Retailers welcome Australia Post privatisation, as long as it leads to cheap and speedy delivery

Australia’s retail bodies have given their support to the prospective privatisation of Australia Post.

They join industry groups like the Business Council of Australia in giving their support to the proposal. However, both retail bodies contacted by SmartCompany this morning sounded notes of caution about some potential effects of privatisation.

Paul Greenberg, chairman of the National Online Retailers Association, says what his members care about is cheap and speedy delivery. And in the parcel market, Australia Post is no monopoly.

“There’s this assumption of [Australia] Post being a monopoly. And clearly in the letter business, they have a legislative monopoly. But in the posting business, it’s a free market, one that’s increasingly fragmented and highly competitive. In a country with a small population – that’s perhaps what we need.”

However, Greenberg says, Australia Post does have a practical monopoly on many regional delivery services, as its commercial rivals are strongest in metropolitan areas. This makes it a significant player in Australia’s parcel delivery infrastructure.

Russell Zimmerman, executive director of the Australian Retailers Association, tells SmartCompany because Australia Post does not receive payment for the delivery of parcels from overseas, domestic parcel delivery effectively subsidises overseas retail.

“Our concern is that we have a strong, competitive environment,” he says. “We think there are some issues around parcel delivery. We’re, one could say, subsidising overseas delivery. And it’s unfair on Australian retailers.”

Zimmerman says the retailers he has spoken to don’t have a strong view for or against the privatisation of the government-owned entity. “But what they all tell is us that they want a good, competitive environment for parcel delivery.

“Australia Post doesn’t have a monopoly on that but they are the ones that can deliver the widest. No one else has the infrastructure to do it as well. That gives them an edge, and doesn’t make them as competitive in some areas.

“How do we expect privatisation will affect retail? We really don’t know. It’s difficult to make a call on that. But one would hope that privatisation of Australia Post would make it more competitive in the marketplace.”

Greenberg, who founded Deals Direct, says Australia Post is the most innovative and competitive he’s ever seen it, having worked with the body for more than a decade.

Nonetheless, it’s his belief that privatisation would make it more efficient.

“Every instinct in my body says privatisation will lead to a better outcome. However, I think this conversation is reasonably fresh and new, and I’d be keen to hear points of disagreement.

“Our members [online retailers] are looking for an efficient and cost-effective service. My intuitive sense is that the free market is the best way to sort that out. Particularly given Australia Post isn’t a monopoly in parcels – you can’t legislate for incredible service and pricing. The market has to sort that out.”

But Greenberg also questions whether subsidising Australia Post will have much of an influence on parcel delivery rates overall, as he says the sector is a hive of entrepreneurism right now, with many new businesses popping up to deliver things cheaply and quickly.

“I think it’s just such a vast landscape. I’m very optimistic. I think in the future, it’s not going to be one player that dominates the sector. Sure, Australia Post will be a key player. But there are so many new innovations that they certainly won’t be the online one.”