The last 20 years of Azerbaijan Post’s development – ARTICLE
Over the past 20 years, Azerpost LLC, the only national postal operator, has come a long way in development. During these years, the institution started to provide a wide range of services.
A multi-sectoral approach allows individuals, businesses and organizations in Azerbaijan to effectively manage their communication needs and benefit from the logistical and financial services provided by Azerpost LLC. Currently, more than 1000 post offices and more than 4500 employees serve citizens throughout the country.
Azerbaijan Post has achieved its major successes over the past 20 years
On 7 October 2004, Azerpost LLC became a state-owned company operating as a national postal operator under the Ministry of Communications and Information Technologies of the Republic of Azerbaijan, and on 31 August 2009, the organizational and legal form of the state enterprise Azerpost was changed and the company continued its activities as Azerpost LLC.
Azerbaijan Post has achieved the greatest successes over the past 20 years. Thus, for the first time at the 23rd Congress of the Universal Postal Union (UPU), held in Bucharest in 2004, our country was elected to the Council of Administration, the highest body of the organization, in 2008 – at the 24th Congress, held in Geneva, to both highest bodies of the organization – the Council of Administration and the Postal Operations Council, in 2016 – re-elected as a member of the Postal Operations Council at the 26th Congress, held in Istanbul.
Azerpost LLC has been taking advantages of the capabilities of these systems, implementing the Global Monitoring System since 2013 and the new IPS.Post tracking system since 2016. These systems, in turn, serve to ensure transparency in the organization of mail operations on an international platform.
Over time, the post began to centralize not only its own services but also the services of the ministry to which it is subordinate. Thus, on 10 February 2017, the first “Shebeke” service center was commissioned under Azerpost. Through these centers, other agencies of the Ministry of Digital Development and Transport, as opposed to regular post offices, started to provide services. Today, there are 10 “Shebeke” service centers in the country. Six of them are located in Baku, and the remaining 4 in the cities of Jalilabad, Zagatala, Sumgayit and Aghdash respectively.
Over the past period, Azerbaijan Post has expanded its activities not only within the country but also abroad. For example, the Regional Postal Transit Center (HUB) project for cross-country e-commerce was launched in July 2016.
During the period 2003–2023, the material and technical base of the company was strengthened nationwide, post offices and branches were overhauled or their buildings were rebuilt. If we look at the statistics, we can see that during these years 887 new buildings of post offices were built, 126 buildings of post offices were overhauled, and new buildings were constructed for 11 postal branches. In addition, 367 new vehicles were purchased and put into operation.
At the same time, during 2003–2023, 73 new ATMs were installed and 1,236 post offices were connected to the central network.
The path of development started in the recent past continues today: the new strategy of Azerpost LLC, approved in 2021, provides for the modernization of infrastructure and the development of new business areas. A transformation office was also established to ensure the effective implementation of the latest strategy.
In addition, in 2021, optimization processes were launched, structural reforms have been implemented, and new services have been launched based on international experience.
Azerpost also provides financial services
Over the past period, Azerpost has expanded its activities not only as a postal operator, but also as an institution providing financial services.
On 16 April 2010 Azerpost LLC was granted a special permit (licence) to provide financial services. Based on this licence, the population in the regions of the country has free access to financial services, the range of services has been expanded by providing new services, and integration with local and international postal and financial institutions has been strengthened.
Currently, 1,116 licensed post offices provide financial services. Thus, as a result of providing financial services in post offices, opening and maintenance of postal service accounts, money transfers, opening of correspondent accounts with financial organizations, including the Central Bank, issuance of means of payment and debit cards, purchase and sale of foreign currency, collection of cash and other valuables are carried out.
In addition, Azerpost has joined the IFS/STEFI international money transfer system since 2005, MasterCard payment system in 2011, and within the country – the Clearing System of Settlements on Small Payments (XÖHKS), Real-Time Gross Settlement System (AZIPS), Government Payment Portal (HÖP) and other payment systems, and uses the capabilities of these systems.
Transition to the phase of renewal and implementation of the new strategy in the national postal sector
In today’s ecosystem, global trends are forcing postal operators to transform their traditional business model and move into new lines of business. Research shows that today, demand for letter delivery is declining sharply, but postal operators are growing in importance due to the growth of e-commerce and global trade, digital transformation and the automation of operations accelerating. Against this backdrop, postal operators’ product and service portfolios are naturally expanding.
The sharp decline in demand for classic postal services, especially for sending letters and telegrams, and as a result of digitalization, factors such as online payment of utilities have a dramatic impact on the revenues and profits of Azerpost LLC, which necessitated the introduction of a new strategy.
Thus, the new strategy of Azerpost, approved in 2021, envisaged modernization of infrastructure, development of new business areas and implementation of transformation of the institution in 3 areas:
The first of these areas is fixing the basics. It combines optimization of the post office network, digitalization of processes, modernization of IT and physical infrastructure, corporate culture, governance and commercialization.
The second area, core business expansion, includes the expansion of the CEP business (courier, express, parcel), the expansion of the financial services portfolio, and the provision of logistics services.
The last and very important area of innovation is focused on applying innovative solutions, digitalizing customer channels, developing new products and revenue streams.
As a logical continuation of all this, transformational processes were initiated in the company in 2022 for the successful implementation of the strategy.
In the first area, optimization processes were launched in 2021, with the implementation of the regionalization project, a total of 35 post offices have been created, of which 20 are regional.
The construction of a new Mail Processing Center (sorting center) and a project to upgrade the entire IT structure was also launched in order to ensure automation of work in the transport of mail, minimize the use of manual labor and, as a result, ensure fast mail delivery.
As part of the new strategy, a number of steps have been taken towards corporate culture, governance and commercialization.
In 2022, the institution established a board institute. At the same time in order to increase the monthly income of the employees, Transaction bonus system and reward for the sale of the product were formed. Also, in order to properly manage commercialization, Azermarka LLC was reorganized by merging with Azerpost LLC.
Within the second direction, three separate development directions have been planned and separate projects have been implemented in each direction.
Thus, with the launch of the Postcargo project in 2023, Azerpost aims to become a leading player in the field of electronic commerce (E-com) shipments from abroad.
To realize the second direction – in-country E-com delivery and improve the quality of service, 42 PUDOs – special service points – were put into operation in the country. An additional 20 main post offices (self-service points with automated mailboxes) were purchased to provide round-the-clock customer service. As a result of the work done, 1.4 million parcels have been delivered across the country in the 12 months of 2023. This is 271% more than the target set at the beginning of the year.
To develop the courier service, which is the third line of business, the purchase of software to develop the courier business is underway and a new marketing strategy has been formed to increase turnover.
As part of the innovation, which is the latest direction of Azerpost’s activity, moving to the stage of renewal, the status of a full member of the VISA payment system was obtained, and the issuance of cards, as well as the acceptance of cards, was actively started. At the same time, a license was obtained to establish a center for card personalization, acquiring services and acceptance of electronic payments.
It should be noted that as a result of the fact that Azerpost is a full member of VISA payment system, cashless payments are possible in at least 500 branches of Azerpost, and thus financial transparency in the implementation of the service is ensured.
The new strategy also includes a target to expand the financial services portfolio, with the investment portfolio being developed from March 2021 onwards.
In addition, the Agent Banking project was launched in a test format and the project was successfully completed. Thanks to the project Agent Banking, access to financial services will be provided by the population in the regions and as a result, support to small and medium-sized businesses will be provided. At the same time, Azerpost joined the Granat money transfer system belonging to the Russian Federation in order to increase the financial choice of post office customers.
Based on international experience, Azerpost utilized its wide postal network for various types of cooperation and ensured an increase in the institution’s income (including its employees).Thus, various businesses operating in the country under the Retail service (Azlotereya OJSC, Azercell Telecom LLC, etc.) were given the opportunity to sell their products through post offices.
Transition from loss to profit and stable financial position
Azerpost has several times ended the year with a loss. However, after the implementation of the latter strategy, the company started to operate profitably and achieved financial sustainability. In the last 3 years alone, the assets of the company have increased almost 5 times to AZN 774 million, and due to the growth of the customer base, the volume of customer balances has increased 10 times compared to 2020. Despite a net loss of AZN 7.7 million in 2020, the net profit in 2023 was AZN 4.6 million.
Azerpost has recently been active in working with financial institutions. As a result, correspondent accounts were opened at Aktif Bank in Türkiye and accounts were opened at BCP Bank in Switzerland.
A new line of business given by the victory
It is gratifying that the activity of Azerpost is not limited only to existing and new services, but due to our historical victory, a special field of activity has been formed.
Since 2020, continuous efforts have been made to organize postal work in the territories liberated from occupation. Thus, in 2020, a post office was opened in Hadrut and later in Jojug Marjanly. And in 2022, postal services were provided in Aghaly village of Zangilan region. Currently, work is underway towards the establishment of the Khankendi postal branch, identification of administrative buildings for the organization of postal services in the cities of Shusha, Lachin, Khojavand and Askaran.
Customer satisfaction as the main goal
Next year, Azerpost plans to build a new postal delivery center and implement IT infrastructure upgrade projects. In addition, it is planned to fully implement the Agent Banking project, which has already successfully passed the testing stage.
Thanks to the work done, improving the customer satisfaction index has been set as the main goal for all postal workers for 2024.
