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SA Post Office turnaround staked on e-commerce and drone deliveries

The state-owned entity is under pressure to diversify from its core mail delivery business, which is in perennial decline.

The South African Post Office, which faces ongoing criticism from the public over delays in mail and parcel deliveries, wants to revive its long-stated plan of becoming an online shopping delivery player.

The difference this time is that the Post Office wants to enhance its outdated and manual delivery system to become a technology player that even incorporates the use of drones for speedy mail and parcel deliveries across SA.

Having lost its monopoly on package deliveries given the proliferation of faster courier companies such as DHL, Aramex and PostNet – which can also reach small towns with red post boxes on street corners – the Post Office plans to regain its crown jewel status through technology investments of an undisclosed sum.  

The first investment will see the state-owned enterprise (SOE) launch an e-commerce platform in April 2019 in collaboration with the Universal Postal Union as well as local and international online retail players.

The idea is for the Post Office to be the preferred parcel delivery partner for online retailers using its extensive reach across SA and infrastructure that includes more than 800 branches and 26 mailing centres.

In other words, the Post Office wants a bigger share of the South African online shopping logistics market.

Another feature of the Post Office’s e-commerce plan is the use of drones for parcel deliveries in SA, which would see the SOE join its international counterparts such as Japan Post and France’s La Poste, which have begun test deliveries using drones.

Post Office CEO Mark Barnes says the use of drones for deliveries is still at the investigation stage and such deliveries might only be commissioned in the long-term. “Drones are a complicated,” he told Moneyweb last week on the sidelines of his Post Office turnaround plan presentation at the Gordon Institute of Business Science. “This will take some time to launch.”

Herculean task

Barnes has been the driver of the Post Office’s move to the e-commerce space since he was roped in from the private sector three years ago to take on the herculean task of saving the financially distressed SOE. 

In the early days when Barnes took over as CEO, the Post Office was so broke that it couldn’t afford to buy toilet paper at its branches or repair bicycles for its postmen to deliver mail. And long before the phenomenon of state capture become a popular fixture in SA’s lexicon, the Post Office’s going concern status – like many other SOEs – was weakened by corruption, mismanagement and bad procurement decisions.

Barnes’s turnaround plan, which will continue until 2030, has included, among other things: cutting costs and wasteful expenditure (his first task was moving the Post Office’s head office from swanky Centurion to the Pretoria CBD, saving R4 million per month in lease expenses); receiving funding from National Treasury (it has received more than R3 billion in recapitalisation funding since 2016); and winning the contract to distribute a portion of social grants to 18 million beneficiaries.

Although the Post Office is still loss-making, recording losses of R908 million in its 2018 financial year, Barnes says the SOE has been stabilised as it has R9 billion of cash on hand.

The next phase of the turnaround plan is to invest in technology; the Post Office has suffered from 15 years of no capital investment. The technology investments will likely be funded from the Post Office’s recapitalisation funding from Treasury, its own financial resources and private capital as well as technological partners.

Mail and parcel backlog

Barnes said e-commerce will be a big revenue driver for the company in the future. Today, mail delivery is a declining and loss-making business, which makes up 70% of the Post Office’s total revenue.

Technology can also improve the Post Office’s efficiency in delivering mail and parcels, said Barnes. The Post Office handles 2.8 million pieces of post per day and 80% of this is sorted manually. Meanwhile, the handling of mail is 90% computerised by the Post Office’s international peers. “They have scanners and technology to process post faster. We will get to this level after we invest in technology.”

The Post Office suffered a mail and parcel delivery backlog that was exacerbated by a two-week strike in July 2018. At the height of the backlog, the Post Office accumulated a backlog of 48-million domestic parcels and letters. Barnes said this backlog has been cleared.

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You can not per sue technology advancement when your core business has been eroded to nothing. Start fixing first, the work ethic amongst personnel. Never mind slow deliveries, what about non deliveries due to theft. And as to pursuing drone deliveries, imagine that. Purchasing a drone capable of delivery and a operator to fly the drone is cost prohibitive. Well I suppose we must have the dreamers amongst us, the problem there are to many of them.

No need for a tax revolt. We just need to pay our taxes via cheque through the post.

Only way to fix the post office is for their own salaries to be be paid by parcel through the mail. 95% will be stolen but at least they’ll have the incentive to sort it out.

Best idea in a very long time!

The post office has an amazing network of points of presence, so deliveries and collections makes sense.

But drones is just plain stupid. Whomever is running that flag up the mast should never have gone to that 3 month harvard executive development program. Just the regulations in SA will hamstring you even if drone and operator cost could one day scale to sensible levels. Somebody still needs to explain how it would work. What, send a bakkie with ten parcels out to a point that is convenient to those ten homes and then AI pilots do their thing from the roofrack?

Also, as long as the post office is obligated to deliver slow mail, it is dead financially.

Also, they need to JV with an operator with a free hand to overhaul the corrupt and inefficient parcel business. It cannot take 7 weeks from when a foreign parcel arrives in SA, to get to me. If it gets to me and isn’t stolen.

On a positive note, I would cheer loudly if somebody could take down the thieves at DHL that want R450 for a letter cape town to johannesburg. That is exploitation

If you want distribution to all areas to be effective, partner up with Coca-Cola – they reach even the remotest areas, so all you need is a container in/behind a Coke truck and Robert is your mother’s brother.

spot on Vlad. Or the beer truck. You can buy Coke and Beer anywhere in Africa. Plus another advantage is you can buy a quick beer when you pick up the mail. QED.

I wouldn’t get too excited over this drone-talk; someone up there in HQ has probably just been smoking something lately and ended up hallucinating just as the journo arrived to do the interview…..
Once he wakes up the next morning, he’ll probably not remember anything he said.

Imagine sending a drone delivery to gangster turf in White City Jabavu Soweto. It will be shot down or pinched and used to commit an airborne cash in transit heist

Is Mark Barnes really this thick.

No, he’s just plain ignorant of what is happening under his very nose. He’s being misled by his operational managers, feeding him false info.

His report on “clear floor” referred only to the retail division of mail operations, not to mail processing or other units involved in the logistics chain. There’s still massive backlog elsewhere in the chain.

Like team sports, playing with high-tech gets you nowhere unless you have the basics right. At SAPO they’re not.

It is symptomatic of SA. The structures are so rotten that leadership cannot fix them. This goes for government, provinces and municipalities then everything in between. If Barnes at least recognised the rot (ANC cadres and the unions), attacked this and kept it simple, stupid, then he would have some credibility. But it seems, like SA (Ramaphosa suggesting computer run education!), he’s going in the opposite direction.

Mark Barnes is the same dronehead who wants to use our pension money to prop up SOEs. Like SAPO

We ordered a parcel from the US

Sent 9 January, the local Post Office is clueless where it is (tracking number provided). “Maybe somewhere at Johannesburg International Mail Centre”

Yet another previously functional SOE the ANC has “transformed”. “Bring the economy of SA to its knees”?

SAPO has destroyed itself by the usual ANC corruption incompetence,arrogance strikes theft and general uselessness and sullen service. They have been overtaken by email and courier services. Good riddance. They cannot even do basics so this drone thing is a joke like SAPO.

I lost 3 parcels already with SAPO from the US!
Not just that, I got a final notice for a traffic fine which was sent 21st January, I only got it on 5th March. No 1st notices where EVER received and now imagine my surprise that I was about to be summonsed to appear in court.

SAPO is a disgrace and an abomination!

We’ve become very cynical in SA, rightfully so but it looks like Mark Barnes is doing the business here. Well done

No I don’t think so. Let’s recap: first my post office closes down, then a year or so later the post boxes becomes dysfunctional (apparently due to non payment to the landlord) – you think we received any communications from the PO? You think they respond to emails, online queries, do you think someone answers their phones? No, nothing, dead silence. Where’s my post? Nobody knows.
Then go and look at the Florida & Roodepoort post offices, filthy to say the least.
Then try and find a post office that can issue car licenses. No chance, that service exists in name only.
Did the PO improve in the 3 years? Not relating to services I require.

The British Army has anoffence which aptly describes the attitude of PO staff to customers. Dumb Insolence

O please, with eskom in its current unreliable / useless / customer sucking state sapo’s drones’ batteries wont even be able to be recharged – rather try bicycles – it will keep the personnel slim and trim – don’t even try and compare sa with a country like japan – we are light years behind them. Drones let me immediately ask the question:”where is the connection?”. Barnes my friend day-dreaming is nice, but come back to reality – sa is for sure not a 1st world country – not even in the next 50 years. it was sapo who shot themselves in the foot and through their own neck by their reckless strikes – the much more advanced /developed private sector just stepped in and took over and now sapo will suck on the back weaner for as long as they still exist. would be interesting to know about the wonderful R9-billion cash: – is that before or after all creditors / liabilities being paid? dream on

OK, he should not have mentioned the drone thing, but hats off to Mark Barnes for saving R4M per month just by moving to cheaper offices. Show me another SOC that takes it on the chin when it comes to saving money. In the bigger scheme od things, I would not mind them being successful. But they will have to invest in automated parcel and letter sortation equipment AND staff work ethics.

SAPO should never have been in that expensive offices to start off with if they had any sense.So it is just common sense and nothing special.

Exactly. A previous CEO Motshoanetsi Lefoka was removed (suspended and then accused until she had to resign, but the fault lay elsewhere) for this move to Eco Park.

The staff seem apathetic – an intelligent looking clerk explained recently when I asked about the red and white SAPO boxes on display, that the stock is simply sent from HQ – there’s no communication first with the branch about how much might be needed, or not needed.
Hence the branch ended up drowning in these boxes.

Talking about premises – the post office at Long Beech mall is in an upmarket location. Fine, no problem, it works for customers to shop in a decent environment.
But does it have to be SO BIG!
What about wasted office space? Can’t they sublet or ask the landlord to move to a smaller spot in the mall?
Who heads up the property management portfolio at SAPO head office? Maybe that guy must do a bit of an in loco inspection and take along his tape measurement; getting from the front door to the nearest counter is like a schools big-walk fundraiser without any sponsors.
(Or perhaps part of that unnecessarily huge floor area can be used for drone training to subsidise the monthly rent.)

Is it April 1st already? Is this a joke? Not even Amazon has made this drone delivery pipe dream come true. You really think SAPO can do it? They can’t even deliver the mail through regular means! I’ve had a package sitting at JHB International since Feb 19th. What it’s doing there is anyone’s guess. No doubt they will blame the ‘backlog’. What a farce. How hard can it be to get a package from A to B? Seriously!

Postnet manages to get my stuff to me so why can’t the Post Office? Postnet does what Post Office had forgotten how to do.

Always full at Postnet and SAPO rather empty. The services have collapsed and people vote with their feet…a big warning to the regime

Really, enjoyed this Monday morning comedy break.

I did, too. Though I think there was definitely room for a discussion of making mail deliveries via postmen (/postwomen!) riding unicorns, or tearing around on flying carpets. Drones are dependent upon a reliable electricity network to charge up – we need to think outside the postbox here…

yes….words like crown jewel status, technology, drones ect. just killing me 🙂

Mr Barnes must be smoking something interesting. Today at Halfway House main PO 12 counters manned occasionally by 3 staff. Forty minutes in the queue. Airmail from Oz – 6 weeks. Airmail from UK – 3 weeks, and don’t tell me the delay was at point of origin. Guy in front of me was told his parcel is “missing”. We know what that means. Barnes must know with the current staff he has no way of making ANY progress.

I sincerely trust that the Post Office pay Mark’s salary in cash and that on introduction of the drones they delivery his salary to his home address by drone. Wonder if a little robot will alight from the drone to have the acknowledgement of receipt signed – reminds me a bit of the ET movie

South Africa’s resourceful criminals will pluck the drones out the sky before you can say ‘Mark Barnes’.

Drones.. sure. But why not get the basics right while using their Points of Presense in a better way? Why not remove personnel from parcel/mail pick up and make it operate as a digital locker type solution (without the fixed locker bit but rather automated warehouse or temporary locker?).

Yes there will still be post office persons involved so unions can’t get upset but hey.. imagine you got a notice that said a parcel or three are awaiting you at your fovourite pick up point and you book a 2 day period to pick up. You go there.. scan id, scan qr payment (or prepaid vis website when making booking) and outcomes a parcel/letter etc?

All of this is so-able with little friction to consumer and a heck of a lot less risky vs drone pipe dream. Just a thought!

“The idea is for the post office to be….”
Great idea, but if it can’t even deliver on its current mandate and get the basics right, how can it think of taking on more?
Before anyone is likely to use the planned high-tech drone service, the post office will first need to gain the trust of the public – no better way to do this than to deliver ordinary mail efficiently.
You can walk before you can crawl!

Isn’t the SAPO like the LIONS team…(been rebuilding and fixing the last 10 years ?). Between drones and SAPO workers…. Hmmm I think I will take my chance with the drones… They seemed less inclined to steal my packages !!!

These delusional clowns must have delivered my christmas card by drone to Australia Brisbane. Posted November 2018 arrived 11 March 2019. DRONEHEADS!

Hope those drones are cheap cheap, as the vast majority will never be coming back…

But in my opinion, the best saving would be to close the parcel and letter distribution system. Lock, stock and smoking barrel. Rather the system should be turned into a vendor neutral logistics system. The existing real estate and boxes can all be converted to electronic locks. However, any other alternative similar solution would be viable! The current post boxes only work for small parcels so some extra larger ones need to be build for larger ones.

The idea would be that a client registers for an electronic key via a on boarding process that would include verification of identity similar to that of RICA or FICA. They pay a key deposit of in the region of a Mandela or two. They key is associated with a specific mobile number for SMS text messages.

If a delivery is required a logistics partner, e.g. Makro, the Courier Guy or whoever, pays a Rhino to the Post Office and is provided with a post box (small or large) and the client’s key is programmed to gain access. Obviously, the larger box would cost an Elephant or Lion! The client is notified via SMS/whatsapp of the post box assigned. The distribution partner then delivers to the appropriate post box. Once the box is opened and accessed by the client it becomes available for reuse.
I have written a more detailed article on medium about the concept

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