June 2012Online at www.postaltechnologyinternational.com

All chAnge How should postal services manage the move to digital alternatives?

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In 2008 Polish postal operator InPost was growing rapidly in its mail business but was well aware that future success would involve e-commerce and parcels. Knowing that it would be very difficult to compete against the major global express carriers, the company began to look at other ways of getting into that sector and came across automated parcel terminals.

“We were immediately attracted by these locker boxes and thought that they might be a good solution,” says Marcin Bosacki, InPost’s head of international business. “We did some research and discovered that all the solutions available at that time were very expensive and that the return on investment would be about 10 years. So we decided to invest some money on research and development and ended up developing our own hardware and software from scratch.”

Looking at implementations of automated terminals in other countries, InPost discovered that many were running pilots with just five or 10 machines, with the only country with an extensive network being Germany. InPost was convinced that its solution would be very successful and was determined to commence operations with a major nationwide network from day one.

“We decided that we would start with 100 EasyPack machines in 30 cities and did so on 1 June 2009,” says Bosacki proudly. “We developed the solution in Poland and added

more cities and more locations and now, just three years later, we have over 420 machines in 130 cities. But to be successful with this service you not only need locations but also a large number of senders, and that is something we have concentrated on developing. Over the past year we have spent a lot of time working with e-retailers on joint promotions to boost deliveries to EasyPack machines. We carried out 97 joint promotions with stores and in some cases saw an increase in deliveries of 200 to 300 percent. At the end of 2011 we had about 1,000 e-retailers working with us and over 3,000 regular senders from internet auction sites. Right now we have over 300,000 users who regularly receive parcels using EasyPack and the number of parcels sent is also growing month by month. In fact the total number grew by 400 percent between 2010 and 2011.”

In November and December 2011 InPost conducted its first television advertising campaign, targeted at end users of the service, affluent people in larger cities who do a lot of online shopping. The aim was to promote the solution as an easy way of collecting parcels, not sending, and was seen by 5.4 million people out of a population of 38 million.

It is also apparent, however, that there is demand from end users who wish to use EasyPack to send parcels. “Initially we thought that people would use the service only for collecting parcels but we started to get

ARE PARCEL DROP BOXES ABOUT TO BE SEEN IN FORCE IN CITIES THROUGHOUT EUROPE AND BEYOND? ANDREW PICKERING FINDS OUT

Boxing clever

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feedback that people were also interested in sending, so we introduced that capability so that people could send parcels as well, but it wasn’t a big percentage of our volume. One of the reasons for the low take-up could have been the need to label parcels at home prior to sending, so in the autumn last year we introduced the new service whereby individuals can send a parcel without a label. If they know only the mobile number and postal code of the receiver they can send a parcel and we print the label on their behalf later on.”

Expansion into Europe Far from being content with its achievements in the Polish market, InPost is planning a major expansion of EasyPack throughout Europe. “The system has evolved a lot over the past year or so,” says Bosacki. “As well as developing all the hardware and software by ourselves, one of our advantages is that we are also real users who talk to senders and end users, so we know what we should be improving to make our solution successful.”

There’s no doubt that this approach has worked for InPost because EasyPack broke even after only 18 months. “We proved in Poland that the concept worked and we wanted to gain additional benefit from our investment. So in 2010 we showed the machine at Post-Expo with that aim of exporting the whole business solution to other postal operators. We received very positive feedback and started discussions with posts and express carriers all over the world. We

“EasyPack broke even after only 18 months”

Pinebridge partnershipIn April it was announced that InPost’s owner, Integer.pl, and global multi-asset investment manager PineBridge Investments was to make a E108 million joint investment to develop the EasyPack system across Europe and CIS countries. Integer.pl will make a cash and capital investment of E58 million over two years, while PineBridge Investments will provide E50 million.

Rafal Brzoska, CEO of the Integer.pl Group commented, “We are very pleased with this project and look forward to working closely with PineBridge Investments as we roll-out our ambitious international growth strategy. 2011 was an important year of growth for the EasyPack system as we won contracts to implement the units in a number of global markets, and we have continued to expand the range this year into countries such as Latvia and Ireland. The agreement with PineBridge will allow us to further strengthen our position and capture the major growth opportunities we are seeing in this sector.”

“We have been impressed with the success of Integer.pl to date and, particularly with the results achieved by EasyPack in Poland and look forward to supporting the company in its international expansion,” said Rossen Hadjiev, managing director of PineBridge Investments (Central Europe).

Soon to be a familiar sight throughout Europe?

have been incredibly successful and only last year signed about a dozen contracts including one with Estonian Post, which will deploy our solution in the whole of the Baltic region, as well as with other companies in Russia, Spain, Chile, Saudi Arabia and a few other countries.”

Since then, however, InPost has reformulated its strategy somewhat. Initially its aim was to sell the whole concept to different posts, but in many cases this took a long time because the posts required formal tender processes because of the a size of the investment. Others were only interested in conducting a trial of the system, which Bosacki

Marcin Bosacki

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“If the market is big enough we can install an entire network”

believes would be doomed to failure as there is little point in putting five or 10 machines in a big country.

Bosacki explains how this plan was implemented. “With the help of the private equity we announced in April, we intend to place our machines all over Europe and charge senders, postal operators and express carriers on a pay-per-parcel model. No one except us will have to make a decision about the huge investment required as we take the whole risk involved in installing the machines and will build the whole European network ourselves.

“We see ourselves as partners with other postal operators and express carriers. This year we want to start our network in five or six countries. Among these will definitely be Poland, Russia, Slovakia and the UK, plus two or three more in western Europe.”

InPost’s implementation plan is indeed impressive, with the goal being to place 16,000 machines in Europe by 2016. Almost 1,500 of these will be in place by the end of this year, 4,500 by the end of 2013, 6,800 by 2014, 11,000 by 2015 and 15,000 by the end of 2016. “That is more or less the timeline for that project and in addition we are still integrating systems in the countries we won contracts with last year,” says Bosacki.

Partnership Earlier this year InPost and leading provider of mailroom equipment Neopost announced that they had entered into a strategic partnership to set up a network of EasyPack terminals outside Europe. “Basically we want to make use of the expertise of both companies,” says Bosacki. “Neopost has a major presence all over the world and enjoys good relationships with many posts and express carriers that we can benefit from.

Neopost also has a web-based application for e-commerce along with track-and-trace services. When we add our EasyPack parcel terminals into that mix we get an impressive combination with which we can work to carry out joint investments in various countries all over the world outside Europe.

Bosacki is keen to emphasise is that he doesn’t want InPost to be thought of as a competitor to postal and express carriers. “We want to work with them. One strategy would be to form an exclusive partnership with a major player in a particular country, where the obvious choice would be one of the incumbent postal operators or large express carriers, which could be granted exclusive use of the network. But in some countries we are also looking into a multi-carrier strategy, where if the market is big enough we can install an entire network and work with various express parcel and postal operators. The important point is that in every single country we need a partner and that’s why we’re still making the final decision as to which countries we should start working with in the first instance.

“We’re not simply selling machines. We are selling a whole business solution and that’s what our partners tell us they want. We want to provide a solution that’s simple and convenient to use and the feedback we get from our customers is really positive.” n

Creating profit from boxesCleveron is currently the only parcel delivery solution provider to succeed in creating a profitable and adaptable business model. In 2010 this led the Finnish logistics company Itella to acquire SmartPost, the brand created by Cleveron to market its self-service parcel delivery system in Estonia. Running on Cleveron’s initial business model, Itella SmartPost went on to conquer 40 percent of the parcel delivery market in Estonia in just 2.5 years and with support from the growing e-commerce sector is now rapidly expanding in Finland.

What is behind this extremely rapid adoption? In Cleveron’s experience, it is the whole package of business processes, operating principles and technology – not simply technology alone. In designing its model, the company has emphasised a customer-centric approach. While many novel technology providers focus their efforts on satisfying the needs of the postal provider, Cleveron has found that it is far more effective to start by determining and building around the needs of the customer. This ensures that the eventual operating model revolves around the people that actually make the business profitable and is certainly one of the reasons behind reaching 20 percent market share in e-commerce parcels in Estonia just 12 months after launching in 2009.

Cleveron’s existing partnerships in Estonia, Finland, Russia and Kazakhstan have benefited from the company’s experience in fast-track implementation, which has been able to save providers from costly experimentation. Now that the business model has been proved, new projects in Denmark, the Czech Republic, Slovakia and Ukraine will be able to skip the pilot stage of implementation and head straight to the fully operational phase.