German-based Hermes Group increased profits and achieved double-digit growth last year thanks tothe international e-commerce boom, and will expand this year with a €120 million investment in
Germany, a parcel shop network in the UK and more retail locations in Russia.Hermes, part of the Otto Group, Europe’s leading distance-selling company, is now seeking toposition itself more broadly than just a specialist B2C parcels firm by highlighting its portfolioof logistics and related services for international retailers.
The group’s overall sales rose about 18% to €1,724 million and pre-tax profits improvedsignificantly. The profit figure was not disclosed. All Hermes-branded business increased theirrevenues significantly, and revenue growth in all four business areas, Sourcing & Product,Transport & Logistics, Fulfilment and Distribution, was encouraging, the company said.
“Hermes has successfully positioned itself on the global market as an integrated provider ofretail-related services. Increasing numbers of international distance sellers are trusting us tohandle essential parts of their value chain,” commented Hanjo Schneider, CEO Hermes Europe andMember of the Executive Board of the Otto Group with responsibility for the Services Segment.“Retailers who choose Hermes as a partner can concentrate entirely on their core business, updatingtheir product line and sales. Our professionally specialised companies will take care of everythingelse.”
Hermes said it can now offer clients all the services they need along the whole of the valuechain. These begin with sourcing and quality assurance in Asia, for example, and extend frominternational transport logistics and warehousing through to fulfilment and delivery to the endcustomer. The services cover the requirements of both medium-sized companies and large enterprises,with customised services provided for both pure internet retailers as well as multichannelretailers.
“We aren’t simply relying on the continued growth of online sales and the resulting contracts.We are increasingly shaping the e-commerce business ourselves by developing new products, brandsand services especially for internet retail and dovetailing this approach with over-the-counterretail,” Schneider explained.
In the distribution sector, Hermes is benefiting from booming parcel business driven by onlineshopping and direct deliveries to consumers.
In the home German market, Hermes Logistics Group Germany increased its parcel volumes by 14% tonearly 304 million in 2010. This increase was nearly twice the 7.1% growth of the German CEP marketlast year and the seventh year in a row of strong volume growth. The parcel company’s revenues werenot disclosed. Its 2009 revenues of €840 million (with 266 million parcels) represented about 57%of the overall Hermes Group revenues. HLGD’s own full-time employee numbers went up from 3,223 to3,680 while the 400 sub-contracted delivery partners increased their staff numbers from 12,000 toabout 13,000. The separate market-leading ‘two-man’ delivery service, Hermes Einrichtungs Service,which delivers furniture and bulky items, increased volumes by nearly 20% to about three millionand claims about 50% of this market segment in Germany.
Hermes will gear up for further parcel growth this year in Germany by investing about €120million in the construction of 18 new depots across the country. This will increase capacity by200% compared to the smaller former buildings at the locations and will raise sorting capacity toan average of 4,500 shipments per hour. In a sign of longer-term ambitions, German media citedHarmut Ilek, head of Hermes Logistics Group Germany, as saying that the B2C parcels operator hadgrown to about 40% of the German B2C market and aimed to overtake DHL as the country’s largestprivate parcels operator by 2015.
In the UK, the second largest national parcel market in Europe, Hermes UK increased shipmentvolumes by around 8% to 115.5 million last year and established itself as the country’ssecond-largest consumer parcel delivery service with a market share of about 20%. At the end of2011, Hermes will begin to set up a country-wide parcel shop network in the UK in cooperation withprivate retailers in an organisation similar to the German network.
Hermes is also planning to expand in Russia where about 61.9 million people, or 44 percent ofthe total population, will be using the Internet by 2013, according to market researchers. After asuccessful pilot project in Moscow, a further 400 parcel shops are planned for the coming months.Alongside Moscow, delivery services could then also be provided through Hermes in the major citiesof St. Petersburg, Nishnji Nowgorod, Samara, Yekaterinenburg and Nowosibirsk. Parent company OttoGroup is also expanding in the world’s largest country.
Hermes Transport Logistics GmbH (HTL), a separate company, is planning to expand its network ofair and sea freight connections this year by adding the key area of intercontinental procurementlogistics. The European LTL (Less than Truck Load) and FTL (Full-Truck-Load) business will also beexpanded to include new destinations. Within Germany, further opportunities for integrated goodstransport by road and rail will also be developed.
In the Fulfilment business area, Hermes Fulfilment GmbH (HF), which offers a wide range ofservices for distance sellers, including returns management and warehousing, set up two companiesspecialised in interactive business and multi-channel sales last year. With a product range of600,000 articles, the company moves around 260 million items per year.
Hermes Otto International, the product sourcing business, also increased sales in 2010. Thecompany sources textile, furniture and lifestyle products for $2.5 billion, primarily in Asia, andsupplies retailers with the resulting 340,000 different individual articles. In 2011, the range ofretail- and sales-ready brands are to be considerably expanded for a wide range of products.Moreover, Hermes Hansecontrol Group, a product quality testing company, will expand its servicesfurther this year. The tests, which are carried out close to Asian production sites, reduce therisk of expensive recall campaigns should articles have to be withdrawn from Europe due tonon-compliance with industry and safety standards, Hermes explained.
Looking ahead, Hermes said it expects another good year in 2011 and all business units shouldprofit from the continuing growth of e-commerce with their services for companies selling via theinternet. The German distance-selling market, for example, is forecast to grow 15.5% this year torevenues of €21.1 billion, according to the German E-Commerce and Distance Selling TradeAssociation.
“Hermes is optimally positioned to pursue its ambitious growth course during the coming yearsand thus enhance the market position it has already achieved. To do this we shall continue with theglobalisation of our service provision and push ahead with the development of services so thatdistance sellers always have first class solutions available to enable them to dovetail theirvarious sales channels,” concluded Schneider.
