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Delivering growth

November 7, 2014

Please give an outline of Pitney Bowes’ work
Pitney Bowes is a global company headquartered in Connecticut, USA and was the inventor of the franking machine 94 years ago. Today, we’re a technology company for the world of commerce. The dynamics of the industry have changed pretty dramatically over the recent years with digital communications coming to the fore and physical communications declining slightly. However we have seen a phenomenal growth in packets and parcels driven by e-commerce.

There are four key areas Pitney Bowes is involved in:
• Delivery systems – the delivery of letter mail, parcels and packets. We have high volume inserting systems, printing systems and sortation units for posts around the world. In the USA we have a mail services business which collects mail and sorts it to get discounts for other organizations – this is not allowed in Europe but in the USA it is a prominent business. We also have the franking machine for the small to medium sized business to ensure they can maximize on discounts available from the posts and provide the posts with a secure way of evidencing that someone is paying the correct price for postage.
• E-commerce – in the USA we handle all the cross border shipping for eBay. Customers all over the world that buy products from eBay in the USA and which need their orders to be shipped to another country (outside of the USA) will have their order processed by Pitney Bowes. We also take care of all the appropriate taxes and paperwork required to fulfil those transactions.
• Data analytics – we help organizations connect with the right people in the way they want to be connected (for example via mail, email or web link).
• Location intelligence – when Facebook or Twitter users, for example, click the button to show their location or find the location of their friends, they are using our technology.

Where are you seeing the most growth?
E-commerce is driving growth in the delivery systems, data analytics and location intelligence. People want to be able to optimize whatever communications they have and optimize their network. There are figures being released all the time on the growth of e-commerce – most recently 10% yearly growth from 2013-2016 in Europe, so this is a massive growth area and solutions are being brought out in response, such as our high volume sorter for packets and parcels.

Geographically China is going to be a growth element in the market – the recent flotation of Alibaba on the US Stock Exchange is a clear example of that – but we will see growth in the traditional European markets of UK, France and Germany. The North American market continues to grow and I think the more traditional mail market in Eastern Europe will continue to develop, as well as emerging markets in Brazil and India.

What challenges do you face in emerging markets?
Like any organization, because it’s new you don’t have the same infrastructure to build upon so you’re starting from a position further back. There are also all the regulatory requirements that you need to meet to work with the postal operator. The postal industry is heavily regulated and you have to make sure you can deal with all of those things. There are challenges that are not insurmountable but perhaps mean things take a little longer than you would like because the majority of posts are public-owned and cannot move as quickly as private enterprises.

How will you improve relationships with regulators to open up new channels?
It is a tough one because they are wearing two hats – they are a regulator of the industry but at the same time they want the market to grow. It’s important that we find ways of improving our partnership so we can help them achieve overall market growth. We also need to ensure that we can comply with the regulator at the same time as keeping some competitive differentiation for ourselves.

What did you launched at Post-Expo 2014?
We launched the Automated Parcel Sorting Solution this year. It is a modular system that helps postal logistics companies to sort packets and parcels and optimize their entry into the mail stream to save money and get the item to the recipient as quickly as possible. It uses core technology that is integrated with our other sortation solutions, so whether the system is sorting flats, letter mail, packets or parcels it works within the overarching technology interface. The system has been installed in the USA but it is brand new to Europe and Post-Expo is the first time it has been unveiled.

What are your plans for the future?
We will continue to focus on our core business of mailing and grow that as best we can, as well as moving into the new areas of data analytics and location intelligence. E-commerce will be a growth engine for the business going forward.

What challenges will you face in the future?
I think this whole blend of physical and digital is going to be really important for the business moving forward. If you had asked us that same question 10 years ago we probably would have thought that physical mail volumes would have declined faster than they have; I think we’re still seeing plenty of people who think physical mail is the right way to communicate and it is the hybrid solution of digital and physical mail that is the next trend. For example, you might send a direct mail piece to a consumer who then opens it and it prompts them go online to look at and perhaps order something. That order will then get fulfilled through an e-commerce solution, but without the direct mail piece they would never have gone online to look for that particular item. There will be a blend of different channels for different things. We all get bombarded by email and we all just hit delete; with physical mail it is harder to ignore. I think there will always be a place for physical mail, especially from a regulatory perspective. I’m not seeing many organizations any time soon saying you no longer need to have a physically signed document.

November 7, 2014


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