Integrated Product Plan (IPP)
With the introduction of the IPP, the UPU is for the very first time taking a fully integrated approach to product development and ensuring speedier decision making in response to market needs.
Posts worldwide are confronted with the same challenges of declining letter volumes accompanied by an exponential increase in postal items containing goods. The cross-border mail and parcel-post market is mature, highly competitive, and highly fragmented. The market space has changed dramatically in the last two decades.
One of the challenges faced by the UPU in relation to customer needs and product features is to find ways of satisfying market requirements by rationalizing, modernizing and integrating the existing framework of products. However, as part of an industry sector involved in the cross-border exchange of goods, it will also need to be mindful of how its products fit in with emerging customs, security and regulatory requirements.
Furthermore, with expected worldwide growth of over 10 per cent per year, cross-border e-commerce represents untapped potential for the postal sector. However, a primary barrier to postal market growth is the complexity of the postal product portfolio, which is preventing Posts from fully exploiting the burgeoning opportunities offered by the e-commerce market.
The UPU's Integrated Product Plan (IPP) is designed to break down this barrier.
The sustainability of the recent increase in demand for postal items containing goods depends ultimately on the UPU continuing to meet customer needs. In this sense, the UPU's IPP constitutes a first-stage response to these recent market developments. Importantly, in such a competitive and rapidly evolving environment, the IPP needs fast, globally coordinated and integrated implementation, as well as continuous innovation, adaptation and reliability. Only by doing this will we be able to persuade international e-shoppers and e-retailers to make the Post their preferred choice for international delivery services.
The main aim of the IPP is to develop a fully integrated portfolio of postal products and adequate, competitive remuneration systems that cover the costs of delivery. This, in turn, will ensure that the opportunities created by e-commerce can be taken up by the whole UPU membership.
The aim of the Integrated Product Plan (IPP) approved by the 26th Congress is to develop a fully integrated portfolio of physical products (letter post items, parcel post items and EMS) and adequate and competitive remuneration systems that cover the costs of delivering the products. This, in turn, will ensure that opportunities created by e-commerce can be taken up by the whole UPU membership. With this in mind, it is vital that the integrated portfolio of products meet the following requirements:
- Addresses the needs of the marketplace as well as customers;
- Creates a classification based on content (documents and goods), remuneration and product features;
- Satisfies the need to provide a seamless 0–30 kg weight range for items containing goods (elimination of any weight silos);
- Eliminates product silos and creates simpler product offerings;
- Facilitates efficient compliance with emerging security and customs requirements for electronic advance data;
- Results in clear and relevant definitions and regulations;
- Ensures network sustainability and takes account of the differing capabilities of member countries.
In view of the above, a number of guiding product integration principles emerged during the development of the IPP, as described below.
Product integration principles
The principles, as contained in the IPP approved by the 26th Congress, can be summarized as fol¬lows:
- Compliance principle: Ensure the alignment of product development with emerging security and electronic customs pre-advice requirements.
- Differentiation principle: In order to reduce the overlap of the products and services and opportunities for service cannibalization, it is important to define criteria for strict differentiation of products:
- Differentiate products by content (documents/goods);
- Three basic differentiation criteria related to the product offering:
Non-priority: deferred with limited or no value-added services;
Priority: quicker with choice of value-added services;
Premium: quickest with most value-added services.
- Menu approach principle: This approach is applied to service level, price and value-added services.
- Progression principle: The application of the IPP will be in line with the dates given in paragraph 29 of Congress–Doc 39.Rev 1 (Integrated Product Plan 2017–2020), thereby allowing countries to prepare for its timely implementation.
- Simplicity principle: The implementation of the IPP will simplify the range of product categories and will also minimize overlap and eliminate redundancies, thereby heading towards a more integrated portfolio of services.
Remuneration principles: The principles adopted by the 26th Congress through resolution C 24/2016, in particular Istanbul Business Plan work proposal 024 concerning the development and implementation of an Integrated Remuneration Plan (IRP), will be followed in response to the modernization and integration of the UPU portfolio of physical products.