InPost & The Automated Parcel Machine (APM) Industry | In Practise

We're gifting a 2-YEAR FREE SUBSCRIPTION to one user who completes this two-minute survey

InPost & The Automated Parcel Machine (APM) Industry

Co-Founder and Group CEO at alfred24


Why is this company interesting?

InPost owns and operates the largest network of APMs in Poland. APMs are autonomous parcel lockers that allow for the delivery and receipt of packages.

To build an APM network, securing both a dense network of attractive locations and a network of merchants is critical. There are strategic places that only allow for one APM and also places that are less dense and one APM is enough. Operating at high capacity utilization is also critical to achieve cost-efficiency.

InPost has 98% of total APMs in Poland, more than 40% of total Polish B2C parcel volumes, 7mn+ mobile app users and 40k+ merchants, which creates strong scale advantages and network effects.  However, half of their revenues come from one single merchant, Allegro, which is the leading ecommerce site in the country. Allegro has started building their own APM network, which is perceived by the market as a major risk. A key question is whether Allegro gain enough share to impact InPost’s competitive position.

Aside from Poland, InPost is also building APM networks in UK, France and Italy.

APMs are gaining share vs To-door delivery, a trend that is likely structural as a result of the following:

  • Cost-efficiency: last-mile delivery to APMs is 25% cheaper than to-door. One driver can deliver 800 parcels in an 8 hour shift vs 100 parcels for best in-class couriers, delivery can be done at night and there are no failed deliveries. If labour and logistic costs continue to increase, APMs cost advantage will only grow.
  • ESG tailwind: delivery to APMs is more environmentally friendly than traditional delivery services and governments, consumers and merchants are supporting alternatives to reduce emissions.
  • Consumer preferences: in markets where APM networks have achieved critical density consumers actually prefer APM delivery, even at the same cost, because of flexibility and convenience. In Europe, the most dense countries in terms of lockers per capita are the Nordics and Poland and consumers’ NPS scores are above regular courier services.
  • Growing C2X volumes: because of e-commerce returns and re-commerce trends (second hand). APM networks are better suited for these volumes.


Executive Bio

Christian Secci

Co-Founder and Group CEO at alfred24

This executive has been in the self-service delivery logistics & software business for 8+ years. He spent two years with InPost 2013-15 after which he moved on to set up a competitor business in Asia which has expanded internationally. He has skin in the game in understanding the market today, with direct experience in Asia (China + SEA), Australia, Europe and Brazil.Read more

View Profile Page

Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Thanks for taking the time. You've got the team here; we would like to understand InPost and the whole last-mile logistics sector better, in which I believe you've been very involved recently. Could you start with a brief introduction to your background as you've been involved in many last-mile delivery APM companies in the past and currently?

I am a co-founder of alfred24. We also build a network of parts and lockers, and we white label our solutions in 16 countries now. Our clients include Hong Kong Post, Australia Post, Singapore Post, Cyprus Post. We're now starting several projects in Europe. I worked with InPost as a partner for a couple of years, in 2013 and 2014. That's my background. Are you an investor of InPost, or are you looking to invest in InPost?

We’ve been researching the business, and we do hold that position now in InPost, yes. Can you give us your overview and your view on how you see the APM industry? Why do you think it's attractive? Perhaps it's that you're currently running alfred24?

At the moment, the parcel locker industry is very attractive for two main reasons. One is that ecommerce growth is pushing the logistics industry to the limit. There is a physical limit of a single courier delivering between 80 and 90 parcels per day to single points of delivery; this is not sustainable, with the growth of ecommerce accelerating and the impact of COVID-19. Second, people are aging in many countries, like Japan, and you can't find enough couriers. Or in the US, courier companies like UPS or FedEx are limiting the number of parcels they can deliver daily. Logistically, ecommerce is now becoming a bottleneck. Lockers help the industry grow because, first of all, a locker is a 24/7 self-service machine. They empower the courier to deliver 60 parcels in one go and do deliveries 24/7. With predictive analytics, we can replenish the lockers multiple times a day.

Of course, you need to build a dense network. You need one locker every 1,000 people or every 500 meters, so there needs to be convenience. Also, a locker can be integrated into a network of pickup points. That's why InPost bought Mondial Relay. They enter a market with a player who already has a network of 8,000 pickup points, millions of parcels, and the integration with the merchant. That is the perfect actor to buy because you can leverage that network and add parcel lockers to their pickup point network. We believe that it will grow and accelerate because of the growth of ecommerce and the change in consumer habits.

I'm based in Madrid, and we're used to receiving all these parcels at our doorstep. It's kind of strange for me now to move to a different service and walk 300 or 500 meters to the APM. We understand that the population in Poland has been used to APMs from early on. But for planning extensions and opening in different countries, how do you see consumers reacting to this change in how parcels are delivered?

You need to see the market's different needs. There will always be people that have the need and the preference to receive their parcel at home. Still, there is one part of the market in terms of consumers that either they are not at home to receive the parcel or schedule a delivery with the courier, or they want to protect their privacy, like many people buying sex toys online. There is a need to have different options for the consumer to choose from. I'll give you an example. Before the food delivery – the on-demand food delivery companies – people were not used to buying food online, except maybe MacDonald's, Pizza Hut, or KFC. Now everyone is ordering food online. Why? Because the ecosystem was built.

It's the same with parcel lockers. Once you have the network, the convenience, the freedom of choice – lockers give the consumer freedom of choice – you can decide. You check out and choose between home delivery, office delivery, locker pickup in the metro station in Madrid, or a pickup point in the convenience store next to your office. You will decide which is more convenient for you. It's on the consumer side.

From the courier side, if they get to the point where they cannot handle more than a certain number of parcels, they need to find alternative solutions and automation to increase the efficiency of a single carrier. There is a push on the logistics side and a change of habit on the consumer side. Maybe not every country will be suitable for parcel lockers. Still, Poland, for example, is becoming very hot because you have 15,000 lockers from InPost, Allegro is building their network, and Polish Post is building their network. I'm giving you news that isn't public yet, but next Monday, Polish Post will announce a network of 2,000 lockers, and Orlen, the largest petrol station company, is also building a network of lockers and pickup points. You see this pipe of InPost being the largest, and there are still another three or four companies trying to build networks.

In the UK, there are thousands of lockers. Italy is starting; France as well. In Germany, there are 20,000 or 50,000 lockers installed by DHL. It's just a question of time. Let me give you another example; before ATMs, what did people do? They went to the bank. Why? Because there were no ATMs. People knew only one thing. If you want money, go to the bank, get the money from the bank, and put it under the mattress. Now, you can collect money from ATMs, banks, convenience stores. I was on my way back to the office, and I needed some cash. I went to the 7-Eleven in Hong Kong, I bought a bottle of water for HK$7, or 70 cents, and I got 500 HK$ – €50 fifty euros – cashback; easy. Now, I can get cash in many ways. Why? Because people have built the network, they've built infrastructure, they've built the service. It will be the same with lockers.

It makes sense. Moving onto the business model, regarding Allegro and the Polish Post building their own networks, how do you think the competitive dynamics in a particular country will work in the end? As we understand, there could be a location plus brand advantage, but now it's a bit counterintuitive. If InPost is so dominant, why are Allegro and Polish Post building their own networks? How do you see competitive dynamics evolving in the market? In other words, what chance of success do you see for Allegro and the Polish Post and why?

Let's start from another country to give an example. In the US, the largest ecommerce market in the world, you don't have only FedEx. You have FedEx, UPS, and Amazon, who no one realizes is now one of the largest courier companies in the world. Moving to Poland, the market needs more than one player. The thing is that InPost has 15,000 lockers. To compete with InPost, who have created a gigantic moat, will be very difficult because you have to grab the best. You have to build the same size, density, and coverage, and you also have to grab the best locations.

Now, there will be a fight for the best location for the locker. Going back to the example of ATMs, you now find ATMs for HSBC and a couple of other banks when you go into a shopping mall. The same thing will happen for lockers. The battle will move soon to residential lockers. There are already companies in the US, patent-pending, that are doing a very special locker. This is where the battle will move because no one can beat residential lockers. But a residential locker needs to be carrier agnostic and open to every courier and every kind of delivery.

To answer your question, I want to give you the overall picture, InPost will continue to be the dominant player in the market. It's not only because of the parcel lockers but also because of the six regional sorting centers. They have 64 depots all over Poland. This is a unique competitive advantage, but Allegro will succeed because they have volume. They can fill their lockers, and they want to protect themselves. If Amazon goes to Poland and buys InPost, Allegro is over. They will not have the lockers to deliver their parcels. So the move from Allegro is a protective move if, in the future, Amazon buys InPost in Poland.

Orlen is a political move because they have 7,000 to 8,000 petrol stations. They want to leverage the network of the petrol stations, and they have the budget. For Allegro, the challenge is that Allegro is buying the machines from a Chinese manufacturer because we lost that project, and they're developing the software themselves; it's taking longer than expected. Orlen will buy machines from Modern-Expo, but they don't have all the compliance software for the carrier agnostic, so this will be their challenge. And now Polish Post has the volume. They have the location because they have the post offices, so they will probably succeed. They want to install 2,000 lockers in the next 24 months, and they will announce this next Monday. I know the numbers because we are the suppliers.

You say InPost has a gigantic moat, but on the other hand, everyone who's entering the market has a reasonable chance of being successful. So where's my moat?

Let me explain again. InPost has a gigantic moat because they have 15,000 locations and a fulfillment network including the six regional sorting centers and 64 depots. If you want to compete with InPost on the same level, you need to build the same infrastructure, which will be almost impossible, because it's not only a big investment but the time. But the networks that the other companies are building, like Polish Post or Allegro, will be set up to fulfill and deliver their own volumes. Does this make sense?


So Polish Post doesn’t need the volume from InPost to fill their network of lockers. Allegro doesn’t need InPost to fill their lockers because they have their own volume.

Sign up to read the full interview and hundreds more.

Investor-Led Interview

Interviews hosted by one of our Premium investor partners are only available in text format.

Did you like this article ?