While government has been vocal about its e-commerce aspirations for the ailing South African Post Office (SAPO), the jury is still out on whether the national postal service can compete in the hotly-contested space.
This is according to analysts responding to ITWeb’s questions on SAPO’s future.
Once considered a key institution, mismanagement and outdated systems have brought the post office to its knees. The state-owned entity is in dire financial straits, with liabilities totalling approximately R12.5 billion as at 31 July 2023. Furthermore, its previously large branch network has significantly shrunk over the years.
Responding to a written Parliamentary question about positioning what is left of the SAPO postal network as a contributor to e-commerce, communications minister Mondli Gungubele said growing this market is part of the broader strategy, as outlined in SAPO’s business rescue plan.
SAPO, he specified, will be positioned as a preferred service provider to e-commerce retailers by strategically investing in the organisation’s depot network, transport fleet and logistics technologies.
However, Gungubele noted this sector is highly-competitive, so the idea is for SAPO to leverage strategic partnerships to enhance its competitiveness. “Envisaged partnerships include logistics, technology, warehousing, infrastructure and e-commerce, as well as industry expertise.
“SAPO is cognisant of the fact that it has a low trust deficit within the courier sector. With commitment from management and the support of government stakeholders, it is anticipated the entity will return to being a leading courier and logistics company within the next three years.”
Tough crowd
According to Mark Walker, IDC associate vice-president for Sub-Saharan Africa, e-commerce is a hotly-contested space in SA, with local players like Takealot, to global online shopping and fulfilment platforms.
In addition, transport or courier players like Courier Guy, PUDO, etc, all offer some form of online presence. It is difficult to see where SAPO would compete effectively, he comments.
“Banks and insurance houses completely dominate the e-commerce opportunity in the personal finance space, from the high-end right down to basic financial service.
“Part of the SAPO mandate is to provide a reliable and relevant government service delivery channel, providing access to government services, enabling secure digital and physical transactional services to all.
“Recently, even the SAPO car licence renewal services have been effectively side-lined by online providers and even NATIS itself. Municipalities and other government departments (home affairs) are similarly using third-party online service providers as a channel.
“SAPO is extremely late to market, has uncertain systems and processes, and a poor record of performance, even in areas of supposed expertise. This doesn’t make for a good story. Unless there is specialised niche e-commerce that is envisaged, it is hard to see where and how this is possible.”
Like Gungubele, Walker believes SAPO’s best chance would be to partner with an existing player to gain a foothold in the local e-commerce space.
“A partner would possibly wish to leverage SAPO’s branch network and online systems – neither of which are gold standard compared with global best practice. The question then is who would be willing to do so, especially given the regulatory environment and close relationship to government direction and policy mandates.”
Alastair Tempest, CEO of the Ecommerce Forum South Africa, notes: “At present, SAPO does not have the facilities to compete on time, track goods, or coverage due to the deep cuts that have had to be made to try to cover the alleged R19 billion it owes. First, it needs to restructure.”
As to what SAPO will need to do differently to stand a chance, Tempest lists: “Timely deliveries, full track-and-trace from the consigning of a parcel to its delivery, reverse logistics in place for returns, urban house-to-house deliveries throughout. Arrangements to have goods delivered or picked up in rural areas.”
To privatise or not privatise?
While there have been numerous calls for government to cut its losses and privatise the entity, communications deputy minister Philly Mapulane recently emphasised the importance of fostering partnerships with private operators for the future of the post office, rather than opting for privatisation.
Walker indicates it is unlikely government will effectively be able to reposition SAPO as a commercially-viable e-commerce player.
This, he explains, is mainly because various strategies and policies over the last five years have had little to no traction. “Current regulatory and government policy constraints mean it is unlikely a partner would wish to become involved.
“Therefore, it should consider focusing narrowly on delivery of basic services according to its mandate, and preparing for the inevitable discontinuation of this entity as it becomes obsolete due to the encroachment of privately-owned e-commerce service providers.”
Tempest says the industry wants to see a healthy SAPO in the future as a competitor in the postal market. However, it does not want a monopoly, which would strangle e-commerce.
“The minister has asked for a review, but the licence for ‘last-mile deliveries’ under the Postal Services Act lapses in March next year – thus we are asking the minister to look at innovative solutions now, in good time.
“SAPO has benefited for years from advice and guidance from the Universal Postal Union (a United Nations body). This advice is based on the experience of hundreds of national postal operators that have, or are in the process of, pivoting from letter mail to e-commerce-related packages and parcels. We hope the ministry can tap into this knowledge over the coming 12 months.”
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