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The intersection of digital and physical commerce: How Pitney Bowes is evolving its mailing strategies


Pitney Bowes has been in business for almost 100 years, and was at the forefront of postage meter technology developed and used mostly for business purposes and to enable commerce ‘back in the day’.

“Most people think of Pitney Bowes with the red indicia at the top of envelopes. But how we enable commerce today has changed a lot,” said Mark Shearer, Executive Vice President and President, Pitney Bowes SMB Mailing.

While the company still has its core mailing business as well as a significant market share globally of the postage meter marketplace, “We have now evolved our view of the market we serve. Mail is actually going through a rather interesting transformation with physical mail often being linked to digital formats, and with physical mail being more cleverly targeted through digital analytics. There’s an interesting intersection between digital technology, physical mail and physical parcels. While we’re still focused on helping deliver physical mail and parcels, we’re also investing heavily in location intelligence technologies,” Shearer said.

“In the US we handle about 89 million packages a year through our meters with the USPS. We have built and are currently enhancing an online shipping portal for US postal service products with material discount in 20% range for people who use this tool,” he said.

Some of Pitney Bowes’ core assets are used by Facebook and twitter to recognize physical location, and to send relevant marketing messages to people based on their physical location.

“Because of our mail business we have very good databases with addresses so we can rationalize physical, geographic identifiers with businesses, addresses and use this intelligently,” he said.

The company has been investing in data analytics capabilities to make sense of the location intelligence data.

“At the end of the day there really is some synergy between analytics, location and physical mail. We’re sort of operating at that intersection of digital and physical commerce. That’s really our core sweet spot. We used to view the world as mailing. Now we view the world as shipping and mailing. And that’s a reflection of our customers’ business challenges and frankly their postage spend. Clients are spending more on office shipping, and they are spending more on e-commerce and e-retailing shipping,” Shearer said.

In the enterprise space, Pitney Bowes offers a multicarrier outbound shipping solution called SendSuite Live.

“It’s really about enabling the lowest cost shipping alternative for each parcel, based on the service level requirements. The way it works is we have an office mode and a production mode. In an office mode, say you want to get this widget from Toronto to Paris, France, what are the shipping alternatives that would meet a service level of 48 hours, and it presents all the relevant carriers from carrier libraries. It can be rules-based and present the top choices or the low cost choices as defined by user and company,” he said.

The same offering is also used in production/high volume shipping and can be deeply integrated with ERP systems.

At the enterprise level the multi carrier shipping capability seems to be important, Shearer observed.

“Although they don’t change the rules every day there is a vast variance of shipping costs for the same service level across the carriers. The problem of optimization is actually quite complex because it depends on origination and destination and boundaries and rates but I’ve seen so many cases where the same service level had a tenfold delta between low cost and high cost,” he said.

This year Pitney Bowes kicked off some market research specifically around SME shipping requirements. While the data has not yet been synthesized, “for me there were some surprises vs. what I was expecting. We did the market research in about a dozen countries, and of course the shipping environment differs so greatly. But what was really interesting to me in terms of small business shipping is that low cost for a package does not appear to be the primary decision factor. What we’re hearing is most small businesses pick a shipping carrier partner and maybe validate it once a year, and they definitely have their preferences, and even when presented with opportunities to save maybe 20 % they don’t necessarily change their preferences. I found that fascinating,” said Shearer.

In some cases the brand of carrier is considered part of the value proposition. In other cases it’s the convenience that the carrier always picks up at a certain time or is located just down the street.

In the North America solution Pitney Bowes has some 50-60 carriers included in the SendSuite offering.

“These are largely a reflection of our 1000 North America-strong client base. In terms of our crossborder carrier selection we have contractual relationships with a certain set of carriers that are managed centrally

And the client does not participate in this selection,” he said.

“I’ve spent my time in about 15 countries around the world, each of which have their own dynamics but what’s so fascinating to me is that universally the post see parcels and e-commerce as the solution to the obvious financial challenges. Going forward I think shipping infrastructure and capacity may become more of the backbone of the international posts. The other interesting thing is I’ve been doing this market research and the other requirement is clients’ desire to have simpler inbound tracking of shipments. Today they have to go on every carrier website to understand the status. They’d really like an integrated company-centric view, not a carrier-centric view, of the inbound process. One of our fastest growing products in Europe is the SendSuite tracking-multicarrier inbound shipping capability that is also available in North America,” he said.

Since 2012, Pitney Bowes has also embarked on a partnership with eBAY in the US for outbound cross-border shipping. The eBay pilot began in 2012 and has been ramping up ever since.

“The value proposition makes it much easier for an eBay retailer to conduct cross-border business. If you live in Toronto and you are trying to buy something from an eBay retailer in the US, you are presented with the fully landed cost that is guaranteed. It has enabled retailers to participate in the global marketplace with more certainty and in a much simpler way,” said Shearer.

Canada is the home base for Pitney Bowes’ cross-border shipping and e-commerce solution.

“Our development team is based here in Toronto and supports the eBay initiative,” Shearer said.

The Pitney Bowes’ EBay partnership aims to eliminate cross-border friction.

“We’ve been really hitting the gas up until now and we plan to really expand the program and increase the number of countries we can serve. We’re now at 54 from 18 countries in 2012. We’re also looking for ways to optimize the service,” said Craig Reed,Vice President of Global e-commerce at Pitney Bowes.

“We provide software services to US based retailers that allows them to price their goods accurately for international transactions, using cost engines, import- export compliance engines, and different integration points with our clients.”

The process locks in the cost with no COD, with Pitnew Bowes providing the services throughout the fulfillment processes.

“We receive the items in the US and convert the domestic inbound parcels to international compliant partners. We work with linehaul agents and inject directly into local players, i.e. integrators. We don’t actually physically touch anything but can provide all of the data and tracking,” said Reed.

He says the service shields buyers from s
ome of the things that go on.

Canada has a geographic advantage (for US sellers), “and we’ve done a really good job of lowering the cost. When you compare to some of the negotiated rates shippers get from US based carriers it’s an advantageous service for Canadians.It’s to our advantage financially to drive costs out because it’s a volume game-increasing volume and lowering cost is more advantageous to us,” Reed noted.

Since import and export compliance rules can change pretty quickly, “We have to be able to adapt to that quickly to protect the buyers. Strategically we think this is a good business to be in-the biggest merchants are not going to be equipped with watching what is happening around the world. We have a pretty streamlined process for changing calculations. The nexus of English-speaking countries tend to have very high transactional volumes because the barriers to transacting are very low. So those are the primary volume corridors.”

Where previously the Canada-US corridor would have been exclusively what has been concentrated on, “now it’s become broader, because of burgeoning demand in the BRIC nations, merchants are looking more and more to global markets to maximize their business. Canada and the US is always going to be the number one corridor for most merchants depending on what’s being sold. That said, the relative mix of demand in business from new sources will continue to grow as a percentage. That carries with it a lot of complexity which not surprisingly we’re happy to help them solve. Generally there will be a lot more choice for Canadian consumers in terms of what they want to buy-not just with eBay but with the other merchants we’re working with,” Reed said.


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