Australia Post's shopfront expansion
Sydney Morning Herald
Thursday September 3, 2009
THE arrival into the $24 billion insurance market of the government-owned monopoly Australia Post is a cause for alarm. The head of its financial services, Andrew Wiseman, will find no quarrel with his assertion that car, home and travel insurance is "a natural fit" for a business that already handles more than $80 billion of payments and transfers every day. Australia Post has an even more powerful institutional advantage in its network of 4450 outlets nationwide that give it an established and unparalleled access to consumers.But a non-privatised Australia Post rushing headlong into the private sector is anything but a natural fit for the Australian Government, which now finds itself scrutinised for its ambitions in the banking sector.Neither is it a natural fit for the Australian consumer, who will be perhaps disoriented to discover that she is invited to buy from an employee wearing an Australia Post logo an insurance product underwritten not by Canberra, or a local franchisee, but by A&G Insurance Services, a South African insurance company for which Australia Post now provides a shopfront from Townsville to Turramurra.Personal computing and the internet have for some years eroded the traditional business of the corner post office. However, although we have become less and less likely to buy a stamp or pay a bill across a counter, Australia Post has thrived in the past two decades.Since becoming a corporate entity on July 1, 1989 €“ it opened its first PostShop in 1991 €“ Australia Post has undergone a stunning transition into a successful retail franchise whose core stationery business has become an ever more relied upon source of state and local government tax, federal excise duty and corporate income tax. Moreover, in its transition into a mature business Australia Post has enhanced greatly the value of an already trusted brand, an achievement that should not be taken lightly.Australia Post's move into general insurance mimics that of the Royal Mail in England, which insures one in 50 cars and one in 200 homes. It is also a continuation of a strategy to squeeze the most out of every consumer who steps into a post office, to maximise what marketers term "footfall yield". But Australia Post is a servant of two masters and its overarching aim is to meet twinned corporate and state expectations: the creation of new revenue streams and higher tax revenues.Australia Post will compete directly with Suncorp, the owner of GIO and AAMI; Insurance Australia Group, which runs NRMA insurance; and QBE Insurance. Between them they write 70 per cent of all policies in the country. Greater competition is needed. But not from Australia Post, which, by advancing into a market it feels built for but has no experience of, puts the state on uncomfortable footing in the financial services sector and recklessly imperils a trusted brand and the business behind it.
© 2009 Sydney Morning Herald
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