Germany’s Hermes is targeting faster growth on the booming Russian e-commerce market by taking full control of its former joint venture with DPD.
The Hamburg-based parcel and logistics group announced today that it has acquired DPD’s 49% stake in the Russian company. The acquisition price was not disclosed. Hermes first entered the Russian market in 2010 and set up the joint venture with DPD in 2012.
Explaining the move, Hermes said full ownership will “accelerate the integration of the company into Hermes' Continental Parcel Network”, the European B2C parcels network set up last year with a mix of subsidiaries and partners.
At the same time, DPD, which provided transportation and delivery services for the former joint venture, will continue to provide these services for Hermes Russia on an exclusive basis.
"As the largest country in the world and as one of the fastest-growing e-commerce markets, Russia occupies a central position for global trade," explained Marc Dessing, Chief Operating Officer at Hermes Europe. "In view of our European expansion, we will be able to further develop the Russian parcel market with immediate effect on our own.
“On top of this, Russia is important in linking Europe to Asia for Hermes, to enable us to better serve the spectrum of business interests there. So our commitment here is a long-term one, as we strongly believe in a positive Russian market development," he added.
Revenues and volumes for Hermes Russia, which has 103 staff, were not disclosed. However, Hermes noted that the Russian company has developed positively, including a 20% increase in business with domestic retailers so far this year.
Looking ahead, the German group stressed that 'Hermes Russia' will continue to develop its parcel shop infrastructure and establish itself as a partner for distance sellers, especially in the booming e-commerce market.
“Talks are currently being held with further potential e-commerce, fashion and consumer electronics partners, also interested in using the returns service introduced in 2014. In addition, Hermes Russia has registered an increasing number of requests from a variety of distance sellers looking to push ahead with their own international programmes by taking advantage of Hermes’ cross-border parcel network to Western Europe and its 36,000 parcel shops.”
Currently, Hermes has more than 400 parcel shops in Russia in over 125 main cities, 100 of which are situated in the metropolitan area of Moscow alone. But Hermes is also operating east of the Urals, in the Asian part of Russia, with parcel shops in major cities such as Yekaterinburg, Novosibirsk, Krasnoyarsk, Omsk and Vladivostok. In the coming months, the number of pick-up/drop-off points will continue to increase rapidly.
Asked about previous targets of more than 1,000 parcel shops in Russia by this year, Hermes spokesman Martin Frommhold said that the company has changed its strategy for parcel shops in Russia, partly due to the stagnation in the Russian retail sector.
“Instead of cooperating with large supermarkets and mobile phone chains (shop-in-shop) like in the beginning, since 2012 we have been creating our own local flagstores in central locations. These meet the needs of Russian customers for convenience as they are particularly easy to reach and offer extra services such as changing-rooms or a returns service,” he explained.
“We are seeing strong demand for these services which are new in Russia, which shows that interest in an alternative to the existing offering in Russia remains large.” Hermes Russia will be competing with Russian Post and private firms such as SPSR in the B2C market.
According to Hermes, over 75 million Russians shopped online in 2014, spending more than €16.7 billion in webshops, which represented growth of 15% year on year.
