Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

COSBOA on Australia Post and Are Media magazines

Mark Fletcher
November 18th, 2020 · No Comments

Cosboa has published an article that will interest newsagents at their website:

Has Australia Post lost its way?

It is not responsible for a fully owned government entity to be using its market power to damage small businesses.

Australia Post was once known simply as a post office and a postal delivery service, but these days the company has become something far removed from its core purpose and, if recent developments are anything to go by, it is continuing to grow into new markets.

In addition to selling books, gadgets, souvenirs, technology, drones, gift cards for big businesses, chocolates, toys and stationery, Australia Post has developed partnerships with overseas competitors of Australian small businesses and Australian communities, such as Amazon.

In essence, Australia Post is a Government Business Enterprise (GBE) using its special and protected status to take business from other SMEs.

It even offers personal finance products, such as car and travel insurance, as well as currency conversion.

The company also provides a number of digital services outside of its mail and logistics operations. These include employment screening, online payment services, and a digital identity platform.

It appears Australia Post seems to be branching out into everything it can and drifting further away from its core purpose. Shouldn’t Australia Post be focussing on getting its postal services working well instead of monopolising the products and services of small businesses?

While the use of postal agents, who are small businesses, does provide people in the private sector an opportunity to add value to their own private businesses, the major post offices continue to compete unfairly with the self-employed. This year it has gotten worse.

This year, Australian small businesses have been battling external circumstances outside of their control during the biggest economic shock in over a century. Then we find StarTrack, a dominant delivery service wholly owned by Australia Post, deciding that this is a good time to further punish small businesses by increasing its prices for businesses by 4.9%. Currently the CPI is less than one percent, but Australia Post just up and increased its price without any real reason. Small businesses who are forced to rely on slow postal services more than ever due to the pandemic are being hit again while they are already down.

And now, having formed a partnership with ‘Are Media,’ Australia Post will sell the top ten most popular magazines in Australia in Post Offices – and most likely on different or more favourable terms to small businesses such as newsagents. There are over 3000 newsagents in Australia that Australia Post seems comfortable to make collateral damage when they are vulnerable.Taking a core identifying product category like magazines from newsagents in the middle of a recession, and particularly in a pandemic when there are a range of other limitations in their businesses, is not only unprincipled, but personally distressing for the individuals involved.

Australia Post has a unique competitive advantage that other small business cannot compete with. It receives all kinds of benefits such as retail price maintenance on stamps and limited liability on damaged parcels while small businesses like newsagents operate in a more competitive environment.

Furthermore, Australia Post may not be complying with Section 16 (2) of the Australian Postal Corporation Act in relation to selling magazines and other products. It is convenient for Australia Post to play the free market card on one hand, when it wants to take from small business, but not when it comes to putting up its prices (as a monopoly) with basically no competition due to its market dominance – and this is while being supported by taxpayers.

The optics of a large government owned corporation seeking to take advantage over thousands of struggling small retailers in a pandemic-induced recession is extraordinary. This is unfair practice.

What will come next? Will Australia Post provide flowers in competition with florists? Coffee and snacks in competition with coffee shops? Clothing? Hardware? Airline tickets? All being sold from big post offices where there is the physical space to do so. Will the main streets around Australia eventually consist of one shop the Government owned Post Office – selling everything? That would kill community, choice, and jobs. In our opinion, Australia Post should stick to postal issues and leave the rest to the private sector

This issue needs to be addressed before it’s too late. In fact, in this post COVID era, the big end of town needs to be more careful and socially responsible. Small business has to be allowed to recover and while we all need to innovate, the country needs big business to show leadership. This starts with Australia Post.

It is un-Australian for Australia Post to use its competitive advantage as a protected Government Business Enterprise, with a model that lacks competitive neutrality, to target vulnerable small businesses. And as the owner and sole shareholder, the Government should make a clear statement to Australia Post that it must not pursue strategies that damage small businesses.

For years, we have seen Australia Post chip away at various product categories like greeting cards, games, toys, gifts, sewing machines and more. The government owned enterprise does this, in my opinion, leveraging the benefits of government ownership and relying on that protection and its provision of extraordinary resources to enable the corporation with a competitive advantage.

Now, newsagents can either sit back and let this Are media move play out, or they can act. I say the channel needs to act. Having 800+ corporate run government owned outlets taking money from our shops is appalling. This is the government competing with us, taking revenue and taking products we are challenged to get in our own businesses.

ALNA is part of COSBOA. They are working for newsagents on this issue through the lobbying route. Newsagents themselves need to think about what they might do about this, especially in the light of the possibility of Are media, through their owners, having a considerable stake in the Ovato business.

In case you missed it, here is a video I shot the morning after the Are Media / Australia Post announcement.

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Category: Australia Post · Newsagency challenges · Newsagency management · Social responsibility

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