Strong consumers are driving the market
Digitalization is the single strongest influence on PostNord’s communication, e-commerce, and logistics business.
Communication – letter volumes declining and digital communication increasing
The way we communicate continues to change – digitalization is increasing, and we are sending fewer and fewer letters. In fact, letter volumes in Sweden have more than halved since the turn of the millennium. In Denmark, the process has been even faster, partly because of legal requirements in respect of digital communication to and from the public sector. Digitalization brings with it both challenges and opportunities.
PostNord is the only provider of a universal postal service in Denmark and Sweden. Meanwhile there is stiff competition in the market, in particular in densely populated areas. For PostNord to be able to deliver this universal service, meet the communication needs of the market, and deliver returns to its owners, the right conditions need to be in place. There is a particular need for more flexible legislation and rules that respond to changing communication needs and behaviors.
PostNord continues to adapt its mail business and activity as letter volume declines. Alongside this we are developing new services, both combinations of physical and digital communication and purely digital services.
E-commerce – record growth
E-commerce currently represents around ten percent of total retail in Sweden1) and by 2025 it is forecast to have increased to between a fifth and a third2) of the total. The growth is due to the entrance into the market of more e-commerce businesses, new technical solutions and consumers becoming increasingly accustomed to shopping online. An additional factor in this growth is a demand for increased choice and convenience.
The increasing influence of the consumer is a clear trend. Now that people are living increasingly digital lives, shopping behavior is changing rapidly. An e-retailer needs to keep up to speed to be assured of success in a market with stiffening competition. It is crucial that we understand consumers and offer solutions that match their needs.
High levels of growth in e-commerce are attracting new investors and players, which is increasing competition still further. One of the most important competitive factors is effective and seamless logistics. Delivery is now an important, integrated part of the shopping experience – consumers want to have control over when, where, and how their purchases are delivered, and what delivery will cost. Two powerful trends are the omnichannel concept, where the consumer has the same purchasing experience irrespective of channel, and information logistics, which provides track and-trace and control over deliveries in real time.
PostNord has unique coverage – we reach all households in Sweden, Denmark, Norway, and Finland. In total, PostNord has over 7,000 distribution points/partner outlets across the Nordic region. This, together with our solid expertise, means that many leading e-retailers in the Nordic countries choose us as their partner. It also ensures that there will continue to be good opportunities for growth.
A substantial proportion of PostNord’s new contracts relates to the rapidly-growing e-commerce segment. PostNord continues to work systematically to provide a good, ongoing basis for world-class e-commerce in the Nordic region. By offering common products and services and the most extensive distribution network in the Nordic countries, we bring e-retailers and consumers closer together.
1) PostNord & Svensk Digital Handel and HUI Research: E-barometer full year report 2018
2) Svensk Handel (Swedish trade association): ”Det stora detaljhandelsskiftet 2018” (The big retail shift 2018)
Logistics – increasing demand for total solutions
The logistics market includes everything from home delivery of parcels to advanced services such as third-party logistics. The major drivers are global growth and increasing international trade. Europe is the Nordic region’s most important trading partner, while trade between the Nordic countries represents a significant proportion of total trade in the region. This means that the demand for total, cross-border solutions for the Nordic region is growing.
The demand for more advanced services is increasing steadily, with significant demands in respect of delivery, flexibility, and communication.
The logistics market is characterized by stiff competition and downward pressure on prices.
Previously, competition in the Nordic market was mainly limited to traditional global and national logistics players, such as DHL, DB Schenker, Bring, GLS, and Posti, and smaller, local providers in various logistics segments. The competitive landscape is now being redesigned with the emergence of new alliances and partnerships.
New players are being established and expanding in consumer-related areas such as market places, payment solutions, and niche logistics and courier services. Their new business models are based on products or services for parts or the whole of the delivery chain and also on selling and using information shared between senders, carriers, and recipients.
Our comprehensive distribution network, our own vehicle fleet in the Nordic region, and international collaboration make PostNord a market leader in Nordic logistics. We benefit from economies of scale as we are able to handle several types of mail items together. We are further strengthening our position, due in no small way to e-commerce-related logistics, and new investment in networks and information platforms.