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Key Research Findings and Initiatives to Promote E-commerce

1

Jane DyerDirector Markets and CommunicationInternational Post Corporation

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011

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Postal Revenue Projection for 2015Mail revenue down by 50% and other revenue up by 10%

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011 3

Japan Post Group

FedEx

Deutsche Post DHL

UPS

United States Postal Service

Poste Italiane SpA

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The Outlook for E-commerce Growth is Strong

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011 4

Source: Forrester 2010 & 2009 Online Retail Forecast

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Global Parcel and Express Market ~€133B

Market shares(global)

Market shares(global)

UPS 22%

FedEx 13%

DHL 8%

TNT Express 3%

DPD/Geopost 2%

GLS 1%

Top 6 49%

1. Use of 2008 values, 2010 market structure 2. Excluding (express freight revenues of all market players. Freight is defined as heavey parcels >70kg, pallets and containers 3. Excluding couriers(same-day point-to-point deliveries) 4. International includes outbound shipments onlySource: FedEx; UPS; DHL; Transport Intelligence; press search, BCG research, BCG analysis

Total market1,2,3 : €133B

North America Int’l4North America domestic

39

UPS

FedEx

Other

Asia PacificInt'l4

6 8

UPS

UPS

FedEx

DHL

TNT

Other

Asia-Pacific

28

Other

DHL

FedEx

4

South America domestic

DHL

FedEx

UPS

5

RoW

0%

100%

0% 80% 100%20% 40% 60%

Other

2

South America Int’l4Europe domestic

25

Other

GLS

80%

60%

40%

20%

FedEx

Other

GeoPost/DPD

GLS

DHL

TNT

Other GeoPost/DPD

TNT

DHL

FedEx

UPS

16

Europe Int’l4

TNTDHL

Other

UPS

Global express and parcel market structure

DHL share has dropped since 2006 by shedding loss making domestic operations in FR/UK

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E-commerce Research

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011 6

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Research DesignMultiple perspectives

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011 7

Opportunities for posts in e-commerce

E-retailers Consumers

Legislative Framework Technological Infrastructure

• Incidence of cross border physical purchases

• Country of origin of cross border goods

• Motivations & barriers for purchasing cross border

• Consumer needs in terms of delivery

• Purchasing online behavior including choices in delivery options

• Current return behavior

• How businesses encompass e-commerce & cross-border trade

• Potential barriers to the development of e-commerce & cross-border trade

• Future potential of cross-border trade

• How postal organizations can better meet the needs of customers

• Value of a return solution to e-retailers

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Scope of ResearchRange of e-commerce market maturity

8

Qualitative Phase

Quantitative Phase

Established Multi-country

Primarily domestic

focus

UK 10 +/- 1500 10 5

Germany 10 +/- 1500 10 5

US 8 4

Denmark 10 +/- 1200

Sweden 10

France 10 +/- 1500 7 4

Belgium 10 +/- 1500 2 5

Netherlands 10 +/- 1500 5 2

TOTAL 70600 target

interviews per country

42 25

Country Consumers E-retailers

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011

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UK

UK-cb

DE

DE-cb

FR

FR-cb

DK

NL-cb

BE

BE-cb

DK-cb

NL

3

4

5

Online Shopping BehaviourCross-border

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011 9

Q1.1 & Q1.2Base: Individuals with internet access at home who purchased goods for physical delivery in past 12 months

Exp

erie

nce

in

Ye

ars

Frequency of Purchase

years

years

years

* cb – Cross-border

Cross-border shoppers are even more experienced and buy online more frequently.

Light Medium Heavy

Lear

ning

proc

ess

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Base: Individuals with internet access at home who purchased goods for physical delivery in past 12 months

Online Purchases Top 10 goods for physical delivery

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011 10

Q2.1 & Q2.1A, Q2.2

UK DE FR DK NL BE(n=635) (n=602) (n=608) (n=606) (n=625) (n=611)

Average # 7.1 7.8 5.9 6.0 5.4 4.5

Books, CDs & DVDs

Clothes & shoes

Computer software / games

Electronic equip. & devices

Toys & hobbies

Small domestic appliances

Beauty

Computer hardware

Office supplies

Sports goods

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E- retailer Business StrategiesCross-border adoption segments in the US

11

Inert

No desireFear fraud

Domestic focusNo resources for

international expansion

Embryonics

Planning orrelatively new to

international

Ad Hoc orders

Manual fraud Inspection

No changes to domestic website

Emergers

Some website changes

More experienced

See value in expansion

Use international facilitators

Embracers

Very knowledgeable

Own fraud detection system

Use retail stores (if have them) to increase cross-border sales &

get faster delivery

May use country URLs or translations

Exploiters

Long-time players

Positioned with superior items or

best pricing over in-country or other

retailers

Use referrals

Use other portals

Use ownseamless shipping

arrangements

“It’s almost like we take international orders, but we’re not actively trying to sell our product to international customers.”

11Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011

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(n=389) (n=457) (n=319) (n=307) (n=381) (n=269)

Return ServicesIncidence and methods of return

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011 12

UK DE FR DK NL BE

61% 76% 52% 51% 61% 44%% Ever returned goods

Take to a post office/collection point

Organise a specific pick up

Take it back to the store

Return immediately at moment of delivery

Base: Individuals with internet access at home who purchased goods for physical delivery in past 12 monts and EVER RETURNED goods

3.2 6.6 2.9 4.0 4.8 4.0Average number of returns

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Conclusions and LearningSuccess in delivery

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• Price• Reliability• Choice • Information

• Cost• Reliability• Track & trace• Flexibility in capacity

Delivery Partner

Cost effectiveQuality service

Drivers for Success• Segmented pricing models• Proactive information management• Logistics expertise• Relationship management • Flexible business model

ConsumersE-retailersCustomer care

Trust

Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011

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Cross-Border Customer Demands

• Low shipping prices• Provision of estimated delivery date• All-inclusive pricing at the point of purchase• Full integration of the tracking data in the web

portal of purchase• Pro-active notification of delivery to the consumer

throughout the supply chain• Simple, clear and speedy returns processes

14Innovations in E-commerce, The Stanford Global Supply Chain Management Forum and IPC, 1 February 2011

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The Future of E-commerce• Transfer of retail from Main Street to direct delivery

• Sharing strategic insights and vision

• Where is the consumer technology headed?

• Future development needs of global supply chain?

• Key issues to overcome?

• Meeting the needs of the global consumer