Germany’s second-largest B2C parcels operator Hermes is open for closer cooperation with Amazon as the e-commerce giant builds up its own delivery operations in Europe’s largest parcels market.
Amazon, which is a major customer for Hermes as well as for DHL and DPD, is currently setting up a Germany-wide network of local delivery centres to enable Prime Now two-hour/same-day city deliveries by local courier partners and apparently also planning to introduce ‘Amazon Lockers’ to German cities in competition to DHL Packstations.
According to industry estimates, Amazon currently accounts for about 500-700 million parcels out of around 3 billion parcels shipped on the German parcels market annually.
In reaction to these moves, Hermes has now floated ideas such as joint use of the planned Amazon Lockers and using its nationwide network of Parcel Shops as alternative delivery address for Amazon parcels. However, no talks are taking place with Amazon about possible cooperation for lockers or parcel shops, a Hermes spokeswoman clarified to CEP-Research.
Hanjo Schneider, Hermes Europe supervisory board chief and board member of parent company Otto Group, told German newspaper Die Welt: “The online retailer (Amazon) is a major customer of Hermes and I’m absolutely convinced that if we offer a good service, there is no reason for Amazon to build up its own nationwide network.
“We could also cooperate. I could imagine, for example, that Hermes cooperates with the Amazon parcel terminals. We could use the lockers jointly and thus improve their utilisation. In addition, Amazon could include the Hermes parcel shops into its own deliveries. For example, if a courier driver contracted by Amazon does not reach a customer at home, he could deposit the item in one of our shops, if the customer is previously informed and agrees to this solution. Everyone involved would benefit from such a combination.”
Schneider stressed that Hermes does not believe it is losing Amazon volume at present. “That cannot be seen in our figures at present. Nevertheless, as a service company we have to do our homework and develop services that others don’t have and who want a customer like Amazon… The better we meet the requirements that Amazon sets us, the less the company has the need to head into the adventure of its own parcel delivery service.”
The Hermes chief said he did not believe that the situation in Germany is comparable to the UK where Amazon delivers a high percentage of its own parcels. “The work of the former state-owned Royal Mail there is not comparable with that of other national postal operators in Europe…It’s been speculated in the market that Royal Mail does not offer the services that Amazon wants. That’s one of the reasons why we are so successful with Hermes UK.”
However, Schneider played down the market potential for same-day deliveries – which Amazon is expanding – even though it offers such a niche service through its stake in start-up firm Liefery, which uses 2,500 couriers in 50 German regions. “We estimate the need for same-day delivery, or even within two hours, as very low… I believe it is a niche,” he commented. All delivery companies are subsidising such deliveries, he claimed.
On other topics, the Hermes chief ruled out any plans to use delivery drones, such as those currently being tested by rival DHL. “With the drones I’m only annoyed that we didn’t recognise the topic in time as a marketing gag. It’s nothing more than that. We will not make any such tests. We don’t have to join in with every kind of rubbish.”
In contrast, Schneider reiterated the potential for the residential parcel-boxes that Hermes, DPD and GLS plan to jointly launch this summer, and highlighted the increasing need for city logistics solutions using consolidation points and shared final-mile deliveries by electrically-powered vehicles.
Meanwhile, parent company Otto Group has released preliminary figures for the 2015/16 year (ending February 29), showing revenue growth of 4.3% to €12.6 billion, driven by online retail activities which increased by 6.5% to €6.6 billion. Online revenues in Germany grew 10% to €4.4 billion.
The Service segment, dominated by the Hermes Group, increased external revenues (generated with customers outside the Otto Group) by a strong 16.6% to €1.74 billion last year. Full results for Hermes, which generates over 70% of its parcel business outside the Otto Group, are due to be released at the end of April. In 2014/15, Hermes Group increased its overall turnover by 7% to €2.23 billion, including 12% growth with third-party customers.
