Post office chief executive sees growth in e-commerce

The growth of online retailers represents the biggest opportunity in a generation, but Canada Post chief executive Deepak Chopra says the post office first needs to change to survive as fewer letters get delivered each year.

Chopra says the organization is going through its biggest upheaval since the introduction of postal codes and machine sorting of mail.

And while the number of window-paned envelopes with the latest Visa bill or bank statement are decreasing as users turn to electronic alternatives, the volume of yellow-padded envelopes with the latest eBay purchase is on the rise.

“We’re on the verge of a massive explosion in e-commerce,” said Chopra, who marked his first year in the top job at the Crown corporation this month.

Chopra succeeded the veteran civil servant Moya Greene, who left Canada to become head of Britain’s Royal Mail service.

In a 2010 presentation to a Senate committee, Greene said the postal operator was looking at new services — including getting into banking as postal companies in New Zealand and Italy had done.

“We think this trust category of services can move in the future, as many postal administrations have done, into a more traditional and generalized banking offer,” she told the committee.

“It is one of the things we are looking at, but it would require a high degree of very detailed planning.”

Postal services around the world are facing the same trends that squeeze their business, undercut revenues and threaten to produce mass layoffs.

The U.S. Postal Service is warning it will lose as much as $18.2 billion a year by 2015 unless the government allows it to eliminate Saturday delivery, slow first-class mail by one day and raise the price of a postage stamp.

U.S Postmaster General Patrick Donahoe is seeking to close up to 252 mail-processing centres and 3,700 local post offices.

Though not as dramatic, Canada Post is also pursuing its own restructuring to modernize and adapt.

The post office is spending $2.1 billion in its modernization program and opened its first new plant in 20 years in Winnipeg in 2010. The organization is also retrofitting its massive operations in Toronto and Montreal as well as other locations across the country.

Modern equipment is speeding processing times, but it also means less manual handling — and rising tensions with unionized workers.

With only a few months on the job last year Chopra faced rotating strikes by postal workers. The corporation responded by locking out the workers in a dispute that came to an end only with back to work legislation from the federal government.

During the dispute Canada Post said the main sticking point was the union’s demand for staffing levels beyond its capability, while the union emphasized working conditions and safety issues as well as arguing that new employees would receive inferior wages and pensions.

Chopra said the company could have done a better job explaining the changes it needed to make and how they would affect the organization.

“What we were missing was the context within which we were trying to transform the business. I think that context is starting to take shape and that’s what gives me hope,” he said.

Chopra noted that Canada Post will have to be at the top of its game when it comes to winning business in the e-commerce sector.

“We have real competition for a change. That means we have to be competitive. We have to be very responsive to customer needs. We have to be very careful in designing our retail strategy so they supplement all of our e-commerce offerings,” he said.

Chopra said the post office much also embrace electronic alternatives as he believes the growth of tablet computers like the iPad mean paper statements now have real competition.

He said worries that Canada Post’s ePost service may serve to speed the cannibalize the post office’s legacy business need to put aside or the post office risks losing relevancy.

“We’re in an inflection point and we need to start going after the alternative opportunities like our ePost products that we’ve in the past been shy about,” he said.

But still Chopra says people are still mailing birthday cards, Christmas cards and wedding invitations.

“I’ve not prepared to declare mail dead. Rumours of my death are greatly exaggerated,” Chopra said, quoting Mark Twain.

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