Turning the SA Post Office around: A not-too-distant dream
With a new team and an expanded business model, the Post Office of the future will have relevance, resilience, reliability and reach.
The SA Post Office (Sapo) has for many years now been regarded as yet another state entity that is unable to adapt to market changes and grow revenues.
Sapo became complacent, as a place of lifetime employment, virtually a protected monopoly in a declining industry.
It was safe- guarded from competition by reg- ulation, and this hampered the necessity to remain competitive in a changing market. The door was open for private sector competitors to come in, and they did.
However, CEO Mark Barnes, who joined the organisation in 2016, has a far-reaching and ambitious vision for the post office which, if realised, will lead to the organisation being transformed into a vital cog in government’s service delivery mandate with a self-sustainable funding model in place.
Barnes has long held the view that the key to Sapo’s turnaround is to make it more relevant to the modern age rather than allowing it to continue to offer outdated services. Sapo has been beset by leadership and operational challenges for the past decade.
A decline in traditional mail volumes — in line with similar declines experienced by the majority of postal operators across the world — has led to it steadily becoming less and less profitable as traditional physical mail is replaced by electronic alternatives such as email.
Despite this decline, mail services have continued to account for the bulk of Sapo’s revenue streams, something which Barnes and his team realise will simply not sustain its growing cost base.
In 2011 government cut all universal service obligation (USO) subsidies to the organisation — Sapo is required to deliver to remote areas, regardless of commercial viability — and a protracted strike in 2014 resulted in the company losing 30% of its turnover as well as a sizeable customer base An e-commerce platform is one of the main innovative services that make up SAPO’S turnaround plan appeared to indicate Sapo’s death knell.
The situation was further worsened by mismanagement and allegations of corruption prior to a new guard arriving to turn the situation around.
“The 2014 strike crippled the organisation,” says Barnes. “The bottom line is that if you’re not generating sufficient revenue, you cannot invest to grow and upgrade the business. Against a global background of postal service providers rapidly diversifying revenue streams and technology platforms, Sapo was lagging behind.”
The new world, of postal services infrastructure, he adds, is all about financial services, logistics and channels for last mile delivery for e-commerce platforms, rather than traditional mail delivery, which has declined globally.
In Sapo, Barnes saw what few others did: a government-owned entity which, ironically because of its public service mandate, is required to have physical representation throughout the country, which gives it a unique footprint in both urban and rural areas. Sapo already had an established bank. Key to his vision for Sapo is the need to stop thinking of it as a traditional post office but rather as a centre of exchange, a channel for the provision of, particularly, government services.
“In this context, Sapo’s primary mandate is to provide efficient services, retaining economics within the fiscus while replacing expensive, private sector dependencies
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