The Australian startup ecosystem will play a pivotal role in the survival of Australia Post

- July 9, 2015 4 MIN READ

Reports in the media of late would have you believe that Australia Post is going through some kind of crisis right now – talks of massive losses in particular departments of the organisation and, in turn, the pending voluntary redundancies that will be occurring as a result are, in some ways, painting a picture that a giant company is injured and in desperate need of assistance. The truth however is that Australia Post is anything but helpless; in fact, I would go out on a limb and say that the company will end up playing a major role in the growth of Australia’s startup ecosystem throughout the next ten years and vice versa, particularly in the ecommerce space.

A Legacy Business

The roots of Australia Post can be traced back to 1809, when ex-convict Isaac Nichols assumed the role of “postmaster” operating the service from his home in George Street, Sydney. His role was introduced largely to curb crowds of people rushing to the ships to collect letters when they arrived in port from the United Kingdom. In 1825 The Postal Act was bought into existence, which allowed the Governor General to appoint “postmasters” in different communities and areas, as well as being able to affix pricing for the delivery of mail, creating the first organised postal service in the country.

It was in 1901 that all the colonial mail systems merged under one umbrella known as the Postmaster-General’s Department, which was responsible for the delivery and systems for all letter, telegraph, and telephony communications across the country. In 1967 the 4 digit postcode system was introduced and later in 1975 the Postmaster-General’s department was separated into two separate commissions: one of those was the Australian Postal Commission (now Australian Postal Corporation), which was officially corporatised in 1989.

Indeed, Australia Post has a long and embedded history in our country. It also happens to be consistently named as one of Australia’s most trusted brands.

While Australia Post may have been built off the back of “letters” – which are globally a declining communication medium in today’s tech-savvy society – the presumption that the losses the organisation is experiencing across this area are somewhat skewed. It is fact that Australia Post had a 15.2 percent increase in losses across its mail services business in the 2014 financial year, however its parcel business experienced a 20.8 percent increase in profits. While overall profits after tax saw a 34.5 percent decrease in profit, we need to note that Australia Post is currently in a state of transition where it needs to plug the leaks in its non-profitable mail business before it can really focus and drive growth across its strategies within the ecommerce and digital space.

Australia Post CEO (since 2010), Ahmed Fahour is tasked with driving the business to ensure that this happens.

Australia Post and the Startup Ecosystem

Although Australia Post is clearly being innovative with new products such as its digital mailbox, the communication and community buy-in surrounding these products are a serious issue. It has created a perception that the organisation is perhaps not as innovative or forward thinking as it genuinely is.

Like Telstra, Australia Post is in a unique position where it has a lot of infrastructure already in place, almost like a “physical” version of an API that startups creating new innovations in the delivery and communications space can “tap into” in order to give end-users competitively priced solutions.

Australia Post has begun – albeit slowly – to embrace the new tech startup culture that has made its way into corporate Australia. Clear examples of this are the two year partnership that the organisation signed with mobile charity platform GiveEasy in 2013 and, more recently, the company’s integration of local startup Bugwolf into its strategy in order to accelerate the Australia Post digital quality and product release timelines.

Though the relationship with Bugwolf has been in place for a while now, it was only recently that Australia Post decided that it wished to make the news public. So far the partnership with Bugwolf has enabled Australia Post to transform its entire testing methodologies and accelerate the go to market strategies across many of its new digital products. The entire focus has been on increasing quality and fostering innovation.

It would actually be quite naive to think that the above two examples are the only thing that Australia Post has up its sleeve when it comes to working with startups or thinking about new products “like a startup” does. There is evidence to support this statement when you look at some of its newer products like ShopMate, a service born out of Australia Post identifying the trend that many Australians were ordering clothing and other items from ecommerce stores based out of countries in the United States and needed a more systemised way of getting those items to their door.

For a company that is supposedly “backwards” according to a variety of mainstream media reports, ShopMate is a clear example of not only a clear example of how Australia Post is thinking in a more innovative way, but also shows us that it has the ability and infrastructure – particularly in the delivery space – to compete aggressively with other startups, in this case another venture called MyUS.

A long and prosperous future together?

When you look at the bigger picture, Australia Post is not a “struggling business” – it is a growing business (averaging 23 per cent growth YoY in revenue) that happens to have “struggling parts” that overall do affect metrics like profitability and EBIT.

The fact that Australia Post is now starting to instigate media coverage regarding partnerships with tech startups means that, like many other companies such as the NRMA, Telstra, and Commonwealth Bank to name a few – Australia Post is now in a position where it has obviously laid down the foundations for its “Future Strategy” and is ready to begin changing the public perception of its brand from being a trusted legacy player to a company that fosters innovative thinking, especially when it comes to the digital realm.

Australia’s startup ecosystem will play a pivotal role in the survival of Australia Post, that is certain. However the million dollar question is, what will that role actually be. There are two significant opportunities: the first is around education, support, and collaboration with the startup scene, similar to the way that companies like Telstra and NRMA are doing it via accelerator programs, mentorship, and strategic partnerships. The second is via acquisitions and incubation of local startups that are solving problems aligned with the Australia Post “Future Ready” strategy.

In an ideal world, I suppose it would be a little from column A and a little from column B.