E-commerce nurturing the micro-multinational

POST OFFICES are becoming natural partners to SMEs because of their huge distribution networks through 650,000 outlets, and an ability to offer complementary business services. The Universal Postal Union is about to roll out an escrow account to help SME e-merchants . . .

THE BILLIONS of little parcels that traverse the globe every second of the day are godsend gifts to the global postal system, which, for a while, looked like being consigned to history as emails replaced letters.

Not any more. Post is now vibrant and re-energised as it parlays its traditional twin roles — communications and logistics — into the heart of global e-commerce machinery.  

It is becoming an integral cog in the growing digital world. 

And in developing countries, especially in their rural regions, national postal services are morphing into the very backbone that supports growth in digital trade.

The past decade has been transformative for the world’s postal system.  

Paul Donohoe, who heads e-commerce and e-postal services development at the Berne-based Universal Postal Union (UPU), says the global postal system has capitalised on public trust to provide e-commerce solutions to help SMEs compete with the big multinational ecommerce platforms. 

“The last thing we want — and most governments want — is to have the world dominated by one or two players, because that is not good for their local markets, says Donohoe. 

“Governments want to encourage local producers and entrepreneurs to take part in this e-commerce explosion. And that is why Post is a natural partner.”

In coming months, the UPU will roll out new services  – from an escrow account  for its clients to an international online marketplace to assist SME e-merchants.

“Post is a very important source of innovation for the digital economy,” Donohoe told ATI.  An expatriate Australian, he says: “The postal network links 650,000 post offices in metropolitan and rural areas in every country in the world. And, particularly in rural Africa and Asia, the postal service has become a natural — and important — infrastructure for B2C e-commerce. 

He says post offices in rural Asia are bringing people online through their Internet kiosks. “In rural and remote communities in Japan and Korea, for example, local producers of fresh food and fish can use the Post Office for delivery to capital cities.” With demand for Japanese produce growing, especially from China, Japan Post has recently expanded its fresh food delivery service outside Japan. 

E-commerce has nurtured a new class of business — the one-man-band micro-multinational. And the local Post Office plays a central role in enabling these micro-multinationals to develop their export businesses, he says. 

Without Post, they would find it difficult to ship packages to New York from outback Australia or rural India.

As Donohoe sees it, the Post Office is now a natural logistics partner for SMEs.  UPU also provides a global track and trace service portal. 

“We are now looking at the postal network from the perspective of e-commerce for buyers and sellers. We are looking at how we can
adapt and enhance our network specifically to help SMEs have access to this global trade,”
he told ATI. 

One approach is to link national postal platforms to create an international marketplace for SMEs. “We have good examples in Korea, Japan, Singapore, and China where their national postal agencies are working with micro businesses and SMEs to host their own platforms in our postal shopping mall. Otherwise, they are just one of 500 million websites and how do you trust the websites you go to?”

As well, he says: “The local Post Office is adding value by providing business services, including exchange of goods and money transfers. It is important to recognise that most of the population in Asia does not have banking services or credit. 

“Here, the Post Office has a very important role in providing financial services with its universally-accepted postal money orders and
facilities for remitting payments.” 

Donohoe adds that even global firms like Western Union use the Post system to move money between rural areas. 

He says the postal network moves a ‘significant’ amount of money on a daily basis because cash on delivery is the main form of transaction in areas where there are no credit cards or financial services. Postmen collect cash on delivery on behalf of the sellers. UPU is establishing an Escrow payment service to
increase the security of e-commerce from the consumers’ perspective. 

Donohoe explains that payment for purchases — cash, pre-paid cash cards, credit or debit cards — will be held in post offices under the Escrow account until the consumer accepts the goods. The payment is than released to
the seller. “This will help increase trust and
security in developing markets.”

The global postal union will begin with pilot programmes for its Escrow service in key markets, including countries in Asia and Africa. The pilot trial, he adds, is to enable UPU to assess whether the Escrow service meets the
requirements of the market. 

Donohoe says although there are many
commercial payment services in the market, they provide niche solutions, and are not ‘truly
universal’ services. “We believe there has to be more than one solution — and more competition.” The idea, he explains, is not to compete with commercial services. In fact, postal services already partner financial services providers to handle mobile payments and other banking and financial services.

Donohoe says national postal systems have a unique role in fostering trust. “Trust and communication in e-commerce is still a problem. So Post is establishing digital solutions to help increase trust and confidence and give SMEs a greater profile.” Post services can now offer
secure electronic post boxes to customers to receive official mail. 

“These are being rolled out. In Australia, it is known as MyPost Digital Mailbox. Other jurisdictions like Macau, North America and
Europe have launched their versions of the secure electronic post boxes. He notes that in Denmark, the Government gives all citizens a free electronic post box through which all Government communications are channelled. 

“Cybercriminals are very smart and they exploit inherent weaknesses in the open email and Internet system,” Donohoe says. “We’ve established a dot.post top-level domain for
secure postal services. It is part of an ongoing infrastructure project to build a space in the
Internet that people can trust.”

But increasingly, postal services are being privatised or corporatised, so how do they maintain trust or universal service?

Deutsche Post, Singapore Post and Malaysia Post are now privately owned. In fact, China’s e-commerce giant,  Alibaba, bought a 10 per cent stake in Singapore Post this year.  

Donohoe says that even when privately owned, postal agencies are regulated because they must offer a universal service. 

“It is a human right for everybody to communicate worldwide through the postal service, so there are established laws governing it.
Regardless of whether they are run as an arm of the Government, a commercial operation separate from the Government, or a private
company, they all have to meet the universal service obligations,” he says.

Donohoe adds that the nature of trade is changing because of an explosion in B2C, where smaller items and consignments are
being sent from one side of the world to the other.  

“Trade flows have changed, particularly out of Asia Pacific. Countries sitting in growth corridors are experiencing improving trade balances.” Thanks to e-commerce.