For Hongkong Post, an organization that earns most of its revenue from traditional postal services, it is facing tough times as fewer people are writing to each other as in the past, and more people are turning to the Internet for their correspondences as well as for paying their bills.

Estella Chow, director of Product Development, Marketing and Sales at Hongkong Post, told China Daily that its postal service business has had to face fierce competition from "electronic bills" as well as rising costs.

Estella Chow, director of Product Development, Marketing and Sales at Hongkong Post. [Photo/China Daily]

"In 2011/2012, Hongkong Post faced a tough business environment under the irreversible trend of e-substitution and continuous costs escalation," Jessie Ting, Postmaster General, said in Hongkong Post's annual report.

For the year ended March 31, 2012, Hongkong Post recorded a total revenue of HK$5.01 billion ($646.32 million), an increase of 6.2 percent over the previous year, but despite the revenue increase, it recorded an operating loss of HK$50 million in the review period, compared to a HK$136 million operating profit a year ago.

Ms Chow said 2011/12 was indeed a challenging year for Hongkong Post.

Hongkong Post admits that the bulk of its revenue is still from offering traditional postal services, and new sources of revenue was growing but only accounted for a small ratio of overall revenues.

Recognizing the challenges, Hongkong post is striving to meet the market demands and to counter the e-substitution trend through exploring the market potentials of direct mail, a service that is targeting small and medium-sized enterprises in Hong Kong, said Chow.

"By using data from (the) census (and statistics department), Hongkong Post has developed some 'profile data' which contains 28 different categories of customer groups, like the people who are already retired, families with small children as well as young office workers," she said.

This "profile data" is provided to local SMEs to help them to reach out to their target customers. Sometimes leaflets from real-estate agents, local restaurants or nearby shopping malls are mailed to people, and they are able to do this from tapping the profile data provided by Hongkong Post.

Hongkong Post is also collaborating with China Post on a cross-border direct mail service which enables local SMEs to promote their brands and enhance brand recognition on the mainland market.

Chow said that currently this cross-border direct mail service covers 11 major cities on the mainland, including Beijing, Shanghai and Guangzhou.

The findings of a study on consumer and marketer behavior in the use of communication channels confirm that direct mail is a very effective marketing tool that significantly complements other communication media, according to its annual report.

In the light of the positive findings, Hongkong Post is developing a new multi-media direct marketing online platform that allows its costumers to plan, create and launch direct marketing campaigns.

Hongkong Post also launched a "Make My Card" service under its e-Post service, said Chow, explaining that its customers only need to upload their pictures and messages via its internet shopping platform, and Hongkong Post will take care of the card production and delivery process.

Chow, who worked for Hongkong Post for over 20 years, said that entering into the new year, Hongkong Post is still facing a lot of challenges.