http://www.smh.com.au/business/aussie-post-to-deliver-fresh-…
Not a good time to hold shares in bricks and mortar retailers.
Auspost teams up with e-tailer tarazz.com.au
retiredfeline on 30/07/2012 - 16:30
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Australia Post is one of those government owned businesses.
True, but they don't get any subsidies, they have to self-fund so they have to fight it out in the marketplace like the rest. From Wiki:
Australia Post is a government business enterprise. It is self-funding and uses its assets and resources to earn profits, which can be reinvested in the business or returned as dividends to its sole shareholder, the Commonwealth Government.
If they have any residual advantages they are the value of the brand, and the monopoly on letters, which I think is worthless now.
I rather see an innovative Auspost succeed than lazy whinging private operators like Gerry. Customers were already deserting them for better retailers, both local and overseas, even before this.
Australia Post is a government business enterprise. It is self-funding and uses its assets and resources to earn profits, which can be reinvested in the business or returned as dividends to its sole shareholder, the Commonwealth Government.
And like all businesses, public and private that are a monopoly, they can also be run to benefit their employees be it CEO or Postman.
For the same price of a parcel from Aust Post, I can also call a courier, who picks, up, I get proof of delivery and they drop off at the door.
Now they have to smarten up because like the Aussie retailers they are losing business to overseas. The parcels posted free from China etc are delivered by the same postman. And I am sure China post isn't paying Aust Post anywhere near what we are. :)
(I used AP because the parcel was going to a PO Box)
Very much doubt this 'courier' has the same logistic power and range of delivery that auspost has for the cost, for example, sending a 3kg exp satchel to Tom price or other remote locations for 12 bucks.
Couriers have their place, but they cannot get even remotely close to ausposts logistics network. Infact alot of couriers use post to transport goods to remote locations.
Now they have to smarten up because like the Aussie retailers they are losing business to overseas. The parcels posted free from China etc are delivered by the same postman. And I am sure China post isn't paying Aust Post anywhere near what we are. :)
Faulty/incomplete reasoning. They are not "losing business" but rather disadvantaged in the same way that other local industries are from high costs. Having an obligation to service the local postal market is an albatross for Auspost in this situation because e.g. HK post has lower costs: cheaper labour, shorter distance to airport, etc; so Auspost has to recover the reciprocity imbalance due to incoming by charging the locals more for outgoing. Except that while you can make smartphones cheaper in China, Chinese postmen cannot do the deliveries here. So like all carriers they have compete hard to reduce costs with automation, streamlining, IT, etc. Which is a good thing for everybody. But unlike other carriers, they cannot opt out of the letter market, and cherry pick the courier market.
The reasoning isn't faulty. Its reality.
You may have a point in that they maybe efficient as they can be given the costs here in Australia, and without having too much knowledge on what those costs are its hard to make a proper call on that score.
They do deliver products from overseas and give those overseas shippers better rates to deliver to the same locations as our local suppliers deliver to.
Without knowing exact costs and prices they charge China post for a parcel, as I said they are most likely getting a lower rate than they get from a local retailer. Hence if for every lost local sale, they also lose the higher revenue that could come from that sale.
As you say they have to recoup the imbalance, by charging the locals more… Hmmm, now more people buy overseas and the recouping needs to be more….. A receipe for disaster on all fronts.
The agreement is reciprocal delivery of letters and has been. HK post is responsible for the local segment of delivery to someone there, and similarly Auspost is responsible for the local segment here. So as you can imagine, it costs more for Auspost to deliver a small item to Wagga Wagga than for HK post to deliver to Mong Kok.
In the past postal service handled mostly letters so the cross-subsidy was tolerable. What you have discovered is what Chinese factories discovered a while back, that with modern shipping, and if the customer is willing to wait a little, you can sell trinkets very cheap by sending from low cost origin countries like HK, SG and CN. Hence cheap SD cards, cheap USB keys, and all sorts of things that fit in a small parcel.
The charges for heavy items like parcels are negotiated and more profitable than letters, which are a declining market, due to e-comms, but the parcel market is contestable as there are other carriers so they can't charge too much.
Thanks for the insights into how the system works.
Given those, it does spell issues for Austpost, in that the old cross subsidy model they worked under, isnt going to work now. The Cherry picking model that Telstra faces in the comms market, is exactly the same here.
Telstra has had to reform. Austpost is going to have to do the same whether they like it or not.
I dont even pretend to know the answer, then again I am not being paid to.
I looked at a $2 keyring from Tarazz and postage was over $50.
Same keyring from china is $2 and free shipping.Added a wooden wine rack to the tarazz cart and shipping went to just under $100
I dont think the retailers are going to be too concerned.
Australia Post is one of those government owned businesses.
An example to all, of how government run businesses can effectively provide cheaper and more efficient services than private "for profit" businesses.
As the article linked says,
But of course the e-tailer "was approached by friend Ahmed Fahour, Australia Post's chief, about launching the service in Australia."
Mates Rates!
I just paid $9.00 for a 2 Kilo package to be shipped 60km with Aust post and I also had to drop it off at the post office. While there I picked up a 4lb package from Iherb in the US which cost $2.99 to ship (actually this last was zip as a deal, but normally it would cost $2.99) 7000 miles vs 40 miles
Gerry forget the GST go for Aust post….