{"id":45,"date":"2015-04-14T17:30:56","date_gmt":"2015-04-14T17:30:56","guid":{"rendered":"http:\/\/cusjc.ca\/canadapost\/?p=45"},"modified":"2015-05-22T17:43:33","modified_gmt":"2015-05-22T17:43:33","slug":"for-better-and-for-worse-the-complicated-case-of-e-commerce","status":"publish","type":"post","link":"https:\/\/cusjc.ca\/canadapost\/?p=45","title":{"rendered":"For better and for worse: The complicated case of e-commerce"},"content":{"rendered":"

Since joining Canada Post in 2009, communications strategy manager Jon Hamilton has observed the steady decline of letter mail. Around 2006, Hamilton says that the, \u201c\u2026Internet started to take hold. People started to trust it to do the types of things they do through the mail\u2026paying bills, getting statements, things like that.\u201d<\/p>\n

The shift took a toll on Canada Post\u2019s nationwide operations in 2011. Although it managed to remain solvent for over a decade, a result of price hikes and organizational changes, 2011 saw before tax losses totaling $253 million. This is consistent with the negative impact that virtual communication is having on Canada Post\u2019s sole access to the collection and distribution of letter mail. While this monopoly was seen historically as an advantage, the Crown corporation\u2019s control over the universal service obligation (USO), or the duty to serve every address in the nation, has become expensive and unrealistic.<\/p>\n

In response, Canada Post commissioned an analytical report from the Conference Board of Canada in 2013. According to the assessment, the corporation delivered one billion fewer letters in 2012 than it did in 2006.<\/p>\n

Booming e-commerce<\/p>\n

Despite the doom and gloom of the Conference Board of Canada\u2019s evaluation, a silver lining appeared in its forecasts for the future. While the Internet was driving down postal rates, it was also enabling an e-commerce boom. Again and again, parcel figures trumped the trend.<\/p>\n

\"E-commerce

E-commerce packages set for delivery at Ottawa’s Canada Post mail sorting facility. [Photo \u00a9 Jordanna Tennebaum]<\/p><\/div>This silver lining reflects the growing popularity of online retailing in Canada. Studies<\/a> conducted by technology and market analysis experts at Forrester Research found that between 2010 and 2013, digital sales rose from $15 billion to $20 billion. It is expected that Canadian e-commerce levels will reach nearly $40 billion by 2019, using a 12 per cent compounded annual growth rate over the next four years.<\/p>\n

Considering surges in the number of goods ordered online, Canada Post is becoming a parcel delivery company with a small letter mail service as opposed to a letter mail corporation with a marginal package delivery service. Canada Post CEO Deepak Chopra supports this transition. In his 2012 president\u2019s message<\/a>, Chopra stated that the corporation would be remodeled over the next eight years with a specific focus on e-commerce, making Canada Post \u201c\u2026the network of the future.\u201d<\/p>\n

\u201cThe workers are vulnerable, especially when there are cheaper options. We want to keep protections so that these workers can count on steady income and hours. But there are contracting risks, especially for parcels.” -Lynne Pajot<\/p><\/blockquote>\n

Chopra\u2019s strategies follow up on Canada Post\u2019s ownership of Purolator, Canada\u2019s biggest courier company. In 2013, the Crown corporation\u2019s control over 91 per cent of Purolator brought about $66 million in pretax earnings. In 2014, this figure went up to $80 million.<\/p>\n

Notwithstanding\u00a0the financial considerations, Chopra\u2019s decision to morph Canada Post into an e-commerce enterprise is yet to be nationally accepted, both inside and outside of the corporation.<\/p>\n

Workforce threats<\/p>\n

For Canadian Union of Postal Workers (CUPW) research specialist Lynne Pajot, the growth of Canada Post\u2019s e-commerce division signifies a potential threat to the organization\u2019s members. Though letter mail is prohibited from being contracted outside of the union, packages are unregulated, which offers up a prospective platform for outsourced employees who may provide services at a lower rate.<\/p>\n

\u201cThe workers are vulnerable, especially when there are cheaper options. We want to keep protections so that these workers can count on steady income and hours. But there are contracting risks, especially for parcels,\u201d says Pajot.<\/p>\n

On the software side, providers are also concerned. In spite of Canada Post\u2019s provision of delivery services through partnerships with new e-commerce companies like Shopify and Magento, industry specialists are still wary of Canada\u2019s online retail climate.<\/p>\n

After being approached by Canada Post in 2013, Thinkwrap Commerce founder Peter Lui-Hing began linking his e-commerce business with the Crown corporation\u2019s mailing system. He recognizes the benefits of a working relationship with Canada Post that accommodates the shipment of retail goods for clients like Le Chateau, Black\u2019s Photography and Cineplex Entertainment. Even so, Lui-Hing is still critical of digital sales in Canada.<\/p>\n

\u201cYou would imagine that, for various reasons, like the fact that we have better average Internet access for most of our citizens\u2026that we would be much higher on the adoption curve for e-commerce, but we\u2019re not,\u201d says Lui-Hing.<\/p>\n

Indeed, although approximately 85 per cent of Canadians have access to the Internet, domestic businesses have been noticeably slow to launch retail websites. This becomes clear when compared with U.S. rates. In 2014, U.S. web commerce shares hit 9 per cent, whereas online retail spending in Canada is only expected to reach 10 per cent by 2019.<\/p>\n

The Standing Committee on Industry, Science and Technology began assessing why Canadians have been slow to embrace digital shopping in its 2012 report E-Commerce in Canada: Pursuing the Promise<\/em><\/a>. It revealed that small and medium sized enterprises avoided online sales for fear of customer security breaches. With reason, in 2014 alone, over one third of Canadian businesses experienced a major data breach.<\/p>\n