Last week I had an extended conversation on the future of postal service and wanted to share some of my thoughts on potential scenarios 10 years from today. These are clearly quick sketches. The future – as is often the case – will likely be an amalgamation of these scenarios.
Scenario 1: Traditional Mail Ceases to Exist, Small Parcel the Only Thing Delivered
Small parcel post is escalating. I seem to recall a statistic recently from Fred Smith of FedEx, suggesting small parcels represent some 15% of their total shipment volume. This category of mail is driven by online retail sales and consumer-to-consumer transactions – both of which continue to increase. Consumer-to-consumer transactions are on the rise as sites like eBay continue to gain in popular and are used more frequently for a wider assortment of goods. Online sales represent only about 5% of retail sales today, but this is clearly growing as well. It won’t be surprising to find online sales representing a quarter of all retail sales within five or six years. As these transactions increase, small parcel post naturally follows.
There are a few trends playing out in the technology sector which will also impact the rate at which small parcel post increases. First, as the retail sector has become more challenging, manufacturers are increasingly looking at selling directly to consumers. This isn’t unique to technology companies, but is playing out across a host of categories. A second element I see evident in technology is the rapid acceleration of product launches, the speed at which companies are attempting to bring these products to market, and the swiftness at which information about new products is disseminated to potential consumers. Manufacturers are building less inventory over a shorter period time before bringing a given product to market. Seeking to fill a broad supply chain in a shorter window will force manufacturers to increasingly rely on expedited, small parcel post – regardless if they are going directly to consumers or through more traditional retail channels.
Scenario 2: The Death of Direct Mail
Today, direct mail represents roughly half of all mail sent. According to a report from advertising and marketing consulting firm Winterberry …