Human And Social Sciences at the Common Conference

November, 17. - 21. 2014

Contribution of postal providers to e-commerce

development
Biljana Grgurovic, Slavica trbac

Gorica Milovanovi-Brakovi

ICT College of Vocational studies

Belgrade, Serbia
biljana.grgurovic@ict.edu.rs
slavica.strbac@ict.edu.rs

PE Post of Serbia
Belgrade, Serbia
gmilova@ptt.rs

AbstractTransferring business into the area of e-trading of

products and services brings a new dimension of the expected
quality when it comes to the velocity of trading i.e. of delivering
bought products. Logistically oriented organizations, where
postal providers can see their opportunity to bring the
competition to a new level play a major role in this part of the
trading chain.
New services which are being developed by postal service
providers are oriented towards the contemporary communication
with clients, from e-payments, to the availability of information
about consignments movement, to online defining of the time
and location of the delivery. Regular postal services, which
include a universal service, play a decreasing role in the market,
considering that the velocity and flexibility of delivering
introduce a new criteria which classifies the success of providers.
When observing economically developed parts of Europe, The
European Union, as well as world known postal providers, we
can draw conclusions which could show us the way to develop
postal traffic in the upcoming period.
Keywords- e-commerce, postal providers

I.

INTRODUCTION

The development of digital economy has stimulated postal

service providers to innovate business management through
developing electronic postal services and their integration with
the already existing services. However, the speed, quantity and
the level of success of these innovations differs in different
countries, regions and markets. One of the reasons for these
variations is the lack of exact and universal information about
the type of postal e-services, their value and impact on future
development of postal traffic [1].
It is also known that the providers of express services have
a major role in distributing international consignments in a
unique EU market. The value of this market increased by
around 70% from 1999 to 2010 [2], while the income from
delivering consignments in this territory increased by around
85%. This information shows that express delivery inside the
EU has a major role and a huge impact on united market
development. Research has shown that about 30% [2] of the
income from e-commerce depends on express postal services.

The main point of express transportation is providing

services of additional value which primarily means
transporting and delivering the next day or until another fixed
deadline door-to-door. However, the biggest contribution is the
effect on other competitive firms which do business in this
manner.
Starting from the fact that e-commerce is made of buying
and selling products and services using ICT, this paper focuses
on the fact that postal service providers whose main activity is
transportation and delivery can contribute not only to their own
development, but the development of this field altogether, or
slowly disappear from the market and leave this job to
someone else.
II.

EASE OF USE CONDITION OF THE EU REGION

Express transportation plays a major role in making

international trade across the EU easier for enterprises which
use this service in order to deliver goods to buyers located in
other countries-members of the EU. Graph 2.1 shows how
international express transportation works in the EU. Express
transportation services should play a major role in making
international trade in EU easier. The question is how ready the
postal services providers are to timely respond to such requests
and enable enterprises which rely on this way of trading goods
to stay in the market, both international and national.
Data shows that in the EU region small and medium
enterprises use express consignments mainly for international

deliveries. International consignments make up circa 72 per

cent of all express consignments in the EU.
Graph 2.1: International express consignments inside the EU per country of
origin (in millions) [2]

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Today, e-commerce is an important marketing channel for

European companies. The income made by selling becomes
more and more dependent on e-commerce in all countriesmembers of the EU. The most outstanding is Holland, where a
quarter of all income made by selling is dependent on ecommerce, as graph 2.2 shows.

Graph 2.2: Companies income made by selling dependent on e-commerce in

the EU region [2]

E-market, on the other hand, depends on the delivery speed,

which automatically increases the effect of express deliveries
on the total income. Graph 2.3 shows income made using ecommerce dependency on express delivery services.

well as uneven development and frequency of both groups and

individual services. The average number of realized electronic
postal services provided by postal managements in
industrialized countries group (23) is far larger than with other

world regions, while the smallest LAC (?) is in the African

region. The average number of electronic postal services
divided by categories and regions is shown in the graph 3.2.
Graph 3.1. Development trend and the number of implemented postal
services world-wide [1]

It is obvious that companies in Holland and Italy most

commonly use express services in order to expand e-commerce
importance in doing business. A large number of Internet users
inside the EU also use e-market, which is not the case with
developing countries (such as Serbia). The average percentage
of Internet users in Europe who use e-commerce is circa 60 per
cent [3], which is still twice as large as the number of internet
users who use e-commerce in Serbia (26.7 per cent) [4].

Graph 3.2. Average number of electronic postal services by regions, for every
service category [1]

Based on the mentioned survey, most current electronic

postal services world-wide are:

Graph 2.3. Income made using e-commerce dependency on express delivery

services [2]

III.

ELECTRONIC POSTAL SERVICES WORLD-WIDE

DEVELOPMENT TREND

Strategic goals and postal managements investments

across the world are being more and more directed towards
complex requirements of their customers, along with towards
new commercial and high-tech services which provide quality,
simplicity and comfort, as well as competitive advantage in
different trading segments. The electronic postal services
world-wide development trend during the last decade is
presented in the graph 3.1., based on survey done by the
Universal Postal Union (UPU).
Regional analysis conclusion shows uneven development
and implementation of electronic postal services by regions, as

e-post services: Track&Trace, Hybrid mail, postal

address accuracy check and ZIPcode search

e-finance services: electronic money transfer

e-market services: online philately and Customer emarket support

e-management services: electronic customs documents,

digital identity, electronic pension payments and
electronic export documents

while:

e-post services: e-postcards, online direct mail,

registered electronic consignment and mobile phones
applications

e-finance services: online bills payment

e-market services: online ZIP products shop and SSL

web certificates and

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Human And Social Sciences at the Common Conference

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e-management services: online passport app

described as partially developed services, especially in

industrialized countries. Based on these analyses a
development strategy can be made in our country for services
like these.
IV.

POSTAL SERVICE PROVIDERS RESPONSE

Postal market is becoming more exciting than ever, in a

way more fragmented, far away from the traditional universal
service. The e-commerce boom surprised many express service
providers who fight to keep up with the demand. To make
everything harder, there are no national companies evolved
enough to compete with leading companies such as FedEx or
DHL. Services vary, in quantity as in quality, from region to
region. This all leads to the fact that companies which rely on
e-commerce are facing a serious problem.
What solution do postal service providers (PSPs) have?
Logistics is one of the ways to go. But is it the right way? Isnt
logistics what postal service is, or is logistics postal service?
Aside from the fact that logistic companies should be able to
efficiently locate their resources and available work force
based on the quantity and location of entry accounts, when it
comes to transporting goods, where is the real border, and is
there a real border between these two? Lets try and find it.
The infrastructure of PSPs exists, but her technical abilities
are not being used in the proper quantity, especially when it
comes to public postal operators (PPOs). What happens with
private providers of these services? They usually make up a
large percentage of this market in national regions. Can a large
number of small and not so small courier companies lead to
less efficiency of services such as these, which is exactly what
happened in China in 2012? [5]
Companies which rely on e-commerce often overcome their
concerns by establishing their own delivery network, especially
in national region. Another problem for PSPs is the fact that in
some cases these networks are in partnership with a third party.
The goal of these companies is most often to establish their
own network which would be able to deliver packages
anywhere in the country in less than 24 hours. Technologies
such as cloud computing enable faster and more efficient
business managing by enabling establishing a joint platform for
transferring data crucial for realizing processes in e-commerce,
sharing data inside a logistic company and supporting the
whole supply chain management. Distributive centers of larger
companies are usually equipped with systems for automatic
sorting. Shouldnt all this be a characteristic of PSPs, and
especially PPOs? Is their problem, which is the case in Serbia,
the low level of automation, non-existing system for managing
storages and a large number of territorially divided units across
the country with sorting processes which are not developed
enough?
Another field where quality differences between PSPs can
be found is in the infrastructure they use. A large number of
consignments are transferred using road vehicles, and it is a
known fact that the quality of road network varies from region
to region.

V.

USING THE TEMPLATE SOME POSTAL PROVIDERS

SOLUTIONS

ITELLA (Itella belongs to Finland, does business in eleven

European countries, including Germany, Sweden and Russia)
is a company which offers postal and logistic services and has
started testing international e-commerce solutions [6]. The
company offers a new way of marketing, delivers Balmuir
products directly from Russian producers [7].
During the testing period, Balmuir products are offered to
Russian customers which have had the opportunity to buy them
in online store designed by ITELLA, which is also in charge of
managing products, storage and logistics, including customs.
The main idea is managing internet commerce as a whole
service. Thanks to that, producers can focus all their efforts to
their primary activity.
Sanoma's Mitsaisiolla.fi (MSO.fi) and ITELLA have
entered a partnership in order to increase e-commerce on
domestic market. In cooperation with a Finnish postal operator,
Sanoma is trying to procide online dealers a market platform
and a logistic service as a unique solution [8] [9].
The solution started in 2013 and already covers 200 online
dealers and over 35000 products, and circa 3.5 millions of
clients demand different services online in this way weekly.
In 2013 ITELLA started an investment project which
covers storage and delivery systems and in that way enables
significant automation of a part of the e-commerce process. To
online dealers, this change means a more efficient and
heterogeneous service, while it leads buyers to faster delivery
(a buyer can receive ordered products the very same day when
they were ordered).
The cooperation between ITELLA and MSO.fi helps online
dealers realize jobs which are usually tough or expensive
marketing or logistic processes.
SingPost cooperates with a Chinese company called
Alibaba, which strives to develop international e-commerce
[10][11]. Alibaba has invested 249 million US dollars in
national postal services of Singapore after buying 10.35 percent
of the company. The new partnership should provide access to
logistic possibilities of SingPost, the delivery infrastructure and
network. In this way the company expands its business abroad,
especially in the Asian-pacific region.
The new partnership will enable SingPost to offer end-toend solutions to buyers and dealers in the Alibaba Group, using
the expertise of the Alibaba Company in the area of ecommerce. It should be taken into consideration that the ecommerce market in the Asian-pacific region is becoming the
biggest e-commerce market in the world.
These changes should enable SingPost to increase income,
even being faced with the problem of the decrease in traditional
postal services.
Deutsche Post DHL also has plans for becoming the leader
in the logistics market which supports e-commerce [12]. Just
like the majority of international companies in the logistics
industry, they believe that they are destined to successfully do
B2C business in non-European market. Their idea is to use all

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their potential to become the leading providers for e-commerce

in the next couple of years.
The study they have carried through suggests that ecommerce could cover up to 40 per cent of the overall market
up to 2025. At the moment, e-commerce makes up to 8 per cent
of the overall market in Europe. They believe that in the future
logistics will be of greater importance to online dealers than it
is today.
Emirates Post is also trying to increase their presence in the
e-commerce market by launching new e-services which will
enable users to buy online and have consignments delivered at
an address of choice. As a part of their e-commerce strategy, in
June 2014 Emirates Post launched a new mobile app for 18
different postal e-services. These services include monitoring,
calculator, maps with posts locations, mobile payments etc. It
is important to emphasize that the penetration of smart mobile
devices in this part of the market is the largest in the world,
over 73 per cent [13].
The initiative has the goal to increase interaction of the
postal sector with its clients through different media channels.
In the beginning of this year, Emirates Post launched an eBook service which enables users to view their mailbox online.
Unlike these examples, PSP services which enable ecommerce are extremely limited in Africa, Latin America and
the Caribbean, regardless of the fact that there is a belief that
these services are important.
Lets see possible development strategies in Serbia for
these services.
VI.

POSSIBLE PPO SOLUTIONS ON THE TERTORY OF THE

REPUBLIC OF SERBIA

Based on differentiation strategy [13], The Post of Serbia

can gain a unique position in its economic segment, thanks to
some traits which customers appreciate. The differentiation
strategy logic required that a company choose features which
do not differentiate its rivals. So, what can The Post of Serbia
emphasize?
The liberalization of postal market and different
consignment types dictate the development of new ways of
delivering. The Post of Serbia wants to grow into a regionally
significant transport and logistics company. As a consequence
of the requirement of everyday transport of a large number of
consignments inside a wide-spread network, the optimal, or at
least rational work organization is required. The Post of Serbia
already has access to a vast quantity of information. The basic
challenge is to put together all these data in the right way, so
that the process of transportation of consignments which had
appeared as a consequence of e-market development flows as
simply as possible. By choosing the right roads, avoiding
traffic jams, monitoring drivers behavior, employing the right
number of transportation means and people, it is possible to
live up to the expectations of clients by providing services
quickly and on time. For that purpose, using geographic
information system (GIS) can prove to be quite effective.
Realization of the ZIP postal code project, made primarily
to solve the problem of fast, high-quality and cheaper

automatized consignments sortation, started on the territory of

Serbia in 2001. The project gets its visual form, i.e. clear region
borders, through GIS, which also helps in the later
development. The main idea is that all data bases which are a
part of the GIS must go through pairing up with a ZIP code.
This makes territory managing possible, and the synergy of the
project and GIS exceeds traditional postal activity and forms a
new powerful weapon for managing areal and informational
data.
A huge advantage of GIS is that it is able to make a new
organizational scheme every day, which leads to saving money,
i.e. increasing service quality, because the optimal number of
vehicles and executors is always being used. Specialized
emergency deliveries, whose efficiency is not being brought
into question, will be able to adequately respond to the increase
of the quantity of services in connection to e-market.
Such direct work organization is in the near future. Data
bases can be updated in a relatively simple manner and with a
few technical investments and employee training for working
with GIS, major savings can be made while at the same time
responding quickly to possible service quantity increase.
While noting that the usual delivery already has a problem
with decreased resources in large cities, and overly
dimensioned capacities in rural areas, we can say that
everything mentioned leads to the fact that postal consignments
distribution needs to be seriously worked on.
Using GIS technology in such conditions is not only
possible, but desirable. Based on available information about
the number and types of received consignments, it is possible
to divide areas of delivery regions and areas which belong to
different ZIP codes. The delivery manager can easily make a
decision about a possible transfer of a populated place in the
delivery area of another delivery post, or about conjoining a
part of one region with another, less busy, or about the number
of executers, about opening a specialized delivery region, all to
the purpose of creating flexible delivery regions and all that on
a daily basis.
CONCLUSION
Although e-commerce has been quickly developing as a
trading channel over the last ten years, many PSPs are still not
ready for this business, i.e. they are not ready for a different
approach to doing business which differs diametrically from
providing the universal postal service. Their influence on
delivery expenses which are a large part of the overall logistic
expenses of using e-commerce is not to be forgotten. Those
expenses, unfortunately, multiply in case this part of the job
should be done by an unready PSP. It seems it is still early to
talk about the possibility of PPOs to provide whole supply
chains.
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[1]
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