There was a time (not so long ago) when Correos was basically an intermediary, a company you went to to send letters, postcards or packages. That’s how it grew. And thus he strengthened his brand for decades. The changes in demand and fierce competition in the logistics sector have, however, forced the public company to reinvent yourselfan endeavor in which he has been engaged for years without this having allowed him to abandon the red numbers that weigh down their accounts.
What has altered is its relationship with users. The last (and most revealing) example is left the decision of Correos to market insurance taking advantage of its vast network of offices and postmen, which has already earned it the union reproach.
What has happened? That Correos has led a curious movement in its efforts to diversify income and leave behind the red numbers. a few months ago reached an agreement with the company AXA to market its private insurance.
The alliance was announced in spring, when it was applied in 32 offices with a view to expanding to more than 800 branches throughout the country over the months. At that time, the Post Office detailed which would initially be dedicated to distributing policies for vehicles, homes, health and life and death insurance, although without closing the doors to expanding that offering to “any product” from AXA.
Why is it news now? The agreement It closed in February and Correos began to market AXA insurance in mayupon registration as exclusive agent. The initiative has now made headlines again for a reason that has more to do with form than substance, although it gives an idea of the extent to which the public company is committed to diversifying its services. CCOO has denounced that the company is entrusting postmen in rural areas with the task of selling policies, “a function completely unrelated to their traditional delivery work.”
“Instead of strengthening the public service and hiring more staff, the management is dedicated to improvising and diverting work towards commercial tasks that have nothing to do with Correos’ mission,” ditch CCOO, which warns from its office in Castilla y León: “The viability of the company cannot be reduced to the sale of insurance by rural postmen. Correos cannot become a network of street vendors. Its function is to communicate, connect territories and guarantee rights, not do business with private insurance.”
Why is it important? Because of the context, which is as or even more important than the measure itself. Insurance is not the public company’s first bet to strengthen its accounts in a challenging context, marked by the collapse in postal demand and an increasingly disputed parcel sector, in which it has to compete with multinationals and is losing market share.
It’s nothing new. Years ago the company already launched one of its bets more ambitious: Post Marketa space of its own e-commerce who aspired to become ‘Amazon Post Office’. The objective: to take advantage of the boom in online commerce with a differentiated commitment to mark distances from giants such as Amazon or eBay, a “market for local products in which national producers and artisans (…) come together with online buyers.”
In the presentation of the platform, in 2020, in fact focused on those two concepts, “local” and “artisan”. Today in Post Market It can be found from food and drinks to beauty, home, toys, fashion and pharmacy items.
Have there been more initiatives? Yes. A few. In an attempt to find its place again, the company has opted for prepaid cardsthe telephony and fiber or the marketing of O2 servicesfrom Telefónica. In recent years he has also experimented with such ambitious projects as Correos Cargoan air parcel transport service in the Latin America-Europe-Asia axis, and even studied launching to commercial rail transport with the help of Renfe.
Why this effort? Because Corres is very big. A lot. And the scenario in which he has to deal has changed. A lot too. With more than 50,000 employees and 2,000 offices it is usually said which is the largest public company in Spain. And how recently recognized to elDiario its strategy director, José Miguel Moreno, the company has been faced with the delicate situation of reinventing itself or disappearing. “Society is transforming and postal operators either do it or die.”
It’s not just theory. According to the data revealed a few months ago by ABCLast year, Correos recorded losses worth 95 million euros, a hole that widens the carryover in previous years and that even has taken its toll to the accounts of the State Industrial Participation Company, to which it is linked.
And how to turn it around? The million dollar question. That is what Correos has sought in part with its Strategic Plan 2024-2028, validated a little over a year ago by SEPI and that aspires to “transform, recover and reposition” the company to “change its business model.” With this purpose, it aims to reinforce its weight in the postal sector, give a boost to parcel delivery and “increase and diversify income” through “new activities, such as financial services, administrative procedures, insurance marketing or logistics services.”
If in 2023 the postal business represented around 66% of income of the public company, followed by 24% from parcel delivery and 10% from “diversification” (“new lines of business”), the idea for 2028 is to turn the tables by making these quotas represent (respectively) 49, 35 and 16%. The goal: “Reverse the losses to end the period with an Ebitda margin of 6%, a consolidated profit situation and a healthy financial position.”
Are they all challenges? No. The scenario may be complicated, as demonstrated by the fact that Correos can’t quite find the key to gain market share or the challenges it has encountered in its commitment to insurance marketing, but the company still has two good assets. Both closely interconnected. The first is its geographic penetration and vast network of operators and offices. The second, its focus as a “provider of essential services.”
“Given the decline of the postal service, providing new content to the Post Office network involves establishing a Service of General Economic Interest, for which two circumstances must occur: it must constitute a general public benefit and it must not be provided by the market without public intervention,” points out the company.
It is an interesting nuance because it allows you to look beyond the mailboxes, the usual letters and the shipments of packages. For example, in a rural area where the population has been seeing ATMs and bank offices disappear for years.
What does that mean? “There are multiple essential services that meet these requirements. We are seeing it with financial exclusion, where citizens are left out of technological banking services or are not served because they live in remote areas. Correos is the optimal solution to solve that need. And it already does. But it should be recognized and receive compensation,” advocated last year its president, Pedro Saura, who has openly recognized its commitment to a Post Office “bank” that collects “the values of the Post Office.”
It is not the only aspiration of the public company, which has also been making moves to position itself as a ‘window’ of reference between citizens and the General Administration of the State, an intermediary that allows issuing documentation, managing the payment of taxes and fines or processing public benefits, as seen a few months ago with aid for those affected by DANA. As says Morenoit’s time to change: “Transform or die.”
Images | Post Office 1 and 2
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