In the race to market for a new service that lets Australians pay bills and statements online, the country’s leading agency was pipped at the post. As many already know, Salmat and Computershare jointly launched ‘Digital Post Australia’ (DPA) in March, beating Australia Post’s own announcement of its ‘Digital MailBox’ service by a matter of weeks. 

If you’re confused because the names sound so similar, you’re not the only one – Australia Post dragged the Salmat-Computershare venture into court over branding issues (for the purposes of this article, we’ll call these new services ‘digital postboxes’).

But if you’re also confused over what’s new, you’re not alone there either. The first response from many people was – huh? Email has been around for almost two decades. The distinction here is that digital postboxes create a secure link via the internet so consumers can allow approved companies to send them correspondence such as bank statements, telephone bills or council rates notices. The portals also provide a kind of electronic filing cabinet for the modern consumer to organise his increasingly cluttered digital life. 

Both Salmat-Computershare’s DPA offering and Australia Post’s Digital MailBox are built on third-party systems. In DPA’s case, that platform is Zumbox, developed in the US, where it has already been operating for around three years. Before the DPA deal, Zumbox already had a presence closer to home, having signed an agreement with New Zealand Post in April 2011. The Australian deal with Salmat and Computershare is a true joint venture – the two business process outsourcing giants each control 40% of the operation, while Zumbox is a 20% partner. There’s a precedent for a deal of this nature; in 2010, Zumbox clinched a similar tie-up with US business process outsourcer DST Output, which produces and delivers nearly three billion electronic and print mail pieces to more than 120 million street addresses for clients every year.

Australia Post’s service is built on the Volly platform, developed by Pitney Bowes. Both organisations have long, dignified histories in the postal business: Australia Post celebrated its bicentenary in 2009, while Pitney Bowes is no baby, with 90 years on the clock. But despite Pitney Bowes’ credentials, it has been playing catch-up with Zumbox, only announcing Volly last year. And while Zumbox has been active in the US for some time, when Digital MailBox launches in Australia in the next few months, it will be the first commercial appearance of Volly anywhere in the world. 

For some people, the next logical question is: do we really need two competing services? After all, mail providers around the world have long been sanctioned monopolies. But far from two being too many, there are a bevy of other online postbox systems on the market. In the US, another major name is Manilla, which is owned by magazine publishing giant Hearst Corporation. There is also Doxo, which is active in the States. 

These services have entered the fray at a time when mail is undoubtedly declining. Since 2007, Australia Post has recorded a fall in postage volumes of about 500 million letters, from 5.5 billion in 2006-07 to five billion posted in 2010-11. Global consultancy Accenture forecasts there will be a 50% decline in volumes by 2020.

How many is too many?

So there’s a market for digital postboxes, but how many is too many? A good person to answer that question is Matt Swain, associate director of InfoTrends. Swain has led the printing industry think tank’s research into numerous segments of mailing, including transpromo, and was behind the 2011 paper into the “The Emergence of Digital Mailbox Services”. 

The first thing Swain points out is that no matter how many providers there are, none of them will be forcing customers to juggle multiple services. He predicts that there will be a surge of providers in these early years then market forces will whittle that down to two players. 

“It will be a MySpace versus Facebook, and if that’s the analogy, the consumer will decide which user experience they prefer. But both services will have all the mailers live. The consumer will never be in a position they need to straddle two services for all their bills.”

One of the selling points behind these services is ease of use. They have their differences but the aim is the same – to have a single sign-on to manage communications from multiple providers in one location. A user logs into a single portal, a bit like an email account, but with greater security. Only approved entities will be able to send correspondence to this portal. A user might have granted the provider permission to access electronic content on his behalf so that when he logs in, he sees things like bank statements, credit card bills, phone bills and car registration renewal forms. 

Both DPA and Digital MailBox have started by working with the major mailers so that when a user first takes the plunge and sets up a digital postbox, his bank, mobile phone provider and council will already be there. This is the argument from Chuck Cordray, the president of Volly, who doesn’t agree with the “if you build it they will come” approach.

“It is like having iTunes without music. It doesn’t matter how pretty it is, if it doesn’t have content, it doesn’t have sign-on,” says Cordray, who reckons an online postbox needs two-thirds to three-quarters of mail before it becomes a compelling argument. This idea is backed up by the InfoTrends survey, in which more than half respondents said they need at least 75% of bills and statements before they would use a digital postbox.

When DPA launched, it claimed to have been in discussions with the top 30 mailers over the past six months to get them onboard before the service launches to consumers in the second half of the year. It is unknown how this plan is going – DPA refused to comment to ProPrint for this article.

Part of the mission is to create an online distribution system that exactly mirrors the post (although without one magic ingredient – print). But the benefit of online channels is not just one-way communication. Sure enough, Zumbox and Volly list a number of interactive features as key selling points for their technology. 

An Australia Post spokespersons said: “The Digital Mailbox is a new personal management app we are developing that will enable consumers to receive communications, pay bills, and store their important documents online, via a secure platform that can be accessed anytime, anywhere, using any PC or mobile device. Consumers will be able to read and print their mail, set reminders, pay bills with one click and store copies of important documents such as passports, birth certificates and tax records, which they will be able to access securely at any time.”

Get physical

The Zumbox offering seems much the same. The question is – what’s the difference? For one, both Zumbox and Volly are tied to a physical address, while providers such as Manilla and Doxo aren’t. In the first instance, a household gets an online postbox on their PC, laptop, iPad and smartphone to match the letterbox out the front. In this country, Australia Post, Salmat and Computershare already hold detailed data on households. 

Another difference is how the systems get the user data. In the US, Volly and Zumbox partner with the banks, telcos and the like to provide access to user data once the user has granted approval. On the other side, Manilla does what is dubbed “screen scraping”. The user gives Manilla their user name and password, and the system automatically trawls through the various portals for online bills and statements, “scrapes” the information, turns it into a PDF and delivers it to the user’s Manilla digital postbox.

Privacy warning bells might be going off now. We’ve all been coached never to give out our user name and passwords, yet now a third party is asking for these highly confidential details so it can go and access our financial information on our behalf. 

InfoTrends’ Swain says this isn’t the deal breaker some might expect. “What Manilla is banking on is that convenience trumps security. This is very important. Businesses say there is no way a consumer will give up their passwords to a company they have never heard of but on the flipside, consumers are saying if you can save me time, convenience trumps security.”

So this becomes a marketing battle – whose brand has the most trust? Manilla benefits from being backed by Hearst, which can run full-page ads in its huge stable of magazines, particularly those like Elle, Cosmopolitan and Marie Claire that are aimed at the women of the household, who tend to be the bill payers, says Swain.

There is at another key differentiator between some of services, and it is of big concern for those in the printing trade. When a user in the US signs up for an account with Manilla or Doxo, they automatically switch off the print-based statement, while Zumbox gives them a choice, according to Swain.

From the mailer’s point of view, you can understand the argument. After all, the big driver here is cost-savings – communicating with customers via the internet is a lot cheaper than producing paper bills and mailing them out. InfoTrends’ survey of 301 major mailers in the US found that 23% of their customers were currently signed up for paperless bill and statement delivery, while the mailers were targeting that figure to reach 64% within five years. In the increasingly connected Australian economy, it is likely that similar numbers would apply. According to the most recent Audit Bureau of Statistics on internet activities at home, 64% of the 13.3 million connected Australians paid bills online, making it the third highest online activity, after emailing and surfing the net.

In terms of this compulsory ‘switching off’ of paper, it doesn’t seem as if this will be the case locally, although it’s fair to say Australia Post wasn’t exactly clear in its explanation around this. 

“Australia Post remains fully committed to providing a world-class mail service and ensuring a fair and accessible letters service for all Australians. Australians are telling us that they want greater convenience and choice when it comes to mail delivery and, just as the traditional letterbox has been a trusted and vital part of how we communicate for the past 200 years, we think that a personal digital mailbox is the perfect complement to the letterbox as online communications increase.”

Time for a change

If digital postboxes take off, there are clear dangers for those in the mail sector, However, Rodney Frost, chief executive of Sydney-based firm Cheque-Mates, sees the rise of these services as an opportunity. There’s nothing new about the arrival of a new technology forcing a company such as his to re-imagine itself. He explains that fax arrived as an alternative to mail, then came SMS, voice messaging and email.  “We have been changing for 20 years from a mailing house to being an IT services business,” said Frost.

“From the point of view of a mailing house or distribution business, it will allow us to offer another channel to deliver to beyond the ones we already have.”

Frost has taken an agnostic stance. “It is our intention to integrate with all major digital mailbox providers. We believe this will become another channel of distribution we need to offer to remain relevant.”

He sees Cheque-Mates’ position not just about connecting upstream to these digital postbox providers but also downstream. “We believe that our smarts will also allow others in the trade to integrate through partnering with Cheque-Mates rather than having to do all of the integration work that we have already done.”

When it comes to playing nice with both providers, Frost is not just sitting on the fence – he staunchly believes there is space in the market for multiple services. 

“If the real question is ‘who will win this battle’, I honestly think they will co-exist. They are both good products.”

But he also envisages a tussle for pole position will play out in the market. He agrees with InfoTrends’ Swain that it will come down to consumer choice. “Do you want an iPhone or an Android? As a consumer, I will open both, test them both, then chose one, like Mac versus PC. They both get you to the same destination – it is just how you get there,” said Frost.

He acknowledges that both players will strive to prove their point of difference to the consumer. “What that point of difference is, you’ll have to ask them,” he added. 

“Will the difference be servicing the business or consumer market? Will it be the ability to pay bills or not? Whether you can archive and upload? There will have to be a point of difference for them both to survive, otherwise one will beat the other to death: that’s business, whether you are running a digital postbox or a service station,” said Frost.

So there’s scope for both digital postbox providers to succeed, while trade suppliers like Cheque-Mates will also find away to prosper from this emerging market. But it isn’t all rosy. A rise in digital postboxes will drive a corresponding decline in the printed mail channel. The losers, then, are companies that put ink on paper – printers. 

For now, both Digital Post Australia and Digital MailBox are focused on the top tier of mailers, where the only players of any significance are Salmat, Computershare and SEMA. The collapse of SEMA last month proved that even without the arrival of another rival channel, the essential mail sector faces intense competition. But while digital postboxes add a new front to the war, the combatants remain limited to those upper-echelon outsourcing giants.

Australia Post said its first focus is “major businesses that send large amounts of essential mail, like bills and statements” but eventually the Digital MailBox will be opened up to every Australian business.

While Pitney Bowes’ Cordray couldn’t comment on the business strategy of Australia Post or DPA, he confirmed that the Volly system could encompass mailers of any size. “There is wide range of mailers that can integrate into Volly – anything except a package can be delivered through Volly, but in the short term, bills, statements and notices are the key features. From a volume perspective in both the US and Australia, we are focusing on the largest first.”

Once high-volume users are onboard, the next tier of mailer will be in the crosshairs. It is easy to imagine these services being rolled out to schools, universities, gyms, smaller online retailers – in fact any company that transacts business online. This will hit print volumes. 

According to Stream Solutions, which manages more than 100 million direct mail pieces per annum, the decline in mail is already very real. General manager Clive Steele said: “There is a reducing number of direct mail pieces over recent years as customers have used data mining to better target selected customers groups and a number of emerging electronic communication channels that our customers are using to communicate with their customers. Essential mail, such as statement printing, is also continuing to decrease.”

He said Stream would also look for a role in the world of digital postboxes, but laid out the reality in clear terms: “Digital mailboxes will be another non-print communication channel that will reduce print volumes for printers.” 

TECHNOLOGY PLATFORMS

Zumbox

• Biggest presence in the market: active in US, New Zealand and imminent roll-out in Australia via Salmat and Computershare join venture

• Account tied to physical address

• Partners with mailers (banks, telcos) to obtain transactional data on users’ behalf 

Volly

• New entrant, backed by the world’s biggest mailing technology provider, Pitney Bowes 

• Account tied to physical address

• Partners with mailers (banks, telcos) to obtain transactional data on users’ behalf

Manilla

• Active in the US since February 2011

• Claims to have delivered more than 2 million pieces of transactional mail 

• Users provide Manilla with login details and it obtains their transactional details by “screen scraping” – trawling sites og banks, telcos etc, then converting this to PDF for delivery to user

• Owned by magazine publishing company Hearst Corporation 

Doxo

• Founded in May 2010 – financial backers include Jeff Bezos, founder of Amazon

• In a survey of more than 1,500 consumers, InfoTrends asked consumers which of a limited number of major financial and technology companies they would be most likely to try. Amazon ranked highest, Facebook lowest

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