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Parcel delivery up 300 per cent in Yk
Popularity of online shopping a growth opportunity for Canada Post, says CEO

Katherine Hudson
Northern News Services
Published Friday, February 22, 2013

While the future looks bleak for Canada Post, with a $327-million deficit announced last year, there is a silver lining North of 60.

NNSL photo/graphic

Deepak Chopra, president and chief executive officer of the Canada Post Corporation, who was in Yellowknife Monday, says there are opportunities for growth in the North as more and more people turn to online shopping. - Katherine Hudson/NNSL photo

Deepak Chopra, the Crown corporation's president and chief executive office, was in Yellowknife earlier this week to check out its seemingly golden godsend where parcel delivery jumped 300 per cent last Christmas. Parcel delivery nationwide only increased by 11 per cent in November and December over the previous year.

The main reason for this? Online shopping, which is becoming a way of life in Canada and especially in the North where shopping options are limited.

"Yes, we did lose a lot of money (in 2011)," said Chopra while visiting the downtown post office Monday. "It's natural for us to look at transformational ideas.

"We need to pay attention to this. These insights are coming out in the last 12 months or so focusing on online shopping."

The deficit facing the company, the first in 16 years, is due in large part to a continued decline in letter mail and direct marketing mail volumes, such as bills, bank statements and unaddressed ad mail. People are moving online to do a lot of their business, bill paying and banking. Letter mail makes up 50 per cent of Canada Post's delivery business, while parcel and ad mail sit at about 25 per cent each. But letter mail is down 20 per cent per household over the last five years.

"One fifth of that most profitable business has gone. We have managed to cut costs, we have managed to balance the books thus far, but that's not possible anymore," said Chopra.

"Parcels are where the action is. That's another 25 per cent of our business. It's growing and it's growing double digits, but we don't believe it's enough to offset the letter mail declines."

He said even though 2011 witnessed the evaporation of the Food Mail program, operated by Canada Post, which transformed into Nutrition North, parcel deliveries are still growing in the North.

"While Food Mail has gone away, it surprised me that there are new opportunities here, possibly new services. Mail used to just be bills and statements and letters or express docs, but now they are changing to parcels and packets. So is this just a Yellowknife phenomenon? ... Where does the break happen where it goes through an inflection point where the services change from the very basic needs to now we need to have a retail presence, now we need to run transportation. That's what we're trying to analyze and understand, starting with Yellowknife."

Chopra said Canada Post is look at developing a community mailbox concept to hold parcels and thicker and longer mail such as magazines, but he said the corporation must ensure there's a payback on that capital investment.

"If that were to be the case, would that generate more shopping?"

Chopra said the next four to five years are "very critical" for Canada Post as it redefines its role, growing from its legacy as mainly a letter mail carrier system.

"We see that in the end, after going through a very painful five years or so, we see a vibrant enterprise that's going to be relevant to Canadians and it's going to be both digitally savvy and physically savvy."

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