Bpost will focus in future on core mail and parcel deliveries, including an innovative newconsolidated home parcel delivery service, and keep out of digital services and logistics in order
to grow profitably and try to retain its above-average profit margin, according to CEO JohnnyThijs.Outlining the company’s strategy at the World Postal Business Forum at Post-Expo in Brussels,Thijs said: “We are preparing the change from a mail company to a parcels company, but the parcelof tomorrow will not be the parcel of today.”
The company, in which international financial investor CVC holds a 49 per cent stake,benefits from being “protected” by a private shareholder, which enables the management to “executethe programme (strategy) without the interference of the Belgian state”, the long-serving CEOemphasised.
The Belgian postal operator currently generates about 65 per cent of its €2.4 billionturnover from letter services, while domestic parcels generate a relatively modest €158 million andinternational mail and parcels account for nearly €200 million. The group had a 15.2 per cent EBITmargin in 2011.
In the letters business, bpost has only seen a relatively small decline in addressed mail inrecent years, including a 3 per cent drop so far this year, but the decline is likely to acceleratein the years ahead, Thijs said. “The future challenge will be to keep the EBIT margin at thepresent level,” he commented. In recent years the company has succeeded in reducing its workforcesteadily about 3-5 per cent a year through natural attrition and a strict non-replacement policyfor retirees.
The parcels business will remain focused on the Belgian domestic B2C market, although thereare also small B2B and courier activities. Thijs stressed: “We have clearly decided that we willonly go into B2B when the platform allows us to get into that.” The sector is characterised bystrong competition, he noted.
The CEO said the company is “investing heavily” in the new Shop & Deliver service,currently being tested at a local level ahead of a potential national rollout. This deliveryservice for groceries and other common household goods “has the potential to replace decliningpostal volumes over time”, he declared. “This is the biggest growth opportunity we see within ourcore competences. It will differentiate us from competitors.”
Under the Shop & Deliver concept, bpost signs up a range of retailers, offering mostlygroceries and everyday goods which are marketed to consumers through “local services” websites.Consumers order their goods online and agree a regular weekly delivery time-slot of two hours on aspecific day. Bpost collects the goods from the participating retailers, delivers them as a singleconsolidated delivery to homes at the agreed time and collects payment via credit card. The companyalso accepts returns and even delivers private goods such as clothes to a laundry service.
Peter Somers, bpost’s head of parcels and international, told a separate e-commerce sessionat Post-Expo: “After four months of testing, we have 100 per cent secure delivery of fresh andfrozen goods.” These perishable goods are the most difficult for time-definite home delivery.
Bpost now plans to run pilot schemes on a wider basis in 2013 to judge if the Shop &Deliver concept is scalable and the willingness of senders and consumers to pay for the convenienceservice. “If it works well, then we will roll it out nationally in 2014,” Somers said.
According to the company’s extensive research, 72 per cent of Belgians want goods orderedonline to be delivered to them at home while the rest would be ready to collect them from a pick-uppoint of some kind. Bpost will thus look into home delivery options such as time-slots anddeliveries to neighbours as well as expand its network of parcel terminals to 175 over the coming18 months, Somers said.
Meanwhile, CEO Thijs stressed in his speech that bpost has no ambitions to move into digitalservices, which he described as an “e-box”, or logistics. “We will not move into new territory inwhich we cannot use our core competences. We believe there is ample opportunity by focusing on corecompetences,” he said.
Referring to electronic services, he said: “We do not see the business case, we do not seeany willingness of senders or recipients to pay. As long as that is the case, we will not move intothe e-box.” In response to a question whether this could be risking a missed opportunity, heresponded: “The day someone shows me the profits from running an e-box I will change my opinion.”
Similarly, Thijs said that logistics “is not on the agenda for us”. “Our domestic market isvery competitive, there are low margins and we do not see synergies between logistics and a mailand parcels company.”
Internationally, bpost will aim to increase inbound flows from North America and Asia toEurope via its international hub at Brussels airport, he said.
