A BANG BY POS MALAYSIA IN FUTURE :

INNOVATIVE BUSINESS IDEAS

Abdul Rahman bin Ahmad Dahlan, Amirul Asyraf Bin Abdul Azis,
Mohd Syahran, Siti Aisyah Mohamad
International Islamic University Malaysia (IIUM), 53100 Kuala Lumpur, Malaysia.

Abstract: In recent years, the postal sector has undergone radical changes which has been
proven by Pos Malaysia maintained consecutive year-on-year growth to touch record revenue of
RM2.1 billion in FY2017. The advent of Information and Communication Technology (ICT) has
added competition to the market, provide opportunity for the broadening and improvement of
services and product range. This paper identifies the method used by Pos Malaysia towards
fulfilling its ambition of becoming the key end-to-end logistics player in the domestic and global
marketplace in the digital era, driven by operational and technological developments. It also
identifies the challenges, opportunities and implications faced by the company to survive in this
digital era. The findings can use to develop the new strategic business plan to improve the Pos
Malaysia in future.

Keywords: digital transformation, logistic, postal sector.

1. INTRODUCTION

The history of Pos Malaysia Berhad in 1800s with the establishment of postal services first in the
Straits Settlements (Penang, Malacca, and Singapore) and gradually, it covered the entire Malaya
by early 20th century. Letters were delivered through dispatch riders. Instead of postage stamps,
fees were collected when letters were handed-in at the Pos office and letters posted were given a
receipt. The evolution of technology has emerged due to changes of customer behaviour and now
Pos Malaysia Berhad as a nation’s postal service provider and has a network of more than 1,000
touch points with presence across the country, encompassing post offices, Pos Mini, PAM (Pos
Automated Machines), Pos-on-Wheels & Go2U (mobile outlets), Pos Laju outlets and service
centres, Pos Laju Kiosks, Pos Laju EziBox, Pos Laju Prepaid EziDrop, e-Commerce Hubs, Pos
Laju EziDrive-Thru, as well as postal and stamp agents, offering Malaysians the most extensive
retail network. As a national postal provider,Pos Malaysia Berhad has going into a conglomerate
by offering supply chain solutions and financial services to connect Malaysians and global.

2. PROBLEM STATEMENT

Many of the postal operators from the postal industry, such as Swiss Post, Norway Post and
Poste Italiane, are currently facing major challenges to their letter postal services. They are
experiencing substantial letter volume declines due to serious competition from digital
substitutes such as e-mail. In response to the threat of digital services and the decline in letter
volumes, many postal operators have started developing digital postal services. Digital postal
services combine the traditional strengths of the postal industry with the flexibility and speed of
digital services. Some digital postal services include electronic stamps, secure e-mail services,
electronic bill presentation and payment. Digital postal services have vast potential in the areas
of financial services, e-Commerce and e-business applications. Therefore, the postal industry has
been trying to develop digital postal services through various approaches such as integrating
digital services with letter postal service or developing independent digital services all together.

However, for Pos Malaysia, the digital postal service developments have been unsuccessful in
terms of revenues. In addition, the postal industry is still uncertain about the possible business
opportunities with digital postal services. Besides, the existence of C2C customer to customer
may interrupted Pos Malaysia’s revenue because this issue does not required Pos Malaysia to be
intermediary in this activity. In our research, we refer to ‘business models’ when studying the
transformation of the postal industry in the age of ICTs. Current research has paid little attention
to business models for the postal industry. In addition, there is scarce research to support the
transformation of the postal industry in order to accommodate the potential business
opportunities for digital postal services using business models. Hence, the fundamental research
question that will be addressed in my research is: “How can Pos Malaysia accommodate the
development of digital postal services in order to be successful in the age of the ICTs?”

3. METHODOLOGY

Comparative Analysis

The demand and the use of postal service is rapidly growth nowadays and may not be sufficient
with the supply of postal service. However, globally there is organization is efficient in the postal
service like U.S. Postal Service. Therefore, by comparing with other organization like U.S Postal
Service is needed in order to have some ideas on what plan that is used by the first ranked postal
service. Thus, it may help Pos Malaysia to have some innovation and what it currently served
and set up a new benchmark for a better performance.

The Business Model Canvas

Knowing the business structure is very important in an organization as it is the framework and
picture of the business.
 Figure 1.0

Current Business Model

The Value Proposition Design Canvas

Value Proposition Canvas is a plug of the Business Model Canvas. It helps to project, test
and build the business Value Proposition of customers in a more structured and reflective
way, as the Business Model Canvas helps you during the process of design of Business
Model.
 Figure 1.1

Lenses of Innovation

This is the power tool for innovation that may guide the organization as mentioned by Rowan
Gibson as shown in
figure 1.2.
 Figure 1.2

According to this approach, it provides steps for organization like Pos Malaysia to move
forward which Pos Malaysia must see things differently from others and need to challenge,
regularly ask question how business may look in the future, able to expand the way they define
their business based on their core competencies and strategic assets, and able to put themselves
in the customer’s shoes, to see things from the customer’s perspective, to feel what the customer
feels.

Interview/Survey

Going outside is giving the exposure to the real issue happened in the real organization.
Therefore, we have conducted a phone call with one of the Pos Malaysia staff. The finding from
the session is giving us some ideas on what action can be used to help Pos Malaysia in solving
their problems and transformation. They are struggling to serve best to their customer but they
are over-control of it. They are proposing several ways to have a smooth delivery which by
having collection of postage on every morning of Sunday to Thursday. Therefore, customers
need to aware about mail collection date to avoid the delay.
LITERATURE REVIEW

Norway Post (Norway)

Norway Post currently offers digital services in the form of a digital mailbox called Digipost.
Digipost allows businesses to send mail such as transactional mail to their customers digitally.
Digipost is a closed authenticated system where residents of Norway can sign up for an account.
In addition to receiving digital mail, Digipost also offers an online storage solution. Digipost
opened to the public on April 4th 2011 and subsequently generated a huge interest. As part of the
launch, Digipost offered life-long storage of 1GB free for the consumer. In the first year, Norway
Post was able to sign up large customers in finance, energy, insurance, health care, etc. as
senders for Digipost. It was able to garner 150,000 registered users and send of 200,000 mails
via Digipost during the first two quarters in 2011.

As of 2013 with the revenue NOK 23 557, Digipost has over 250,000 registered users with many
new large companies such as DNB, KLP, Fjellinjen and Gjensidige etc. signed up. “Electronic
receipt” was the recent feature launched by Norway Post to collect and store receipts online. The
main priority of Norway Post’s Digipost is end-to-end authentication solutions for digital
communication. In 2014, the revenue has increased to NOK 24 404 million and NOK 25 507 in
2015 showing that Norway Post was doing well.

La Poste (France)
La Poste has created many digital services that are related to their letter postal services. These
include:

Stamps and franking

Stamps and franking were one of the first letter postal services offered digitally by La Poste.
Here, the offer developed into two directions. First, La Poste opened the possibility to order
stamps online and have them shipped to the buyer. Second, private individuals and businesses
have the possibility to create their own stamps. This second process is a digital one and allows
the customer to create and design his own stamps and have them shipped directly to him. Many
options allow the customer to design and create the stamps to his particular needs, including
shape, franking, etc. There is a third solution for parcels (Colissimo). Customers can order and
print out their franking labels online, by including all necessary information, such as from where
the parcel is sent, with which service it shall be delivered (with or without signature), the
destination address and the weight. The system will automatically calculate the tariff. Customers
can then print out the franking label and place it on their parcel before bringing it to a post office.

Lettre en ligne
This is an online hybrid mail solution that allows the customer to prepare his letter digitally and
have it shipped in a physical form. A user has to first register for an account. Special solutions
have been put into place for business users. The process is as follows:

(1) The customer prepares his message/letter;

(2) Via the dedicated internet site, he fills in the necessary data, including the address of the
recipient;
(3) The mailing will be paid by credit card on the website through a secured server;
(4) The message is then printed and mailed to the address of the recipient. La Poste promises to
mail all letter created and paid before 19h00 the next day.

FINDING

To meet the needs of a digitally enabled marketplace, Pos Malaysia has been steadily
transforming its businesses and moving beyond the boundaries of the traditional postal business.
Today, Pos Malaysia’s key businesses are structured as follows:
 Figure 1.3

Business Segment of Pos Malaysia Berhad

The digital transformation has impacted all business segment of Pos Malaysia as they tried to
focus on implementing ICT into their current business segments. Below is the current
performance of each business segments and how the organization tried to improve the
performance by implementing the concept of digital transformation.

Mail Business
The Group’s Postal Services today encompass the group’s Mail business under Pos Mel. Pos
Mel’s network today includes the mail business hub at the national automated mail sorting
facility in Shah Alam that branches out to 25 other mail processing centres, 332 delivery
branches and an international gateway at the Kuala Lumpur International Airport. This delivery
network also incorporates more than 8,000 postmen who deliver mail to some 8.5 million
addresses daily throughout Malaysia’s urban, sub-urban and rural areas. In FY2017, Pos Mel’s
revenue dropped by about 3.0% to RM619.7 million from RM639.1 million in the preceding
financial year. While the Mail business has been a substantial revenue contributor over the last
few years, the decline in mail volume has affected Pos Mel’s contributions. As a result, Pos
Mel’s contribution to total Group revenue dropped to 29.8% for FY2017 from 37.2% for
FY2016. In line with the efforts to alleviate declining mail volumes, Pos Mel continues to
leverage on the strength of its physical delivery network to provide innovative services and
customised solutions that meet customers’ diverse needs. The year in review saw Pos Mel
successfully launch FlexiPrepaid, an economical and affordable product targeting e-Commerce
merchants who sell low value items. Taking the form of a prepaid self-service sticker label that is
applied to light weight items, FlexiPrepaid provides customers the flexibility to use their own
packaging and to send items at a cost as low as RM3.60 to any destination in Malaysia. Together
with its track and trace as well as proof of delivery features, this innovative product effectively
addresses the needs of customers who are looking at reliability and cost efficiency for their
delivery needs. Pos Mel has also taken measures to diversify its MyDistribution or MyD offering
which is now available in Basic, Premium and Premium Plus packages. This service involves the
collection and distribution of bulky items (with a minimum weight of 30 kg) to multiple delivery
points. Tapping the hub-to-hub or point-to-point delivery and pick-up concept, the service is
available on an inter-state or intra-state basis. The mail business is continuing with its efforts to
mitigate the decline in traditional mail volume through developing innovative offerings that add
value to commercial customers and individuals. To this end, Pos Mel has been exploring the
option of combining the elements of technology and physical mail for advertising and greeting
cards. Today, the Mail business is offering its Direct Mail customers a host of creative
Augmented Reality (“AR”) features embedded in mail or physical samples to promote
customers’ products and services in a more attractive manner.

Retail Business
Today, Pos Malaysia retail arm continues to leverage on the nationwide postal network to accord
the customers convenient platforms to perform their daily transactions. These comprise regular
postal transactions, driving license and road tax renewals, purchase of motor vehicle, personal
and life insurance, shared banking services and national unit trust product transactions, bill
payments and international remittances. For FY2017, the Retail business posted lower revenues
of RM159.8 million, 9.7% lower than FY2016’s revenues of RM177.0 million. This was mainly
due to lower transaction volume at the post offices partly due to increased online payments
directly to billers. The lower commissions from Amanah Saham Nasional Berhad transactions
also contributed to Retail Business’ lower revenue for FY2017. Currently, there are 696 post
offices nationwide. The company are in the midst of installing some 90 Pos Automated
Machines (“PAM”) in the following financial year.

Courier
The Group’s courier arm, Pos Laju, continues to power the Group’s growth on the back of a
robust e-Commerce landscape that relies on courier, express and parcel solutions for the delivery
of goods and merchandise sold online. In FY2017, in tandem with increased demand for e-
Commerce last mile delivery services, the courier business grew its revenue by some 22.5% to
RM684.6 million from RM558.7 million previously. Today, Pos Laju continues to tap its
extensive courier network infrastructure to meet the delivery demands of its customers. Its
market strength currently stands at 69 standalone Pos Laju Centres, the Pos Laju counters at 696
post offices as well as 165 authorised agents nationwide. In FY2017, the courier business
bolstered its touchpoint network by strengthening existing channels and rolling out numerous
new ones.
Currently, Pos Laju has in operation 10 Pos Laju EziDrive-Thrus, 60 Pos Laju EziBox, 40 Pos
Laju Prepaid Ezidrop and 21 Pos Laju Kiosks. Located at strategic and high-traffic areas, these
facilities enable customers to collect or post their parcels in a convenient manner. Online
merchants in particular have benefitted from the convenience of being able to deliver their
products to their customers beyond the conventional operating hours of post offices and Pos Laju
centres. This has certainly done much to boost the sales volume and revenue of online
merchants.
Moving forward, Pos Laju is preparing to bring several new initiatives to the table. One of the
initiative are the plans to enhance Pos Laju’s drop-off and collection channels as well as its
points of purchase by introducing new and innovative means to provide greater customer
convenience. The organization collaboration with their e-Commerce partners for cash on
delivery and credit card services will be enhanced while several novel marketing campaigns will
be rolled out over the course of FY2018. Pos Malaysia predicts that as these new initiatives play
out, they will steadfastly reinforce Pos Laju’s dominant role in the domestic courier market.
International Business
The international business segment of the organization continues to connect Malaysia to the
world by providing a suite of international solutions comprising e-commerce transhipment
services and direct entry services. In FY2017, Pos Malaysia International posted lower revenue
of RM192.8 million, a 26.1% drop from revenue of RM260.9 million previously. The lower
revenue was attributable to lower transhipment volume arising from keen competition by
emerging postal players in the region trying to break into the transhipment business.
In line with the Group’s vision of becoming a complete end-to-end e-Fulfilment and logistics
service provider, the organization are proactively forging strategic alliances with international
players to develop regional/ international e-Commerce and postal processing hubs in Malaysia.
The vision of Pos Malaysia International will also look to tap into the outbound (out of Malaysia)
e-Commerce segment with its offer of more economical postal solutions.

Logistics
The Group completed the acquisition of the Pos Aviation Group in mid-September 2016, thereby
bolstering their newfound position as a fully integrated e-Commerce fulfilment and logistics
solutions provider. The Pos Aviation Group brings to the table three key businesses that are air
cargo and ground handling services under Pos Aviation Sdn Bhd (Pos Aviation); air freight
services under Pos Air Cargo Express Sdn Bhd (Pos ACE); and haulage and general logistics
services under Pos Logistics Berhad (Pos Logisitcs). For FY2017, the newly absorbed businesses
of the Pos Aviation Group contributed six months of revenue amounting to RM327.6 million to
Pos Malaysia.
Today, Pos Aviation’s air cargo and ground handling activities are part of a concession business
that leverages on operational efficiency as its key strategy for profitability. Pos Aviation has also
been tasked with spearheading the Group’s efforts in relation to the redevelopment of the old
LCCT to cater for future growth. Pos ACE’s primary business is the delivery of postal and
courier items from Peninsular Malaysia to Sabah and Sarawak on a daily basis. This business’
key strategy is to increase asset utilisation (essentially two leased aircrafts) by securing
additional clients domestically and regionally.
The haulage industry is currently experiencing excess capacity due to the large number of
competitors. As such, Pos Logistics’ key strategy is to develop the e-Commerce logistics
segment together with the relevant businesses within the Pos Malaysia Group, particularly in the
area of warehousing and fulfilment facilities. Pos Logistics is also setting its sights on further
developing its project logistics business.
Currently Pos Logistics has contracts with TNB Fuels Sdn Bhd and Rapid Pengerang for its
project logistics business. The infrastructure building initiatives by the Government are expected
to open up new avenues of opportunity that will help drive the project logistics business forward.

Proposed Business Model Canvas for Pos Malaysia as below :

Key partners: Key Activity: Value Customer Customer

- Ali baba - Delivery propsitions: relationship segment:
- Lazada - Renting -Convenience -Pickup service -C2C
- MAS -Secure -Door to door -Business
- Airasia
- Firefly
- Malindo
- KTM
- Prasarana
- Buses
company

Key resources: Channels

-Transportation -Masjid
-Convenience
shops

Cost structure: Revenue:

 -Transportation cost -Pickup service
-Door to door

Figure 1.4

For the key partners, Pos Malaysia may has partners with Ali Baba, Lazada as the increased of e-
commerce nowadays. Plus, to support this, the key resource required for this is the transportation
which to push this up and some cost may incurred. The transportation may include with the
partners of MAS, Airasia, Malindo, KTM, Prasarana and Buses company. Meanwhile, this
strategy is to attend the customer segment which the priority is to customer to customer C2C
which rapidly increase nowaday doing their own business. Therefore, Pos Malaysia should
concern on their customer relationship by having pickup service to their residential and door to
door pickup to avoid C2C become avoiding the use of postal service. Besides, the customer will
be more convenience and secure of their item. In addition, make use of masjid and any
convenience shop as the channel to collect things as people are all gather in Masjid and
frequently visit convenience shop to search for their items. Thus, Pos Malaysia should grab this
opportunity and fully utilize it.
The Value Propositional Design
The Environment Map
CONCLUSION AND FUTURE WORKS

As a conclusion, Pos Malaysia Berhad can be say as the monopoly player in the national postal
industry. Without many realizing it, Pos Malaysia Berhad has been strategizing its operations to
compete directly and indirectly with many companies in both domestic and international arena.
With right strategy, Pos Malaysia would be able to reinvent and improve itself by using efficient
mail services complemented like extensive delivery network, strong international partnerships,
door-to-door deliveries with complete reliability and efficiency, provides one-stop, round-the-
clock convenience e-commerce for customers while continuing to capitalize on its mass user
base. Throughout the years, Pos Malaysia has grown from strength to strength and is progressing
from being a mail and postal services provider towards becoming a dynamic communications,
financial services and supply chain solutions provider. Moving forward, Pos Malaysia will
continue to transform and innovate itself in order to maintain its relevance and competitive edge
as well as continue to connect Malaysians with the rest of the world

REFERENCES:

[1] Pos Malaysia Delivery Issues ,By ExpatGo Staff, June 6 2013, Retrieved from
http://www.expatgo.com/my/2013/06/06/pos-malaysia-delivery-issues/

[2] Oct 24 2017, Retrieved from https://www.complaintboard.com/pos-malaysia-l9798.html

[3] United States Postal Service Ranked No. 1 in the World,The Best Among Top 20 Largest
Global Economies,February 06, 2012 , Retrieved from http://about.usps.com/news/national-
releases/2012/pr12_023.htm

[4] The 4 lenses of Innovation,Retrieved from http://www.4lenses.it/en/

[5] Power Your Creative Thinking With the 4 Lenses of Innovation, March 23, 2015, Retrieved
from https://www.skipprichard.com/power-your-creative-thinking-with-the-4-lenses-of-innovation/

[6] Postal Or Courier Services In Malaysia And Singapore, Retrieved from

http://www.mymalaysiabooks.com/malaysia/Malaysia_postalservices.htm

[7] Retrieved from http://www.postennorge.com/annual-report-2015/results