speed has become critical for every business seeking to keep demanding consumers happy. Through our research, we have identified Gen Z as the most demanding group. They are the first to buy a product offering same-day delivery, but only 23% are willing to pay for the added service. With that said, 67% of Millennials would use same-day delivery even if they have no urgent need.
Interestingly, 56% of customers expect 1-hour delivery from local companies or companies with a large number of warehouses. Likewise, 92% would assume that “fast delivery” means same-day delivery and the same percentage would prefer this service for free.
According to 32% of the businesses that work with DataArt, using blockchain has saved them up to 47% on back and middle offices. Our research has shown that blockchain can improve:
- Automation: Smart Contracts can automate manual processes leading to faster and more convenient transactions.
- Tracking: Track the path of each product–follow it during each step of the process.
- Transactions: Direct transactions, excluding third parties.
- Efficiency: Reducing the amount of paperwork and optimizing the processes.
‘The market is still in a place where the customer is looking for the most convenient service. I see a lot of great companies who fight for outstanding service built on cutting-edge solutions, promising us a better market share shortly. I firmly believe that the future will come after the companies who solve customers’ problems, bring real value and profit, and change our way of doing things.’Ilya Aristov, Head of Digital Transformation