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| The Canada Post Surprise |
May 6, 2003 |
By Andy Pedersen
Everyone pretty much took it as given that the internet was going to kill Canada Post. The idea that an old, cumbersome, over-regulated pseudo-governmental body could actually survive in the fast, fluid and flexible world of the ’net was,well, ridiculous.
After all, every person who set up an e-mail account was another person to abandon stamps and envelopes.
But like many other predictions about the ’net, this one turned out to be hasty. Think of other stalwarts of the old economy: the publishing industry, revitalized by Amazon.
Collecting and antique dealing, remade by eBay.
And the Internet isn’t killing Canada Post. On the contrary, the ’net may have taught it to be stronger, and the lesson could prove invaluable to entrepreneurs scared that their own business models don’t fit the new economy.
Picking its fights
Canada Post’s online persona—epost—just landed one of its biggest contracts not in spite of, but because of, its longstanding traditions.
“At the end of the day security is paramount,” said Cande Dandelé, vice-president of product management for Ceridian Canada, a payroll company that cuts cheques for more than two-and-a-half million Canadians. Soon, Ceridian’s customers will have the option of receiving pay stubs and tax forms over the ’net via epost. “[Other Internet document companies] have fabulous security, too, but epost is Her Majesty’s Mail. It’s actually got a postmark. It just makes you more confident.”
So how did Canada Post move into this new world? The first step was acknowledging some battles shouldn’t even be fought.
“What we realized early on is that there were some types of mail, like personal correspondence, that were simply lost to the post forever,” said Peter Melanson, one of the architects of Canada Post’s online presence. “But we also knew that there were lots of other things going through the mail system that, if done right,we could keep for ourselves.
“We also realized we could try to win back business that had been lost to the post for years; when was the last time the company you worked for sent your pay stub through the mail?
Soon, it might be doing that again.”
Those on the post office death watch failed to take into account that, as the only organization subject to the federal government’s Postal Act, Canada Post was in a unique position to offer a rare ’net commodity: peace of mind. If an Internet provider fails to deliver an e-mail or accidentally reveals its contents, the only real recourse—and it’s a long shot—is a lawsuit. But with Canada Post, if your e-mail is lost, intercepted or interfered with in any way, postal employees can face jail time.
“We’re not going to data mine (your information).We’re not going to drop cookies.We’re not going to peek inside electronic envelopes.We wrap up a big, warm blanket of electronic and legislative security around whatever you want to send,” Melanson said.
So the post office set its sights on the delivery of business documents such as pay stubs, tax forms and bills, and resolved to dominate that market. After all, millions of Canadians were paying their bills online, so why couldn’t those bills be delivered online, too?
Tradition, with a twist
From the start, the transition team knew it would use the post office’s traditional model in which the sender pays. It set up the epost system of secure e-mail boxes and opened it to all Canadians. Customers pay nothing to receive or check their mail, and senders also get a break—sending electronically costs just 40 cents per document, instead of the 75 cents to $2 total cost for mailing paper around the country.
But it’s no small thing to build a virtual post office, so Melanson convinced his bosses to bring in the Bank of Montreal’s online division to help. The deal was structured so that Canada Post’s online wing would actually be spun off into a separate company—epost—with the post office as a partner.
“It was a very courageous decision,” Melanson said. “Canada Post set up a company to cannibalize itself.They said to themselves, ‘If we don’t do it, somebody else will do it to us.’”
The deal worked so well that the following year, in 2000, Telus decided it wanted a piece of the action, and paid $30 million for a five per cent stake.
Then came the long grind to win customers. Municipal governments were among the earliest adopters: citizens in Calgary,Winnipeg and Toronto can receive and pay their tax and water bills and parking tickets through epost. Ottawa has announced it intends to join the club.
But epost’s two biggest accomplishments were announced in December. A deal with software-vendor Intuit allows people who receive pay stubs and tax forms through epost to easily plug them into Quicken or QuickTax software. The Intuit deal in turn spurred the deal with Ceridian.
“We’re seeing an increasing demand from people who want their pay stubs and tax forms online,” said Ceridian’s Dandelé. “It started as a trickle, but more and more companies have virtual employees and consultants and e-commuters, and this really helps us add value to our product.”
epost? What’s that?
Dandelé said she cannot even guess how many people will sign up over the next couple of years. “I truly have no idea. It’s a new foray for us. What I do know is that around my own office there seem to be a lot of people interested in the idea.
“The challenge now will be to get the word out to all of our clients and customers.”
That’s Melanson’s challenge, too. He and his team have plenty of marketing in front of them. There are lots of Canadians who don’t know about epost or how it works.
City managers in Halifax, for example, recently began to allow citizens to pay parking tickets and pet registrations online. They stopped short of allowing tax payments online, however, because they were worried that the credit card fees would cost the city too much.
“We want to make sure that the little old widow who lives on a pension and has never used a computer doesn’t have to [subsidize] you or somebody else having the convenience of paying taxes online,” said Halifax’s revenue manager Catherine Sanderson.
Fair point, Melanson concedes. But he said credit cards aren’t the only payment method that epost is using; they’ll work to set up whatever system best suits their client.
“Ottawa has chosen something which is essentially an electronic funds transfer right out of your bank account,” he said. “It has a much lower transaction fee than you’d get with a credit card.
“I guess I’ll have to put Halifax on the list of [cities] we need to make stronger presentations to.”
Aggressive? Absolutely. But Melanson said he’s known all along that would be required. “It’s going to take a lot of 40-cent transactions to get to the millions in revenue we need.”
And while he’s reluctant to divulge actual revenue or profit information because of epost’s private-sector shareholders, he does promise profitability soon. Within the decade? “Oh certainly. And hopefully much sooner than that.”
Webpost
Ceridian http://www.ceridian.com
City of Calgary http://www.calgary.ca
City of Halifax http://www.region.halifax.ns.ca
City of Ottawa http://www.city.ottawa.on.ca
City of Toronto http://www.city.toronto.on.ca
City of Winnipeg http://www.city.winnipeg.mb.ca/interhom
epost http://www.epost.ca
Intuit http://www.intuit.com/canada
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