Postal businesses embrace new models to make gains

Viettel Post aims for revenue growth of 33.8 per cent this year, driven by growth momentum in 2023.

Deputy director general Dinh Thanh Son said, “We will focus on developing groups of customers in the fast-moving consumer goods, retail, and e-commerce industries; continue to invest in warehouse infrastructure; increase advanced IT application; build a smart border gate in the northern province of Lang Son; and put into operation 2,000 smart lockers at industrial parks and major residential areas.”

The company will also expand investment abroad, specifically in Myanmar, Cambodia, Laos, as well as open representative offices in China and Thailand, Son added.

Viettel Post has made the moves amid an acceleration of digital transformation, a boom in e-commerce, and green growth. In 2023, the e-commerce market continued to grow rapidly, up 17 per cent compared to 2022, with 70 per cent of delivery revenues coming from e-commerce platforms.

Viettel Post is well on its way to becoming a more digitally-focused organisation, photo Le Toan

“E-commerce platforms exclusively designate delivery units, leading to strong price competition in the market. SPX Express, Lazada Express, and Tiki Now not only serve their own e-commerce platforms, but are also expanding their businesses, becoming top rivals for local delivery businesses,” Son elaborated.

The company estimated an on-year increase of 30 per cent in revenue last year, and 47 per cent on-year rise in profit. This is a major increase compared to industry average growth of about 10 per cent.

Last year, the company began to pilot new growth business lines such as rail transport (both domestic and with China) and other cross-border transport, while cooperating with economic groups in mainland China and Taiwan such as Alibaba, JD, and others to build e-commerce business plans and provide sales and service solutions in Vietnam.

What is more, it has also strongly been investing in a nationwide warehouse infrastructure network and smart warehouses, while applying advanced warehouse management systems and self-propelled robots to meet the increasing needs of customers.

Similarly, 2023 marked a strong shift in mindset and operation of Vietnam Post when it successfully tested the model of separating operating business at provincial and city post offices. In addition, it made efforts to innovate, improve service quality, promote digitalisation, and utilise green postal activities to meet the needs of the market.

Vietnam Post general director Chu Quang Hao said, “In 2023, Vietnam Post had many bright spots in implementing production and business activities. We are gradually realising the aspiration of turning Vietnam Post from a traditional business into a business-centred development enterprise, confidently entering a new phase, along with innovations in the operational model.”

Its total revenues hit $757.38 million and profit reached $25.95 million last year, up 30 and 47 per cent on-year, respectively. Of the sum, revenues of the parent company rose 1.4 per cent on-year, while before-tax profit ascended 39.6 per cent.

Vietnam Post aims to increase revenue, profit, and state budget contribution by 10-13 per cent in 2024. It is focused on effectively implementing a development strategy across IT; building a presence in villages, wards, and communes; and smooth and effective management.

It also wants to ensure attractive and reliable postal financial services; an e-commerce platform for the agro-forestry-fishery ecosystem; and offer effective and reliable public administration services.

According to the Ministry of Information and Communications, the industry’s total revenue was estimated at $2.48 billion in 2023, up 9.3 per cent on-year. Postal output reached 2.5 billion postal items, an increase of 32.3 per cent from 2022.

According to the Vietnam Postal Association (VPA), the postal market is becoming more attractive to players. The number of postal businesses has doubled to over 800 since 2018, forcing local postal companies to make quicker and more proper changes to adapt and to stand firm.

VPA chairman Nguyen Truong Giang said, “Domestic postal companies face a wave of franchising, and indirect investment to expand business activities of e-commerce platforms and cross-border delivery companies. Foreign-invested businesses are constantly expanding investment sources, reducing delivery prices below cost, increasing discounts and promotions to compete for market share.”

Competition rising for e-commerce postal services Vietnam’s postal market has grown strongly in recent years, from $1.2 billion in 2019 to nearly $2.5 billion in 2023. Of the sum, estimated revenue from package services and e-commerce services reached more than $1.6 billion, or 64 per cent of the total.