ZimPost is an interesting organisation. Particularly because they are in a transitional period where one revenue model (mail) is dying rapidly whilst another opportunity presents itself (eCommerce). With less and less people sending letters, ZimPost has to find a way to turn the eCommerce opportunity into revenue fast.
|Year||Volume of letters|
Urgent problems to solve
Glancing at numbers provided by POTRAZ who regulate ZimPost suggest the industry has made a loss for 2 of the last 3 years;
|Zim postal industry Profit/Loss|
Clearly the industry is not in a healthy shape. The regulator POTRAZ has suggested the postal industry adopt eCommerce to reverse the trend;
The postal and courier services sector continued to record depressed service volumes; the decline in postal volumes is expected to continue. The principal cause of the decline in letter volumes has been the substitution of paper communication by electronic methods (e-substitution). E-commerce needs to be supported as it is a pillar for postal reform.POTRAZ Q4 2019 Postal & Telecoms Report
To be fair to ZimPost and the postal industry in general, many national post offices are struggling to turn a profit – even in countries like the USA where eCommerce is well-developed the post office has been loss-making for much of the last decade.
Is eCommerce the answer?
ZimPost has tried their hand at eCommerce – actually setting up a shop on their website. The shop has been online since 2018 but it’s not clear how much traction they have and how much it has impacted revenues up until now.
ZimPost’s current thinking in regards to the eCommerce store is actually quite interesting as they are looking to become an aggregator of sorts – at least according to Sifundo Moyo the Postmaster General at ZimPost;
Zimpost has also created an E-Commerce ecosystem where we have the Zimpost Mall Post, which is an e-shop where online buyers and sellers interact. Right now we have OK Supermarket and College Press as some of our e-sellers on that platform.Sifundo Moyo
This is similar to the approach South Africa’s post office took earlier this year. They too are allowing local sellers to sell on their platform and then handling the logistics for them. The only difference being that SAPOs also allows people in SA to sell products internationally.
You have everything you need…
Another option is for ZimPost to leverage their existing network of over 190 post offices nationwide. I say 190+ because there are conflicting figures – POTRAZ quotes the figure at 219 whilst ZimPost website has 193 post offices listed.
This service would be pitched to eCommerce players who already built their own sites and would prefer to use ZimPost for logistics instead of placing their products on ZimPost Mall. ZimPost’s core business is logistics and therefore providing partnerships with eCommerce players would play to their existing strengths.
McKinsey suggests that post offices looking to win at eCommerce need to ask themselves 3 questions;
- How much capacity is needed (and where) in line with evolving e-tailer fulfilment strategies and service expectations?
- What’s the right kind of automation technology in line with product mix and local factor costs?
- How can additional capacity be integrated in the best way to protect joint network economics?
None of the above suggests that post offices become eCommerce storefronts themselves, instead suggesting that Post Office’s role and focus be to enable eCommerce.
ZimPost also has an advantage over the likes of FedEx and DHL in that they can deliver to the last mile at a lower cost – even though this has been argued to be counterproductive in the case of the US Postal Service in America.
Steps in the right direction
ZimPost’s PostMaster General recently said that COVID-19 boosted eCommerce and more interestingly ZimPost has been providing last-mile delivery for these eCommerce players;
The pandemic triggered a positive change in consumer behaviour. With quite a number of suppliers and customers alike, converting to online selling and buying. Zimpost is providing last mail delivery of goods bought from manufacturers, wholesalers and retailers.
OK Mart, Gain Cash & Carry and pharmaceutical companies are said to have contracted ZimPost as their delivery partner since the start of the pandemic.
The fact that ZimPost is making strides in this space is encouraging and suggests that they understand their role in local eCommerce. Time will tell…