Canada Post looks to digital mailbox for new business
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As mail volumes continue to dip in the digital age, Canada Post is trying to figure out ways of shoring up its business, and possibly branching into new ones.
It has hired its own tech guy — Kerry Munro, who headed up Yahoo! Canada for four years — to figure out how Canada Post can capture a foothold in this changing market.
Munro, group president of digital delivery network, envisions expansion of Canada Post’s epost system as critical, though it is still unclear how much money can be made.
Epost, which began in late 1999, is a billing consolidation program where consumers can pay all bills from one spot, using any of the major banks of credit unions. It is secured behind the firewalls of all five big banks.
While it’s free for consumers, businesses that sign up — and about hundred have to date, from hydro companies to Highway 407 to department store credit cards — pay a fee per transaction, but Munro says it’s less than the cost of mailing the bill.
More than 7.5 million people have signed up for the service, and Munro believes expanding its offerings is the way to go.
Though Canadians spend more time online than residents in other countries —45 hours a month on average —they don’t actually do as many transactions online.
“We research more online, and we buy more offline,” he said, adding when Canadians do actually buy through an online retailer, it’s often a U.S. business.
For Canada Post, growth in eCommerce sales can only help to improve the bottom line, because many of those purchases are shipped through the post office.
But as people are often reluctant to buy online, whether it’s putting down a credit card for a plane ticket add or major purchases like a computer, Munro wants to see purchases made through the epost platform.
As well, Canada Post has just launched a digital network of magazines people can sign up for. Munro hopes to eventually consolidate flyers and group deals, specifically targeted for users, instead of clogging email boxes.
Eventually Munro hopes to add government services, from renewing a vehicle licence plate to getting a municipal parking permit, to epost. Potentially, it could mean keeping accurate lists of residents, to prevent fraud, and might even compile eligible voters’ lists that could lead to electronic voting some day.
While many people still cling to getting their bills delivered by post, as companies start charging extra for paper bills, people will gravitate to electronic versions.
“But the challenge is you have to go each individual site. You have to remember multiple user names, multiple passwords,” Munro said.
“With epost, we’re your kitchen table electronically. All your bills are safely stacked for you, ready to go.” He dreams customers might even be able to renew a mortgage with their bank through the system some day.
Beginning next month, Canada Post will launch a pilot project in the Kitchener-Waterloo region to test expanding epost services with municipal governments and certain businesses.
“It’s about tying your virtual profile with your physical address,” he said. “The next evolution of authentication in the online world will verify who you are — this is your credential.”
And it is also testing a “vault” system, where customers can store important documents, whether it’s a tax return or bills for up to seven years for a fee.
“We see digital as a great opportunity. We live in this dual world. We believe for generations to come, people are going to manage both physical and digital,” he said.
Canada Post records huge loss
For the first time in 16 years, Canada Post has reported a whopping $327 million loss before tax.
It is blamed on a number of factors including last June’s rotating strikes that was followed a lockout, declining mail volumes, a widening pension solvency deficit and a pay equity decision.
When you factor in other associated businesses including Purolator and logistics, the loss before taxes shrinks to $253 million. The net loss is $188 million.
“We are responsible for the losses. We don’t want to be a drain on the taxpayers,” said Canada Post spokesman Jon Hamilton, noting the key will be to work with unions to fix the cost structure because letter mail volumes will continue to drop.
But the Canadian Union of Postal Workers countered that the company’s figures need to be “examined very carefully as they are being used to justify cuts in jobs and services.”
CUPW president Denis Lemelin said in a statement that Canada Post lost a key pay equity decision last year, and the 2011 loss could be attributed in part to that.
Hamilton said the actual cost of the pay equity decision, which was announced in November is recorded last year even if payouts haven’t happened yet, is not broken out.
The original award called for $150 million, but once back pay and interest is added in, estimates suggested it could grow to $250 million.
The pension solvency deficit stands at $4.67 billion, in part because of low-interest rates and poor investment returns.
The union added Canada Post has failed to take responsibility for its decision to lock out postal workers and shut down the system for two weeks.
“The cost of this action, together with the preceding rotating strikes, has been estimated at $55 million to $60 million,” Lemelin said.