NZ Post to expand YouShop to China after luring 82,000 customers to forwarding service

New Zealand Post plans to roll out YouShop in China after attracting 82,000 kiwis to the parcel forwarding service from the UK and US that was set up to cash in on the surge in online shopping.

The state-owned postal service, which is grappling with a slump in traditional mail volumes, says 4,000 users a month are signing up to YouShop, using delivery addresses in the UK and US to buy goods from companies that won't ship overseas.

The business, which launched in September 2012, is now profitable, the company said, without giving details. That's encouraged it to set up a mailing address in China, the biggest source of imported goods to New Zealand, in the next six months.

"It's certainly doing well for us and it's continued to grow in a very pleasing sense and is proving profitable," Joe Brophy, new solutions development manager at NZ Post told BusinessDesk. "As those users register and create the YouShop account it creates an ongoing digital relationship with them and it's giving us the opportunity to leverage and promote other services through that relationship."

In 2013 New Zealanders spent an estimated $3.6 billion shopping online and the value is expected to grow to $6 billion by 2017 driven in large part by shoppers looking for cheaper prices, according to PwC. Half of Australian online purchases went to overseas retailers, a trend which has been fuelled by cheaper prices and free shipping from international vendors, the report said.

YouShop users most frequently bought clothes and accessories, with Amazon the most popular website in both the UK and US. Zara and Asos, the 'fast-fashion' chains, and online auction site eBay were among the most popular UK websites for Kiwi shoppers using YouShop, while Mac, the makeup brand, Gap and Ralph Lauren were the top US online retailers.

Shoes, cosmetics, electronics and home and kitchenwares were the most common products bought, said Brophy.

He declined to give figures for average spend per YouShop customer. It charges about $36 to ship a US$119 pair of running shoes to New Zealand from its Oregon delivery address. FedEx's international economy rate would amount to about $48, based on figures posted by a US-based online shoe retailer.

Brophy said YouShop typically steps up marketing when the New Zealand dollar is strong against the greenback or the pound and kiwis can benefit from the increased spending power of their currency.

While a large proportion of users were once or twice monthly shoppers, looking for gifts or bargains, the top 10 percent were frequent users, with some small businesses making the service a core part of their operations.

"We have a view of our users in terms of their value and in terms of the amount of parcels they're shipping using our service," Brophy said. "We see at the top end, in the top 10 percent of users, the real savvy or pro shoppers who use the service really well and know where to go to get their deals. We're probably seeing a little bit of small business usage at that top end as well."

Last year NZ Post said it was cutting as many as 2,000 jobs over the next three years and scaling back physical mail deliveries in a bid to return to profitability. It's chasing growth by focusing on logistics and parcel deliveries while expanding the wealth and insurance offerings of its Kiwibank unit.

YouShop "is very strategically aligned in terms of the core business focus now being in mail logistics and financial services," Brophy said. "Logistics is all about growth and increasing parcel volumes. We see the potential to continue growing it. "

(BusinessDesk)