What the new US trade tariffs could mean for your business
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In January, Canada Post increased the cost of its stamps and mail products by 25%, a move that experts branded "risky and ineffective". However, those experts also noted the potential opportunity that this price hike offered to independently owned franchises operating out of grocery stores and pharmacies.
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Let's take a look at the potential pros and cons of the price hike and your options.
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Pros
Canada Post was in a precarious financial situation, and this price rise may allow it to remain a viable business proposition. Canadian stamp prices have always been among the cheapest in the world, so this price increase brings Canada Post better in line with its global peers.
Canada Post remaining operational strengthens competition for independent couriers and can drive cost efficiencies for businesses. It can also improve resilience for businesses operating out of rural areas who may struggle to access cheaper independent couriers who primarily focus on metropolitan areas.
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Cons
Canada Post has already lost a significant proportion of its package delivery business to independent couriers, and this price rise is unlikely to sway consumers back to it. On top of this, the letter mail portion of its business is also in decline as more customers now use digital mediums to communicate with friends and family instead of mailing letters.
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Your options
Franchises that routinely mail products to customers will need to assess their needs and consider their logistics supply chain options. They should compare the Canada Post offering to that of independent courier companies to determine which offers greater security and value for money.
Franchises that operate out of grocery stores and pharmacies could consider becoming a hub for Canada Post deliveries as this would increase foot traffic from customers arriving to collect their mail and packages who may then be persuaded to spend money in store, bolstering the business's cash flow.
People considering joining a franchise should consider the potential impact of postal strikes and postage cost increases on their fledgling business, especially if they are located in rural areas that are not well served by independent couriers and must rely on Canada Post. They should discuss their concerns with their prospective franchisor and a business advisor to determine whether an unstable postal service could compromise their ability to effectively run their business.
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Times are changing
Canada Post's operating model is almost certainly going to change. The extent of this change is not yet known, and there are risks and opportunities facing businesses of all kinds as the company goes through its transformation. Franchisees should stay on top of relevant news and regularly reevaluate their needs and supply chain to ensure stability for their customers and certainty in their financial forecasting.
