The Christmas 2011 catalogue from Australia Post is packed with items which are far removed from what I would expect a post office to sell, like the Brûlée Set on page 7. While this is not a newsagency line and therefore not directly harming my business, there are plenty of items being offered by the 850 or so government owned (and protected) post offices which in my view Australia Post should not sell.
I don’t care so much about the privately owned post offices as these are small business owners. It is the government competition to which I object.
Having the government compete with you, leveraging their protected brand and foot traffic to take sales from independent small businesses is appalling.
The Howard government refused to do anything to help newsagents and other retailers when they complained they the government owned outlets were taking sales from. The Labor government is not much better.
Both sides of politics continue to let small business down by equal measure.
These products, like the Brûlée Set, a Bird Bath, Beach Bat Sets, Sewing Machine, and Children’s Books being available at the Post Office mocks the Postal Corporation Act 1989.
Section 14 of the Act requires Australia Post to provide a postal service first and foremost:
The principal function of Australia Post is to supply postal services within Australia and between Australia and places outside Australia.
Section 15 talks about permitted subsidiary functions:
A subsidiary function of Australia Post is to carry on, outside Australia, any business or activity relating to postal services.
Section 16 talks about other permitted functions:
Functions incidental businesses and activities
(1) The functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is incidental to: (a) the supplying of postal services under section 14; or (b) the carrying on of any business or activity under section 15.
(2) Without limiting subsection (1), the functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is capable of being conveniently carried on: (a) by the use of resources that are not immediately required in carrying out Australia Post’s principal or subsidiary function; or (b) in the course of: (i) supplying postal services under section 14; or (ii) carrying on any business or activity under section 15.
The last federal government and the current one have permitted Australia Post to take millions of dollars in revenue from small business. The situation is getting worse.
The federal government deregulated newspaper and magazine distribution saying that newsagents needed to get into the competitive world. It is a pity that they have not applied the same competition rules to the business they own.
It is ridiculous model funded by public money.
It would hardly get the traffic it does if it did not have monopoly for making a profit on the “stamp”.
I agree the shops should not be government owned, how would one separate the two functions Australia Post has.
a) Post Office
b) Postman.
Australia Post are a pimple on the ar$e of the business community. Appalling is a strong word Mark but not strong enough. The behaviour of both sides of Govt regarding this issue is a shameful disgrace. They should all hang their head in shame. Its about time a campaign was raised to educate the public to boycott AP except for the postal products they are supposed to be selling. I have written to federal politicians on both sides many times and been ignored every time. Because its easier to ignore the issue than have to try and explain it.
Derek, it’s not actually funded by public money as such. Aus Post returned to profit this last financial year (332.2 mil before tax) so paid its own way with a return for its (govt) stakeholder.
The number of “corporate” offices is decreasing as more of them are either franchised out or sold off as new LPO offices. I think it won’t be too far off that we see only a very small core of offices left under corporate ownership.
Regarding splitting off the two parts I don’t think it can be done. Either part relies on the other to function. Aus Post still has to deliver letters and parcels as part of its core responsibilities and I don’t think it could do so efficently by splitting into delivery and retail.
There is certainly alot of “diversity” in the current Christmas catalogue with stuff from microscopes , to tents (shade tent ?) and lego to telescopes, so yes, APs retail strategy is definately taking it away from traditional lines.
While I certainly understand what Mark is saying, so long as AP continues to provide the core services efficiently then I would expect to see an increase in the retail offerings diversity let alone that of other parts of the business.
The government funded its establishment and invests by way of protection of the monopoly.
Australia Post should adopt world best practice and eliminate government ownership, introduce competition and stock competing with business in items outside postal services.
Who would seriously take on mail deliveries though Mark when in pretty well every other country in the world that efficently delivers mail (there are plenty that don’t have a particularly efficent by our standards mail service) the Post Office is government owned and runs at a loss ? US Postal service is running at a billion dollar loss, the UK postal service runs at a multi hundred million pound loss, several European countries have dramatically cut services (Finnish Post delivers twice a week only now), Canada Post is undergoing major changes and suffered through a 5 week mail strike this year in which there were no services. I think the Danes or Dutch were going to try partially privatising their mail service but I haven’t read anything in regard to its success or otherwise. The reason why it was government protected was basically because no one else could provide the service or wanted to. I think I remember reading somewhere that postage values would have to nearly double in value to cover the real cost of mail and that’s something thats for a long time been unpalatable to pretty well any government.
While I certainly understand where you’re coming from this I think it’s something that we have to accept to have the sustainable postal service that we do have in its current form.Aus Post isn’t really that different in some regards to some of the state “owned” power suppliers where the level of government now expects something in return for their years of government ownership and cost burdens.
BTW I should state that my Post Office section (and I know you aren’t directly having a go at LPOS ) carries none of the non postal retail stuff currently though I am looking at it more closely as possible replacements for certain newsagency income streams in the future such as newspapers and magazines.
Paul – Thanks for the insight into AP, it is useful information.
Paul,
Do you have or is there a breakdown of the $332.2 million profit in terms of core i.e postal services vs non-core i.e. anything else?
if we make enough noise the govt will change things, but only the postal act to allow the PO to carry on with what its doing of course
Great post Paul, many thanks.
IF the government wants a service to exist that carries mail, OR carries newspapers, to households on a regular basis, they need to sort out how to do it. They gave up on milk, (because there are alternatives) they are NOT committed to newspapers (because there are alternatives?), are they committed to
mail services?? Time will tell.
If any body wishes to take a look at the current information regarding Australia Post. Hopefully this link will work.
http://auspost.com.au/media/documents/2010-11-integrated-annual-report-web.pdf
There is accurate information and breakdowns of the category of Post Offices.
According to the Annual report on page 130
Their are 786 Corporate outlets.
Their are 2948 Licenced Post offices which includes 29 Franchised post offices
Their are 685 community postal agencies
One of the future expectations according to Australia Post is:
Roll out our next-generation retail
model to provide customers with
greater access, convenience
and choice.
It does appear that increased profit comes from a range of sources however the increase on the Stamp appears to have had a significant impact for Australia Post.
One could say they are building their future model government owned shop on the back of the “stamp” monopoly.
I could not find the breakdowns off financials between Government Owned Shop & Postperson.
I lobbied a range of federal ministers (Helen Coonan, Joe Hockey, Fran Bailey, John Howard, Janette Howard) around six years ago on this, the Liberals had no interest in the case of newsagents losing business to a government owned post office. I fear I would encounter the same lack of interest with labor government ministers today.
We were deregulated in pursuit of inter nation best practice around competition. It is a pity, but not surprising, they do not apply the same best practice commitment to the retail businesses they own.
For me I do not really care what they sell , but I would like to be able to actually make some money off the stamps we sell instead of selling them for what we buy them for .
I understand where you’re coming from there Shauns. Stamps are pretty well the only retail core postal item that comes to mind that doesn’t attract a retail discount based on the volume of the customers purchase. Part of that is tied into the deemed currancy value of the stamp and who is allowed to sell it to place it in “circulation” under current legislation. I believe how remuneration is made to the post office on selling the stamp (it’s not simply just a commission percentage) is also a factor but would need to do some proper research to give you an exact reason.
BTW, “next generation ” retail mentioned above will involve introduction of some 24 hour accessible services. Customer convenience is seen as a way of pushing further growth.
Paul – again useful information.
I am talking about Govt owned Post Offices. If they did not have the Stamp etc profit monopoly would they be able to survive?
For us now single blokes – What the heck is a brulee set ??
Sounds like a French swear word.
That probably explains why the post office sells it.
Was just in my local PO, they now have a fairly large range of Confectionary items, Mars Bars, Kit Kats, bags of Snakes, Chewing Gum range, warm bottled water etc etc. I suppose a Coke fridge will be next and maybe i could also get Fries with that…….
Hmmm. Local PO is in a hertiage building and Head Office run, I just can’t see it EVER operating 24 hrs. They are strictly
Public Service mentality. One of my subs is an LPO and six and a half days, I doubt he’d make enough out of a 24 hr service to cover costs, I can’t think of an LPO in my town that would.
hz,
24hr operation is almost always something only applicable to cities or busy regional centres.
Derek the margin on stamps isn’t great enough to sustain the business by itself I would say from my experience. Its all the ancilliary items that make it profitable. Things like PO Boxes (very profitable) & packaging (very profitable) make the business worthwhile. Stamps on very high volume would do but are somewhere between lotto and magazines on GP return so for most LPO’s not the bread winner. I think another poster here who is an ex LPO has mentioned some more about the profitability of certain lines.
Allan, I believe the choccies etc have just been added by a number of LPOs. I wouldn’t rule out the coke fridges etc if LPOs wanted to go that way. Aus Post is pretty focused on making sure its LPOs are able to operate profitable businesses and while there may be some things that they won’t allow to be sold they are very reasonable. In conjunction businesses that operate an LPO along with another business side step that as they only have to have a specifically dedicated Post floor plan area the rest is open to the other business.
The 24 hour offices are fully automated and self service. Brisbane GPO is the first one and is the the “test bed”. It looks pretty amazing !
We buy stamps (sell in 10’s, 100’s & 200’s) from the post office and bulk buy the express post items. We charge a stamp service fee of 5c per stamp which 99% of our customers will pay (CBD convenience factor) and charge full face value for the express post bags, no bulk discount to cover the costs of providing the service to our customers.
Aaron,
Would be very careful about making public charging above the face value of a stamp… If they want to, they will go you, and more importandly you will loose and it could cost you dearly…
I know of a Newsagent on the Gold Coast some time ago who was taken on by AP… He only got away with doing what he was doing as they were dispnsed through a coin operated machine… However did loose his sub agency arrangement with them…
Peter
I am pretty sure almost (100%) it is illegal to discount or charge over the face value of a stamp in Australia
Hi BrettS
yes it is… you cannot charge over the face value… However if provided through a vending machine you can, however AP will fight you.
The agent in question took up the fight and won… and they tried to stop him seeling stamps full stop and implemented some dirty tactics with fellow Newsagents who he was trying to purchase through…
Peter
Paul
Thankyou.
I assume you guys are talking about Government Post Office regarding confectionary & coke etc. If so it is really looking similar to another business model except for magazines. Very crafty in my view or good business from AP.
Dont mention coke, they again in my view have got their fingers into every pie even the ones that are not made yet. Arghhh
Derek,
No, I was talking about the Licensed Post Offices like mine which are privately owned. I’m not aware if the Corporate stores are doing it too.
It does look like another business model and to be honest I can see my post office side of the business taking over more and more as a couple of the traditional newsagency lines start to fade such as papers and magazines. Once newspapers are out of the equation there’s almost really no need to brand as a newsagency anymore as pretty well everything else can be covered under the Aus Post banner which has a single nationally recognised corporate image unlike the mish mash of newsagency corporate images.
Aus Post is in a very strong position regarding growth thanks to the current CEO who is ex NAB. He’s used to a very aggressively fought sector that was used to turning out “innovative” new products and using corporate image perception to win business from the other major players. Whether people like it or not AP ranked in the top 5 most trusted Australian brands not long ago (and may still do so) so he’s had a great base to build upon. Aus Post is aggressively changing its business model to meet new times. Are we as newsagents also doing the same thing ?
Paul
Personally I do not have a problem with licenced privately owned P.O’s and what one has to do to earn a living.
I should be careful regarding some of my concerns and views regarding the monopoly situation.
This is an unfair advantage, biased, a leg up and as the years go by the AP Government owned P.O’s will only get stronger because of the monopoly.
One can debate that one may have competing business’s except for print in the majority in shopping centres with the gap closing because of that monopoly, it creates foot traffic.
Newsagents cannot sell stamps legally as stated for profit or get them cheaper so they can make a profit at the RRP.
I am of the view the monopoly is wrong because they are competing with other small business’s due to its monopoly.
Regarding entiltlements and goverment work hours factored into their budgets it does not add up unless you work for a government organisation. Strong views I know, its only because the playing field is not even.
I think the Brand regarding Australian Post is correct however I believe the Newsagency Brand is still very strong but must move more hastily and this can only be done now in my view through Marketing Groups, the horse has bolted in my view unfourtunately and to survive I believe Newsagents (quoted) in cities or busy regional centres should seriously consider a Marketing group for a longer future.
You have given a good insight into what the intention of AP future is leaning too and Newsagents must keep 2 steps in front of them.
I will leave the debate regarding brands for someone who knows a lot more than I do.
Just came across this re the US Postal
Service – seems they haven’t leveraged
brulee sets over there yet
http://news.yahoo.com/post-office-near-default-losses-mount-5-1b-210808129.html