Should ‘starving’ Posta venture into PSV or E-commerce?

Coming a decade too late, PSV is an analog move on a digital chessboard. Posta e-commerce, however, is another story

From moving mail to moving mailers. Postal Corporation of Kenya (Posta/PCK) is diversifying into public transportation. The then Postmaster General/CEO Dr. Enock Kinara explains: “We are starting a Postliner Bus Service that will help improve on our mail circulation quality and, in addition, we shall be able to (sic) get funded to do that by the passenger.

Posta Bus is not unique to Posta

Is this a global first? No. There’s PostBus Switzerland and PostBus Uganda born over a decade ago. The former as a response to emerging disruption, the latter to fill a yawning gap, then. PostBus Switzerland has enjoyed phenomenal cultural acceptance (being an evolution from stagecoaches), and therefore, commercial success; almost as much as M-Pesa (‘mobile money’) has in Kenya.

Enter Postliner a decade later and coming in the throes of disruption, intense competition from private courier services and dwindling revenues. Has Posta bitten more than it can chew? Diversification is the riskiest of all growth strategies. Diversification in times of rapid change as we are in, is even riskier. The typical lethargy of a parastatal (government body) compounds that risk.

Posta response to disruption

To be fair, a response to disruption is necessary. I mean, when’s the last time you sent a letter by post? In fact, when’s the last time you used the word letter in reference to mail? Suffice to say, sending a letter by post is something that has ‘museum’ connotations to my teenage son. Disrupted by email, the letter degraded to snail mail category over a decade ago. And with texting then, and instant messaging platforms like WhatsApp now, e-mail itself is quickly becoming the new snail mail.

Posta e-commerce and other activities

So, yes, for sheer business survival, PCK (as with all ‘Post Offices’ globally) has to evolve. There has been a flurry of activity to shore up its dwindling revenues. In 2013, the entry of Huduma Centres, increase of mail charges, closure of 56 (8%) loss making outlets and talk of a joint venture with real estate investors in a bid to take Posta’s services to people’s doorstep.

Still, the ship leaked. In 2015, PCK spoke of launching Postal Registered Encrypted Mail (Prem) in 2016, targeting individuals and companies that rely on email for personal or official communication. In addition, alarmed by the closure of almost 18% of the outlets over a decade, the regulator, Communications Authority, gave Posta a lifeline when it announced that it had adopted new regulations requiring new postal and courier service providers to adhere to conditions such as use of Posta’s vast national networks.

As as such, PCK partnered with e-commerce platforms like Jumia and Kilimall. (Something which ICT Secretary Joseph Mucheru encourages). Then in 2016 there was M-Post, a product that allows customers to use their cell phones as virtual ‘postal’ boxes, Travel Lite, targeting university students, a write-off of unpaid fees for letter boxes that have remained in default for lengthy periods of time, and now there’s Postliner. Despite the leaking ship, the plan is to grow annual revenues by over 1,000% – from Kes. 3.6 billion ($36 million) to Kes. 40 billion ($400 million)-over the next three year strategic period.

Posta E-commerce

Paradoxically demand remains

Interestingly, though gradually waning, the demand for the post office remains. In the last decade it’s dropped by only 34% for unregistered mail locally and 24% for letters from abroad; plus, there’s been an 18% increase in rentals over the same period. These statistics must make Posta feel stuck in a time warp and possibly explain Postliner.

Posta e-commerce is not PSV venture

Still, in my view, albeit still experimental, the ‘Postliner direction’ is an attempt by a behemoth of a ship to make a 180 degree turn on a dime. Venturing into public transport is not as simple as acquiring a bus or two. If it was, the graveyard of ‘bus transport companies’ in Kenya wouldn’t be thriving. And, no, it’s not just another step from offering courier services. In fact, unchecked, diversification can kill the core business. Diversifying in this manner means taking time to create supporting systems, structures and culture. It means exposing struggling Posta to the vagaries of public transport in Kenya. Posta will be a fish out of water.

Analog move on digital chessboard

This notwithstanding, with Communications Authority reported 74% Internet penetration, in ‘digital’ Kenya, ‘Postliner’ is akin to insisting on using a carburettor engine, ‘dumb’ ‘phone, or posting a letter when the world has moved to EFI engines, smart ‘phones, and instant messaging. Coming a decade too late, it’s an analog move on a digital chessboard.

Coming in a decade too late, Postliner is like insisting on posting a letter when an instant message will do. It’s an analog move on a digital chessboard. Communication (e.g. Posta E-commerce) is the space Posta should be transforming within.

Ray of hope in Posta E-commerce

Is it all doom and gloom for Posta, then? I don’t think so.

But, to remain relevant in this disruptive time, Posta must redefine what business it is in. And it’s not post office or postal services. In my view, it’s communication . And, transport as a means of communication is fast losing currency. Plus, in Kenya, touted Africa’s Silicon Valley, communication is an industry that is growing exponentially and includes telecommunications (and therefore, banking) and media. Posta E-commerce would make sense in this space, for instance.

Whilst leveraging its vast 634 outlet national distribution network, and faced with growing competition and a rapidly growing millennial (‘digital’) market, to remain relevant, communication is the space PCK should be seeking to transform (as opposed to diversify) within.

What do you think?

You may also want to read, “Are Kenyan banks too big to fail?”


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