A New Digital Master Plan For Deutsche Post, The World’s Largest Logistics Operations

The privately-run German postal service has more logistics business than any other single enterprise. Now it is taking its stab at competing in the Internet age – and the news business.

German postal box (Sludgegulper)

By Caspar Busse and Hans-Jürgen Jakobs
SÜDDEUTSCHE ZEITUNG/Worldcrunch

BONN - To “Generation Web,” printing Internet material -- whether text or visuals -- to create a hardback book seems like a weird idea. But it’s working for Deutsche Post. The German postal service says its digital application, "Social Memories," for Facebook users worldwide, has been a huge success.

Each book may contain up to 28 pages, and Deutsche Post will send it anywhere in the world for 19 euros plus postage. The offer was posted mid-May on Facebook, and according to the company 80,000 orders have already been received – while more than 10,000 Facebook users have “liked” the app.

The concept is just one brick in the company’s Internet strategy. CEO Frank Appel has made it his mission to “digitalize all areas” of Deutsche Post, which is part of Deutsche Post DHL, the world's leading mail and logistics group. The one-time McKinsey consultant is geared to opening up new opportunities even while serving customers used to the old way of doing things.

But Appel hasn’t gone all that far yet. “E-Post-Brief,” a secure, paid e-mail letter service, was launched in 2010. No statements have been released by the Bonn-based firm as to the success of the service, which has one million registered customers, and in which the company plans to invest half a billion euros by 2015. "Success doesn’t come overnight," Appel admits. "But as part of our digital business, electronic letters will be one of the cornerstones of our corporate mail division."

The former state company also wants to go digital with publications. "We have to," says Lutz Glandt, a member of the mail division board, responsible for publishing among other areas. Before joining Deutsche Post in 2005, Glandt was managing director of the Essen-based WAZ media group, Germany’s third largest publisher of magazines and newspapers. Magazine and newspaper publishers are presently among Deutsche Post’s major customers: but for how long?

The danger is that that Deutsche Post could lose huge amounts of business because of digitalization; if the trend for magazines to be distributed electronically continues to grow, it could mean a huge loss of volume.

The German postal service currently delivers some 6.7 million magazines daily – 90% of the country's magazine subscriptions are sent by mail, which means some 800 million euros annually in earnings for the company. Post board member Jürgen Gerdes says he calculated that if you took all the magazines that had been delivered by Deutsche Post in the last 60 years and piled them all up, you would reach the moon, and back.

Converting content

Deutsche Post wants to find a way to keep this business up as it turns to the Internet. One project to do just that is called “Content Converter.” Aimed at mid-sized publishers, this software will help them not only digitalize their content but ensure that it is also adapted for new devices such as tablets.

Some are concerned about possible influence Deutsche Post could exercise over content. But Glandt says the company would be a neutral conduit, considering other projects like a digital kiosk (Deutsche Telekom has in fact already launched one).

Glandt‘s division has another project up its sleeve. In March, it started a journalism exchange, DieRedaktion.de. Plans are afoot to merge it with a competing exchange called Spredder. Spredder founder Hajo Schumacher says the joint objective is to link journalists, editors and publishers to promote quality journalism.

DieRedaktion.de will work as an independent market place, where journalists, for example, can offer articles for sale and get assignments, or publishers can announce new projects for which they are seeking investors. "The project has a lot of similarities with the myhammer service for carpenters, electricians and other service providers,” says Glandt. If the project takes off, it could be further extended to include video. Target groups are the internal and external communication departments of businesses, large and small. The German Journalists’ Association (DJV) supports the project.

So far, 1,600 journalists have registered on DieRedaktion.de. The idea is to ask for a basic registration fee and 15% commission on all successful exchanges. Deutsche Post stresses that it has no intention of influencing journalists or publishers: "We have no way of influencing content or the search for business partners," Glandt explains.

The manager is familiar with trust issues; the relationship between the logistics firm and media companies has had its tense moments in the past. A few years ago, there was an attempt to hijack a large part of Deutsche Bank’s business when Axel Springer AG launched a national postal delivery service called Pin. The plan to open up a lucrative new division bombed big time, however, and Pin ended up going into bankruptcy.

The other side of the coin is that Deutsche Post has itself given publishers reasons for concern, for example by toying with the idea of publishing a free newspaper that would be nationally distributed. It’s already behind Einkauf Aktuell, which has a print-run of 18.6 million copies. With some regional variations (the paper is more successful in the northern part of the country than it in the south), it is lucrative business. Now Einkauf Aktuell has gone online where it can be leafed through without having to first remove the annoying plastic foil that covers the hard copies.

Read the original article in German