Canada Post betting that services such as delivering packages to online shoppers--including same-day delivery--will help compensate for decline in traditional mail business, return government-owned agency to financial stability within five years
Cindy Allen
TORONTO
,
May 6, 2014
(press release)
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Canada Post Corp. Chief Executive Officer Deepak Chopra is betting services such as delivering packages to online shoppers will help make up for a decline in its traditional mail business.
Chopra, who took over the money-losing Ottawa-based postal agency about three years ago, is testing services such as “Delivered Tonight” to capitalize on the surge in Internet- based retailing. He says he wants to return the government-owned agency to financial stability within five years. “We’re moving from the letterbox to a cart,” Chopra said in a May 1 interview at Bloomberg’s Toronto office, referring to the way online shoppers keep purchases before having them shipped. “What’s happening now is a bit of a race to reposition our business from letters to parcels.” Canada Post, like its global peers, is struggling to adjust to eroding mail volumes as customers turn to the Internet for communicating and shopping. Chopra, whose agency already offers delivery service for retailers including Wal-Mart Stores Inc., Amazon.com Inc. and shopping sites such as Well.ca, calls online grocery shipments the “next battleground” in a “war for convenience” among consumers. The agency traces its roots to 1753 when Benjamin Franklin, then U.S. deputy postmaster general based in Philadelphia, opened an office in Halifax, Nova Scotia to link Britain’s Atlantic colonies with Europe. Canada Post said in December it would stop delivering mail to about five million households in favor of community mailboxes, as part of a turnaround plan. Canada Post Corp. reported its net loss narrowed to C$88 million ($80 million) through the three quarters ended Sept. 28, from C$219 million in the same period a year earlier, after it sold a downtown Vancouver processing plant. An April 2013 report by the Conference Board of Canada estimated the agency will lose nearly C$1 billion annually by 2020 unless it makes changes. Chopra, 50, is embracing online commerce as the way forward for a company that has been slow to adapt. Canada Post was the last mail service in the Western world to introduce postal codes and to automate mail sorting, Chopra said. When he joined as chief executive in February 2011, Canada Post didn’t have an iPhone application, he said. The former Pitney Bowes Inc. executive set about to change that. “We placed a bet very early on, literally in the first 90 days, on e-commerce,” Chopra said. “We invested in technology, invested in more scanning, more visibility.” Chopra is testing a “Delivered Tonight” project, which guarantees Toronto shoppers evening delivery of their lunchtime online purchases from select retailers, following a similar offering by the U.S. Postal Service. Canada Post employees deliver about 10 billion pieces of mail, parcels and messages each year to 15 million addresses in urban, rural and remote locations across the country, according to Canada Post. About 60 percent of its revenue comes from non- letter mail business, such as direct marketing and its Purolator courier operations, Chopra said. Letter mail, a C$3 billion business, may decline 50 percent from its peak, he said. “We’re going to have to be on the edge of our seat for the next generation, constantly reinventing,” Chopra said. --With assistance from Katia Dmitrieva and Gerrit De Vynck in Toronto. To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net Chris Fournier, Paul Badertscher
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