According to the experts, the electronic substitution of mail is not a uniform phenomenon – it depends on the technologies available and how quickly they catch on.
Heikki Nikali of Finland Post has thoroughly analyzed the trend in his country. He says that electronic substitution has different characteristics in each of the three main postal market segments, and involves a number of phases: it starts slowly, then accelerates and finally stabilizes.
In the customer-to-customer (C2C) segment, “we are reaching the end of the cycle”, said Nikali at the Mail and Express Economics Forum, held this week during the UPU Council of Administration session. In his view, technology is so diverse today that customers are spoilt for choice. That being said, die-hard letter-writers continue to use traditional postal services to send personal items like greeting cards, unbothered by the cost.
For the business-to-business (B2B) segment, electronic substitution is at pace with the development of new technologies. Finland, for example, has seen a 55% drop in business mail volumes over the past 20 years. Electronic substitution catches on more quickly in large companies than in small and medium enterprises (SMEs), as the often costly technology can be beyond their means. But this situation could soon change in industrialized countries.
In the business-to-customer (B2C) segment, the increase in electronic substitution (more than 60% over the past 10 years) is related to the growing number of homes with high-speed Internet, Nikali explained.
The rate of substitution varies from one country to the next, according to Franck Rodriguez of Oxera, an economic consulting firm that has studied the United Kingdom’s postal situation. Oxera predicts that U.K. letter-mail volumes will continue to drop 5% a year.
The trend can also be attributed to the fact that authorities are gradually giving legal weight to electronic invoices and administrative documents. This factor, combined with higher bandwidth and more secure electronic document transmission, provides an incentive for SMEs to move away from traditional postal services.
And yet one postal market segment remains relatively unscathed: direct marketing. “It’s the only segment that can, for example, integrate the different postal communication channels with popular social networks such as Facebook, Twitter and LinkedIn”, said U.S. expert Jonathan Margulies from Winterberry Group. “This coupling with electronic media gives direct marketing added value.”