E-mail and SMS eroding 'snail mail'

Jeff Turnbull, AAP
October 12, 2005
URL: E_mail_and_SMS_eroding_snail_mail_/0,2000061791,39216730,00.htm

The traditional engine room of Australia Post -- its letters division -- is on the decline as more people turn to e-mail or SMS to keep in touch. Australia Post today reported a one per cent lift in net profit to AU $374.9 million for the 2004/05 year, off a record AU$4.32 billion in revenue. But the letters division's earnings fell almost AU$57 million to AU $248.3 million. The big area of improvement for the government-owned Australia Post came in the parcels and logistics business which increased its profit by AU$41.4 million or 28.9 per cent to AU$184.8 million. Australia Post chairman Linda Nicholls said the impact of electronic substitution on the letters business was being felt globally. "With our letter prices currently frozen and our costs rising with the addition of around 200,000 new addresses each year, growth in letter volume is going to be the crucial element determining our future profitability in the letters business," Nicholls said. In 1960, the letters share of the total messaging market totalled almost 50 percent but by last year it had shrunk to 14 percent. The bulk of that market is now dominated by transactional letters such as the mailing of accounts, bills, statements and cheques. Social letters involving letters, postcards and private greetings amount to just five per cent of the market.
But Australia Post is not yet prepared to accept defeat in letters.
Managing director Graeme John said there is growth potential in letters, especially in direct mail, because people prefer to receive important information on paper. "We are continuing to develop new letters products that help businesses communicate with, and sell to, their customers," he said. Australia Post has also earmarked parcels, banking and bill payment services and identity checking as growth areas. Nicholls said that over the next 12 months Australia Post will rebrand giroPost as [EMAIL PROTECTED] and offer Australians living in regional and remote areas greater access to banking services. She said with the increase in identity fraud, Australia Post is also beefing up its 100 point identity check service as well as growing its international money transfers and travellers' cheques business. Another area Australia Post sees as ripe for growth is assisting local manufacturers in their dealings with China through its joint venture with China Post. The postal service envisages storing goods bought by Australian retailers at its own warehouse in China before shipping them back either straight to customers or to the retailers' outlets.

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