German retail and logistics services provider Hermes is investing heavily in capacity expansion and new services to drive domestic and cross-border growth after again achieving record revenues last year.
The Hamburg-based group today announced a 7% rise in total revenues to €2.23 billion in 2014/15 (ending February 28), with a similar increase in volumes to a total of 530 million parcels in Europe. As a division of the Otto Group (which has revenues of €12 billion), its profits are not disclosed. Revenues from third-party customers (outside the Otto Group) climbed by 12%.
Hermes increased delivery volumes by 7% to 496 million parcels in its five main markets of Germany, UK, Austria, Italy and Russia, including around 12 million catalogues and more than four million items of furniture and household appliances. Revenues for the five countries were not disclosed. By securing cooperation agreements with national delivery partners in other EU states and integrating them into its own network, Hermes was able to enhance its intra-European parcel delivery service.
"Hermes has been growing successfully for eleven years now. This is largely down to our early moves into international markets. Now we are pushing ahead with international expansion into Asia and North America and are looking to leverage business opportunities arising from the digital transformation," commented Hanjo Schneider, member of the Executive Board Otto Group with responsibility for services and chairman of the Supervisory Board Hermes Europe GmbH.
This year Hermes is adding new services for both private and business customers to enhance parcel shipments. The focus is on options for shipment delivery and customer-oriented solutions for cross-border shopping – even overseas.
"We have a lot ahead of us in 2015,” Schneider said. “This includes the introduction of new services in our parcel unit, online solutions for global shopping and building up start-ups such as our storehouse service ‘Send & Store’. On top of this we are investing massively, particularly in our German logistics and technical infrastructure. Our intent is to make Hermes the logistics partner of choice for e-commerce players of all sizes."
In Germany, Hermes is looking to increasingly target small and medium-sized distance sellers in its drive to acquire new clients. By 2019 the company will have invested around €300 million in its logistics network. At the same time, Hermes is moving geographically closer to potential clients. An extensive 100,000 square meter distribution centre is currently being built in Löhne (close to Bielefeld in northern Germany) at a cost of a further €90 million. Hermes Fulfilment and the Group's 2-man handling unit Hermes Einrichtungs Service will be the new occupants, expecting to move in this year.
Hermes also confirmed that in collaboration with other parcel companies it plans to introduce shared parcel boxes for private households in Germany. A pilot phase will be starting shortly with the national launch expected for the second half of 2015. Customers can also expect to profit from the introduction of new services for parcel recipients which Hermes will be offering free of charge from Q4 2015, such as the option to re-route parcels at short notice.
To improve its offering for cross-border deliveries, Hermes is starting a new service called ‘BorderGuru’, which, for the first time, allows online retailers to sell and deliver their goods around the world. As part of the process, a 'shipping client' is integrated on the client's website, which informs the end-customer of all the costs incurred – customs, transport, taxes – and coordinates both the shipping and the payment process. End-customers can also returned unwanted goods. Today, BorderGuru facilitates shipment from the US to all destinations worldwide. The coming weeks will see the start of initial tests for shipping from Europe to the US and China.
According to Hermes, BorderGuru is “the key to worldwide online shopping” and can generate new impetus for the e-commerce sales channel. "The first tests have been conducted successfully and show how, thanks to this smart solution, we can help international retailers to close service gaps and address new target groups. Retailers have responded very positively to the one-stop processing, to transparency of costs and to the customer-friendly tracking system," Schneider explained.
In particular, the new service should enable European and American retailers to sell more goods in the growing Chinese market. At the same time it gives Chinese e-commerce providers the opportunity to expand into Europe and makes it possible for them to call on other Hermes service options covered by distribution, fulfilment and quality assessment.
To serve the rising demand for international transport from and to Asia from Europe better in the future, Hermes said it is expanding its market presence in China. Accordingly, Hermes Transport Logistics Asia was established, with offices in Hong Kong and Shanghai. This subsidiary targets Chinese retailers looking for logistics solutions both in sourcing and shipping goods. Its focus is on both turnkey supply chain solutions and environmentally sound sea and airfreight transportation.
"With the growth in internationalisation, there is the parallel growth in the responsibility to shape the global supply chain in a sustainable fashion. Here, Hermes provides suitable offers and services worldwide," said Schneider.
Hermes Otto International has strengthened its commitment to Asia by setting up ASTRA Supply Chain Service Ltd. The company offers combined services in the field of auditing and quality control in key sourcing markets as well as IT-based supply chain solutions, with the main focus being service provision for the textiles industry. ASTRA maintains inspection centres in several key locations, including Dhaka, Shanghai, Qingdao, Bangkok, Tirupur, Mumbai, Istanbul and Izmir.
