The transformation of Singapore Post continues as the company has reported that its second quarter (three month period ending September 30) earnings increased 32.6% to S$203.8m. Excluding contributions from new subsidiaries, revenue increased 9.6%. Operating profit increased slightly less than 1.0% to S$43.7m. Expenses still remain high, up 34.9% to S$171.3m, but the company notes that the increase was attributed to the changes taking place in its business model.
By business, Mail revenue increased 13.4% to S$119.7m. The rising volume of e-commerce packages was credited for the growth. In fact, the company noted strong growth in international transhipments of these packages.
Logistics revenue increased 79.1% to S$94.6m. Growth in this group came mainly from its recent acquisitions of General Storage Company and Famous Holdings. Excluding the acquisitions, revenue growth was 12.1%.
The Retail and e-commerce business increased revenues by 4.7% to S$21.3m. Growth in the Group’s e-commerce businesses and financial services were attributed to the increase.
According to Wolfgang Baier, Group CEO of SingPost, “There is good growth momentum across our regional businesses, particularly from the new M&As. However, we remain cautious as letter mail volumes remain challenging and e-subscription continues. In view of this, we have intensified this stage of SingPost’s transformation and have been growing our regional e-commerce packages and transhipments in the international mail business.”
Indeed, the Group is quickly becoming a formidable logistics provider within the region. It is streamlining hub operations, investing in regional mailroom management systems and processes as well as rolling out domestic and international returns management solutions.
Not only is SingPost undergoing changes within traditional logistics offerings but it has also taken a creative approach in its quest to dominate the e-commerce logistics market – by building websites for businesses wanting to expand into Southeast Asia. For example, earlier this year and starting with the Singapore market, SingPost built and launched such a website for Adidas. It includes catalogue management, inventory management, returns and customer service integration. Since then, SingPost has built Adidas websites in Malaysia, Thailand and the Philippines. The reason the Group has undertaken such a task is that by connecting the front end of the business to the back end, it is able to better track sales than it can by simply waiting for sales to come in from third-party retailers using other systems. Thus, allowing the Group to respond quicker.
Perhaps such creativity is needed to expand its reach across the region. According to Wolfgang Baier, the Group plans to “capitalise on the e-commerce boom in Asia by offering low cost, end-to-end e-commerce logistics solutions to enable businesses access into Asia.”With over 200 e-commerce customers, Singapore Post appears to be on track to be a leader in Asia-Pacific e-commerce logistics. However, the field is crowded with a variety of competitors – local, regional and international. Can Singapore Post be all things e-commerce to businesses? That remains to be seen, as it needs to be mindful of rising costs as well as successfully integrating its acquisitions into its emerging business model.