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Digital Transformation for Posts - South Asian Context

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During the history of industrial revolutions from discovering the power of water and steam to mechanize production, electric power, use of electronics & information technology to automate production, we have reached to a point that fourth industrial revolution hinges on the power of digital, where industries are ultimately driven by businesses and entrepreneurs rather than states.

Digital transformation being the biggest trend across the globe, Asia is in its forefront of this digital wave since 2016. With robust digital infrastructure and more than 8.6 billion connected devices, most countries in Asia are almost in a way to make the most of the opportunities arising from digital transformation. Southeast Asia is leading in this wave and booming in digital sector with lot of interest. Digital has become core part of the business strategy, not only in any other business, but also in the Postal industry, experiencing rapid business growth by providing digital activities to the customers.

Deviating from Southeast, South Asia is a region with immense diversity comprising young population and developing economies. Postal services in this region are often critical to reach a vast underprivileged population mainly lives in rural areas. Almost all the postal entities in this region are state-owned, social welfare oriented service providers responsible for providing universal service fulfilling Universal Service Obligation (USO). These entities provide agency services for government and private sector. However with all the tension between their universal service obligation and financial viability, South Asian Postal entities are in a struggle to modernize the demanding and changed customer requirements, using technology to transform themselves into digital businesses. They should understand the impact of digital transformation and how it benefits the long-term sustainability of Post in many ways including impacts on costs and productivity, revenue and profits, customer satisfaction, quality of service and ability to compete.

For example, Sri Lanka is an emerging economy in South Asian region just beginning their digital revolution. The annual growth rate of Sri Lanka's Internet population has burst considerably over the past decade, but only about 30% of the population is active online and on social media. Comparing to other Asia Pacific emerging markets, Sri Lanka exhibits strengths in connectivity, digital marketing, investment in digital initiatives, and the ability to move quickly. However, when compared with China, India, and more-developed countries, Sri Lanka is well behind.

According to a research done by the Institute of Policy Studies of Sri Lanka on Cross-Border Ecommerce ecosystems, Sri Lanka’s Domestic e-commerce market is estimated to be around 40-70USD and is expected to be grow by 3% in the near future and the UNCTAD network readiness index report 2017, places Sri Lanka Postal reliability score at 43%. Further integrated index of postal development (2IPD) 2018, scores Sri Lanka at 36.67 out of 100 on the basis of digitalization of services, operational efficiency, adaptability of business models etc. This leaves a huge vacuum to consider growth and to seek opportunities to capture the market and business growth by integrating their digital priorities into the overall business strategy, automation of internal and customer-facing processes, and adoption of a collaborative culture between the digital teams and business functions. 

Digital Maturity of Industries in Sri Lanka
Source – McKinsey& Company review on unlocking Sri Lanka’s digital opportunity

Sri Lankan postal entity is yet to establish an effective system of accountability and governance for digital goals, targets and figure out how to effectively attract and retain digital talent to win the competitive advantage of the emerging courier services in the market domain.

Considering the sub-regional tech giant, India has become one of the largest and fastest-growing markets for digital consumers in south Asian region. But adoption of digital technology is uneven among businesses. However as digital capabilities improve and connectivity becomes widespread, technology is absorbed quickly and radically change nearly every sector of India’s economy, targeting India to be a truly connected nation by 2025.

India Post from its automation and digitalizing journey, expanding mail processing centres at New Delhi with an automated system that processed up to 55,000 mail pieces in an hour reached to a level to partnered with Tata Consultancy Services (TCS) in a multiyear deal, to digitize all the postal mail services in an effective manner from April 2019 onwards. Further India has implemented a Point of Sale (PoS) solution in 80,000 terminals across 24,000 post offices, along with setting up a web portal with consignment tracking capabilities and a multilingual call centre for customer support. From financial inclusion, integration to modernization, India Post is almost there embracing technology and digitalize its 150,000 post offices to create world’s biggest EPostal network.

Considering other south Asian nations, Nepal, Pakistan, Bangladesh, seeking avenues of adopting modern technology and has taken revolutionary steps to improve efficiency and expand their network across the globe. Pakistan for instance has focused on digitalizing service sector, policy making, digital service and enabling growth. Pakistan is working towards to enhance public-private partnerships enabling new business models to improve digital capabilities for adoption. Nepal for instance working towards e-governance in the postal services which is needed to address the change of needs of customers in the market of communication. They have introduced E-Commerce initiatives benefiting the changing market dynamics. Nepal is yet to follow the regional giants like India and other fellow countries like Sri Lanka through Digital transformation strategies, policy making involvement of diverse stakeholders to meet specific socio-economic priorities.

South Asia, the way forward

In this Digital era, postal entities of south Asian region, more or less in common, still lack a unique identity to see the great potential to make a difference, to see the potential and the stainable future of post depend on turning their current strength to strong logistical capabilities and moving into digital platforms like e -commerce. Other than the universal service obligations, Post can provide a wide range of services to their customers if they use their capabilities into reality.

Traditional Posts needs to harness the brainpower of their own employees while benefiting from collaborations with external parties. It would be an advantage to focus on combining the industry expertise with the power of digital to reshape the markets and re think on how South Asian region posts can help their postal business grow by working together with other industries, leveraging digital solutions leading posts to become the Backbone of national retail/e-commerce network.

Digital transformation is all about updating in technology, process, culture and business models. Updated technologies create new opportunities, new opportunities create ground to experiment new models that respond faster evolving preferences of customers and more flexible options. Hence investing in and implementing digital innovations across the Post is a good initiative for a long-term roadmap along with identifying talent already available or ready of “upskilling” in the organization.

2020 will be coming soon. Postal entities as business entities, should ask ourselves, how prepared are we to respond the market and business changes that is impacted by digital technology and how far have we taken the advantage of new digital technology to keep our business relevant to customers and to be competitive in the market.

Reference:

  1. https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/digital-innovation-in-asia-what-the-world-can-learn
  2. https://digitalinasia.com
  3. https://eiuperspectives.economist.com/sites/default/files/eco059_mastercard_-_the_digitalisation_of_commerce_in_asia_8_screen_4_mar_19.pdf
  4. http://www.rticommission.lk/web/images/pdf/DigitalTransformationinSriLankareport-FINAL-30Nov2017.pdf
  5. https://unctad.org/en/PublicationsLibrary/der2019_en.pdf
  6. https://unctad.org/en/PublicationsLibrary/tn_unctad_ict4d09_en.pdf
  7. https://digitalindia.gov.in/ebook/dop/page1.php
  8. https://thediplomat.com/2019/05/digitizing-nepal-from-within-the-himalayas/
  9. http://digitalpakistan.pk/home.html

Article by Norika Warnasuriya

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