Canada Post’s Chopra Pushes Online Carts Over Letters

Canada Post Corp. Chief Executive Officer Deepak Chopra is betting services such as delivering packages to online shoppers will help make up for a decline in its traditional mail business.

Chopra, who took over the money-losing Ottawa-based postal agency about three years ago, is testing services such as “Delivered Tonight” to capitalize on the surge in Internet-based retailing. He says he wants to return the government-owned agency to financial stability within five years.

“We’re moving from the letterbox to a cart,” Chopra said in a May 1 interview at Bloomberg’s Toronto office, referring to the way online shoppers keep purchases before having them shipped. “What’s happening now is a bit of a race to reposition our business from letters to parcels.”

Canada Post, like its global peers, is struggling to adjust to eroding mail volumes as customers turn to the Internet for communicating and shopping. Chopra, whose agency already offers delivery service for retailers including Wal-Mart Stores Inc., Amazon.com Inc. and shopping sites such as Well.ca, calls online grocery shipments the “next battleground” in a “war for convenience” among consumers.

The agency traces its roots to 1753 when Benjamin Franklin, then U.S. deputy postmaster general based in Philadelphia, opened an office in Halifax, Nova Scotia to link Britain’s Atlantic colonies with Europe. Canada Post said in December it would stop delivering mail to about five million households in favor of community mailboxes, as part of a turnaround plan.

Annual Losses

Canada Post Corp. said today its annual loss from operations widened to C$193 million in 2013 from C$106 million in the prior year, “largely due to the continued decline in transaction mail volumes” in its Canada Post business. This marked the third consecutive annual operating loss for the company. Annual revenue from operations rose 0.4 percent to C$7.56 billion.

An April 2013 report by the Conference Board of Canada estimated the agency will lose nearly C$1 billion annually by 2020 unless it makes changes.

Chopra, 50, is embracing online commerce as the way forward for a company that has been slow to adapt. Canada Post was the last mail service in the Western world to introduce postal codes and to automate mail sorting, Chopra said. When he joined as chief executive in February 2011, Canada Post didn’t have an iPhone application, he said. The former Pitney Bowes Inc. executive set about to change that.

Early Bet

“We placed a bet very early on, literally in the first 90 days, on e-commerce,” Chopra said. “We invested in technology, invested in more scanning, more visibility.”

Chopra is testing a “Delivered Tonight” project, which guarantees Toronto shoppers evening delivery of their lunchtime online purchases from select retailers, following a similar offering by the U.S. Postal Service.

Canada Post says its winning market share from such efforts. Parcel revenue rose by C$93 million, or 7.2 percent, last year compared to 2012, and volumes rose by 5 million pieces, or 2.8 percent from the year earlier, the company said today in today’s statement. Domestic parcels revenue rose by C$68 million, or 7.5 percent, and volumes increased by 7 million pieces, or 6.9 percent.

Direct Marketing

Canada Post employees deliver about 9.4 billion pieces of mail, parcels and messages each year to 15.5 million addresses in urban, rural and remote locations across the country, according to Canada Post. About 60 percent of its revenue comes from non-letter mail business, such as direct marketing and its Purolator courier operations, Chopra said.

Volume of transaction mail, which is mostly letters, bills and statements, has fallen 30 percent per address since its decline began in 2007, Canada Post said today in its annual report. Transaction mail volumes fell by 230 million pieces, or 5.3 percent, compared to 2012, the agency said.

Letter mail, a C$3 billion business, may decline 50 percent from its peak, Chopra said.

“We’re going to have to be on the edge of our seat for the next generation, constantly reinventing,” he said.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net Paul Badertscher

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