Digital apocalypse and lost opportunities

16:00, Feb 08 2013

After years of procrastination we have moved to the country.

Both my wife and I grew up on farms and were keen to give our kids a taste of the same before they became teenagers and started to hate us. So now we, and the bank, own 10 acres of Godzone and an impressive crop of Scottish thistle.

Moving into the country you start to get a feeling for how badly rural folks are served when it comes to the things city slickers take for granted - like public transport, broadband and roading.

A noticeable exception to this has been the postal service. Already we know our postie's name and, along with our 20-gallon bright yellow mailbox, he provides a great service in his trusty Hilux.

The parameters of that service are about to change if NZ Post gets its way. The SOE is keen to make a change to the minimum service obligations it's contracted to deliver to the Government and the people of New Zealand. In simple terms it wants to drop the minimum service standards so it can lower its overheads.

It's not tough maths. When was the last time you sat down, wrote someone a letter, licked a stamp and threw it in the mail? Maybe a month ago, maybe a year ago, maybe more? On the other hand how many emails did you clear today? I bet it was over 10.

NZ Post's domestic mail volumes are decreasing at a rapid rate - last year alone it dropped close to seven per cent, while offshore directed letters and parcels fell around 12 percent. It's not a new trend. As early as 2007 the SOE was reporting domestic letter volumes were down 4.6 per cent.

Current NZ Post head honcho Brian Roche is fighting back with a number of initiatives aimed at harnessing Post's brand and public trust to promote online offerings (and offload unsuccessful previous attempts like Localist).

Amongst the new offerings are YouShop (a physical American address to receive mail at and have on-sent to you in New Zealand), YouPost (an integrated online payment portal to allow you to manage your bills online), and RealMe (an online identity service).

It's bloody tough going though.

The worst part of it is that the current situation that Roche and his team are managing is the direct result of opportunities that NZ Post threw away back in the 1990s.

Chief among these was its failure to set up as an internet service provider. As Kiwis cautiously started adopting email there would have been no company more trusted to lead them into this online world of email than NZ Post.


Certainly I would have trusted them a lot more than Telecom.

NZ Post's decision not to migrate its monopoly on physical mail to online mail by setting up an ISP business back in the 90s was an unconscionably bad call.

But it wasn't the only bad call NZ Post made in the 90s.

In the early stages of corporatisation it also had the ability to acquire one of the big courier firms like Freightways.

With a largely unleveraged balance sheet and a distribution network to die for, acquiring one of the big courier companies was a natural extension as eCommerce started to head north.

But like the ISP, it was a lost opportunity.

To be fair there were some good ideas that actually made it to fruition, but they suffered from poor execution.

Consider the 2001 launch of E-Bill. This was actually a hell of a good idea - the ability to receive, pay and file your bills online - whether it be power, rates or telephone. And to its credit it got the services providers on board early, including all the credit card companies and many of the power companies and local councils.

NZ Post just never got the consumers on board, probably because the execution was dreadful.

It had the sort of user interface that would tempt normal mortals to pluck out their eyeballs rather than try to work out how to use it. It was finally shuttered in 2006.

So now NZ Post is doing the only thing it can do, reducing its overheads by reducing the service it provides the New Zealand public.

Rationally it's a no brainer, but emotionally it's going to hurt.

The new deed of understanding could see NZ Post move from guaranteeing six-day-a-week delivery to 95 per cent of addresses, to three-day-a-week delivery to 99.88 per cent of addresses.

The big losers here are rural folk who could see delivery drop down to three times a week.

Other losers include newspaper companies, supermarkets and online retailers, all of whom rely on rural posties to deliver their products.

Submissions at close 12 March so if you're on rural delivery you'd better get a wriggle on.

Going forward the acid is on NZ Post to prove that its digital execution abilities have moved on with the times, and that it has the courage to seize the opportunities.

I wish it well but am guessing that, like my front paddock, progress will be painful.

Mike "MOD" O'Donnell is a professional director and eCommerce manager. His Twitter handle is @modsta. He can do you a deal on Scottish Thistle.