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Australia Post’s digital delivery scheme may yield few returns to spender

The new virtual postman: Australia Post is about to launch its Digital MailBox.

Australia Post have every reason to be pleased with their role in the online shopping revolution. They are central to the process by providing a means of converting the virtual into the real, by delivering online shoppers’ purchases to their doorstep or mail locker. This has resulted in Australia Post “posting” a $281 million profit for 2011/2012. This was despite a $148 million loss in the traditional mail business.

On the back of this success — and perhaps over confident in its mastery of the Internet — Australia Post has announced a $2 billion investment in upgrading its national parcel network and in providing a service called the “Digital MailBox”.

Mail re-imagined in the digital world

The Digital MailBox is due to launch in the next few weeks. Details are sketchy at this point. It will be a service that provides the ability to receive secure communications from companies and organisations also using the service. It will also allow you to receive and pay bills.

The “secure” portion of Digital MailBox will be provided by Telstra’s Australian-based cloud. There will also be two-factor authentication, which provides extra security when people log into the site. This will presumably be via a text message that provides a time-based one-off password in addition to the user’s regular password.

Australia Post may also require some sort of identification process in order to set up an account so that the account identifiers can be used in the confidence that they are actually linked to the people they are supposed to be linked to.

A good idea — but hasn’t it been done before?

The idea of providing this type of service is not necessarily a bad one, given that there are already successful services that already do much of what it is proposing. To a large extent, it is an extension of what the banks and Australia Post themselves are already providing with online access to services such as BPay and Australia Post’s own POSTbillpay.

The subtle difference (possibly too subtle) with Digital MailBox is that the service can theoretically be used beyond just paying bills. Dealing with government agencies could be done through this mechanism because the communication is both secure, the party’s identities can be verified and, possibly more importantly, the communication can be tracked. The service will be free of spam and thus reduce the likelihood of important messages going missing or being missed in the general flow of other communications.

The challenge for Australia Post in launching this service is twofold. The first challenge is as previously mentioned: the competition from existing and new services that largely provide some or all of what they are proposing to offer. The second and probably crucial issue is convincing the public and organisations that the service is necessary at all.

The competition

Australia Post faces challenges from the banks — who already provide the ability to pay bills from their online services — and from direct competitors in the secure mailbox space.

One such competitor is Computershare, who has proposed a similar service called Digital Post. Digital Post is almost identical to the Digital MailBox, so much so that Australia Post took Computershare to court to try and prevent is using the name Digital Post. It lost the battle, leaving the coast clear for a race to see who can provide the service in Australia first.

Here, Computershare may have the advantage, having already launched a service publicly in the US in partnership with Zumbox. It has also launched the service in Australia in a limited private release.

A solution to a non-existent problem?

The big question however is whether digital mail is a solution looking for a problem that hasn’t already been solved. Here, I am not convinced. The technology to achieve a digital mailbox using ordinary email with digital signatures and encryption has been around for a very long time. Despite improvements in infrastructure and the ease of use, it has never really taken off, mostly because there has never been the perception that it was really needed in the first place.

Another big problem has been that digital signatures and identity services were fine as long as you were dealing with the purely digital, but never really quite accommodated the need to also operate in the physical world. One immediate irony is that to prove identity, you often have to present paper copies of bills sent to a postal address!

Even Computershare CEO Stuart Crosby had a hard time convincing a slightly sceptical Alan Kohler of ABC’s Inside Business that Digital Post Australia was a viable business proposition. He said “One of the exciting things about these sorts of businesses […] is that you don’t know the answers”.

I expect that Australia Post is none the wiser. Fortunately for them, they don’t have shareholders asking those questions, including what part of the $2 billion is going to be invested in this scheme. If they did, I expect they would be prepared to never see that money again.

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