Australia Post

The Mother’s Day catalogue from the federal government owned Australia Post shops was out to take sales from newsagents and other independent family-owned retailers.  The catalogue offers Mother’s Day cards, cookbooks, novels, CDs, DVDs, notepaper, gift pens, a sewing machine (yes, seriously!), photo frames, cameras, phones, computer mouse … all sorts of products which have absolutely nothing to do with providing a postal service.

That we have more than 800 government owned retail shops selling these items which are readily available in privately owned retail businesses is appalling.

Successive federal governments of various political leanings have allowed the Australia Post elephant to get bigger and bigger, to wreak more damage on family owned businesses like newsagencies.  As I have blogged before, I contend that the act under which Australia Post operates is being breached by their reach into non postage products and services.

None of these politicians, labour and Liberal, can claim good small business credentials when they allow Australia Post to hurt newsagents and other small family run businesses in this way.

We are the average Australians they all so often claim to serve yet they fail us by allowing the Australia Post elephant to get bigger by taking business from independent retailers.

What do I want? I want Australia Post to get out of being a general retailer and to go back to focusing on postage stamps, postal services and products which very specially relate to these two areas.   sadly, we don’t have politicians with the balls to make this happen.  The result will be more jobs lost.

Australia Post government owned stores are doing more damage to our independent and privately owned retail channel that the proposed carbon tax and any other government initiative newsagents currently have issue with.

Australia Post is currently selling Reflex copy paper for $4.99 a ream.  Even if we purchased for the same price as Australia Post, newsagents could not achieve the same reward as the government owned outlets since we do not have government protection delivering foot traffic to our retail businesses for next to nothing.

Whereas we have to actively promote our businesses to attract shoppers, Australia Post is guaranteed traffic to its corporate retail network due to its government protection.

It galls me that Australia Post uses its Government protection to continue to take sales from newsagents and other retailers operating in the stationery space.  While the Australian Government Competitive Neutrality Complaints Office says that Australia Post is doing nothing wrong, it is the sort of response I would expect to see from one arm of the government investigating another.

The Australia Post brand is one of the most recognised and respected brands in Australia.  Taxpayers have funded this situation. the brand is protected by the government.  All of this means that they land a customer for the fraction of a cost of competitors.

Personally, I am not affected by the $4.99 reflex offer as I don’t chase customers who buy copy paper on price.  that said, I know plenty of newsagents who do and who work hard to scratch a few cents from the sale of a ream of copy paper.  I feel for them and how they feel about the federal government owned business taking sales from them purely because of their government ownership.

I have been writing about Australia Post here for years and, yes, nothing has changed.  I live in hope that one day a politician of influence will understand the damage the government business does to small businesses like newsagents.

Australia Post’s 66% decline in profit over the last year is bad news for newsagents.

As the organisation battles a decline in the use of its traditional mail services, it is turning to other revenue opportunities, leveraging off its ubiquitous brand.

These other opportunities will include pursuing growth in retail.  As Coles supermarkets are finding, there is money to be made in targeting key newsagency  categories in their corporate stores.

Australia Post has been half assed in their pursuit of greeting cards, too expensive on ink and haphazard on stationery.  These are three key areas where I would expect to see significant change in the next year.

While I see such activity as outside the spirit of the legislation under which Australia Post operates, politicians of all sides have demonstrated a lack of appetite to address this and stop the government protected monopoly from competing against family owned businesses which are near their corporate stores.  Newsagents have not pressed their case well.  This must change.

John Durie writing at The Australian today has an interesting perspective on the Australia Post situation.

I have heard from a couple of people that government owned Australia Post outlets, as opposed to privately owned Licenced Post Offices, are introducing selected confectionery and convenience lines to their business.  If these reports are true, I would ask on what basis can Australia Post further move into areaswell served by private enterprise, newsagents especailly.

Paragraphs 14 through 16 of Division 1 or Part 2 of the Australian Postal Corporation Act 1989 document the functions of The Australian Postal Corporation, better known as Australia Post:

14 Functions – the principal function
The principal function of Australia Post is to supply postal services
within Australia and between Australia and places outside Australia.

15 Functions – subsidiary function
A subsidiary function of Australia Post is to carry on, outside Australia, any business or activity relating to postal services.

16 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.

I am curious how the possible move into confectionery and Australia Post’s aggressive move into the retailing of office products, greeting cards, telco recharge, Western Union money transfer and bill payment fits into the functions provided for under the Act. The only means I can see is if they are using resources “not immediately required in carrying out Australia Post’s principal or subsidiary function”.

This is a Corporation created by the Government to regulate the manufacture, distribution and retail of postal services. Around 80% of what is on the shop fllor of a government owned Australia Post soft is not incidental to the provision of postal services.

I would like to see politicians look at the revenue Australia Post is taking from family run businesses like newsagencies as a policy issue.

In writing about Australia Post I run the risk of alienating the many newsagents who operate Licenced Post Offices. I have no quarrel with them since they run broader businesses of which their Post Office counter is part. No, my quarrel is with the politicians who have turned a blind eye to the expansion of products and services offered through the Australia Post corporate stores.

Australia Post got a fair bit of news coverage yesterday.  Chairman David Mortimer and new CEO Ahmed Fahour Check were widely quoted talking up their retail network and the rest of the business.  Having read many of the reports, one is left with no doubt that Australia Post is on the move, hunting down more business.

While the stories talk about electronic business, fixing the queues in their stores and chasing revenue from superannuation business, I have no doubt that they will continue pursue revenue currently the domain of newsagents.

The stories also made it clear that regardless of who wins the federal election, Australia Post will not be privatised.

Over the last ten years, Australia Post’s 860 (or so) corporate stores have pursued Australia’s family owned newsagencies. They have directly targeted our customers by moving deeper into non postal related products of greeting cards, stationery and books.  They do this on the back of a government nurtured and protected brand.  Their monopoly gives them a lower cost of entry into new areas of business.

Politicians say that Australia Post is a best practice model.  I don’t think so.   They have no competition for mail.  In the EU, best practice is considered genuine competition for mail services.  Also in EU countries I have visited, the retail post offices are, well, post offices and not general stores like Australia Post operates today.

I would like to see newsagent representatives target the government ownership of the retail channel.  If we sit back as we have for the last ten years it will be only a matter of time before they have more of our product categories.

Check out the story in the Sydney Morning Herald and the story in The Australian.