Hermes Germany is targeting the growing same-day market with its 28% stake in start-up Liefery announced yesterday and is planning to launch new products in this area which will then be implemented by Liefery.
Frank Rausch, Hermes Logistics Group CEO, highlighted the promising growth prospects for the same-day delivery market. “According to experts, the market in Western Europe will reach around €3 billion by 2020 and account for 15% of the revenues generated by standard parcels. If this comes true, Hermes should participate in this development. It is often just one step from a niche market to the mass market. Therefore, our acquisition of Liefery is logical.”
In a joint interview with Liefery co-founder Franz-Joseph Miller accompanying the press release on the deal, Rausch explained that Hermes is exploring the market first of all to expand its own service portfolio through cooperations or innovative business ideas.
Asked why Hermes didn’t integrate a same-day service in its own processes, he replied: “Based on our structure, we can’t make it a viable business, neither in organisational nor in economic terms. Therefore it is an advantage to have access to an established, professionally organised business when providing same-day delivery. Hermes, in contrast, is a parcel operator focusing on volumes.
“We ship over a million parcels in Germany on a daily basis in a highly efficient way, thanks to our infrastructure, and get them delivered to our recipients in one or two days. This was considered an express service just a few years ago! So we are quite fast but don’t have the systemic requirements of a same-day delivery service which often carries out "Point2Point” transportation.”
Rausch added that same-day delivery helps Hermes redefine delivery speed. “In addition to precision and flexibility, the delivery time is a decisive criteria when it comes to awarding a contract to a parcel provider, whether it is for business or private purposes.” In this respect, the cooperation with Liefery can also have positive effects for the Hermes brand.
However, Rausch confirmed that the topic of same-day delivery and its economic prospects are still quite controversial in Germany. “Compared to the traditional parcel business in which over six million shipments are transported every day, same-day delivery is still a niche product.
“But many big retailers such as Amazon, eBay and Google plan to launch their own same day services in Germany in 2015. And that's not so surprising because same-day delivery combines the convenience of online shopping with the immediate product availability of retail stores. This brings both advantages for the customer as well as for online shops or multichannel retailers.”
Meanwhile, Liefery now serves over 800 retailers in various industries and more than a dozen large retail chains just one year after its launch. The company was hived off from B2B courier firm time:matters last year and has handled about 100,000 deliveries to date.
Franz-Joseph Miller, CEO of time:matters and co-founder of Liefery, explained the start-up’s business model. “We are not a courier service. We have developed a platform that communicates via specially developed interfaces between our clients and 2,500 affiliated couriers and handles orders automatically. We are also working to expand this technology platform, e.g. to inform the recipient about the current location of a courier or to-the-minute delivery time. This enables us to work more efficiently than conventional courier companies and increase shipment volumes much more easily.”
As soon as an order comes in, whether online or offline, Liefery determines the most appropriate driver for the particular delivery, based on different factors such as the location and quality of all available drivers. The order is then forwarded to the driver per API or smartphone app. The delivery is then made within 90 minutes or according to the delivery time slot requested by the recipient.
Miller said Liefery’s growth confirms the potential of the same-day service. “We are growing from month to month by at least 20% and winning new customers of all sizes for our services almost every day. In addition, more and more retailers and couriers approach us to use Liefery or to become part of our delivery platform. We are thus very confident about our growth prospects.”
A delivery with Liefery costs €8.99 for distances of up to 10 km, with one euro more added for each extra kilometre covered.
