SingPost still seems to be rather unsuccessful in making use of its connections and reputation to fuel its growth in the logistics and ecommerce space. How it is that this major player is lagging behind relatively new entrants such as NinjaVan, even in its own backyard?
Reading between the lines of SingPost’s earnings call on May 10, we see a giant that is struggling to defend itself from smaller, more nimble players.
For FY’17-’18, revenue from ecommerce was ‘stable’ – which is disappointing in the context that ecommerce revenue grew by 12% in home market Singapore and a comparable percentage in other markets it operates in. This may be due to a failure to compete against other last mile logistics companies. Over time it may become increasingly difficult to compete with the newer (not necessarily smaller) players that charge less and offer more customer-centric services.
It is notable that international mail revenue rose 37.4% with higher cross-border eCommerce deliveries in particular for Alibaba Group (Alibaba holds over 14% in SingPost). However, it’s still worrying. Vpost, which competes with the likes of ezbuy, has failed to gain traction even after so many years. Their failure to evolve will only spell their eventual failure – nowadays if you buy from Sephora US for example, they don’t ship via freight forwarders like Vpost anymore.
As if the issues weren’t enough – TradeGlobal, a US-based ecommerce enabler owned by SingPost suffered a huge loss when 2 of its 10 major customers (one of them went out of business, and the other developed inhouse capability) left. It is also rumoured that some customers are looking for alternatives, waiting for existing contracts to expire.
It was also rumored recently that the different subsidiaries (within SingPost) have been given the greenlight to explore working with partners outside the network so as to remain competitive. However, the subsidiaries each have their own agendas, i.e. they are all protecting their own bottom line. If they are able to work together, the potential to really develop an integrated solution is definitely possible. However, in order to do this, massive restructuring is required.
Ever since Marcelo Wesseler (former CEO of SP ecommerce) left, we heard there has been an exodus of talent leaving SingPost. The remaining are struggling to adapt to the new management.
We believe SingPost has worked hard to be where it is today. However, SingPost needs to be quick in adapting and executing if it wants to survive in the new, ultra-competitive world of logistics and ecommerce. While reputation is important and can be leveraged, the most important factors – customer satisfaction and seamless experience – need to take the center stage.
Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.