InPost: Yodel’s Acquisition and the UK Out-of-Home Market
Former Director at Yodel
inpractise.com/articles/inpost-sa-challenges-and-competition-in-the-uk
InPost S.A.
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.
Former Director at Yodel
Interview Transcript
This is a snippet of the transcript.Contact Salesto get full access.
Are you saying that the new shareholding in PayPoint makes it difficult for Yodel to direct traffic from that angle because these 130 million parcels will be redirected elsewhere? Is that what you're implying?
There's new volume being routed into these stores that wasn't previously, and they needed this capacity due to the growth in the international import market, especially with companies like Shein and Temu. The volume continues to grow, and they need somewhere to place it. The last thing they want to do, which I was moving the business away from, is pushing it onto Final Mile resources. You can't use human capital to deliver that scale of volume in the space they have. This is one reason why the price point for Evri versus Yodel is so different—it's about density. A Yodel courier in a four square mile radius might handle 120 items, while an Evri courier in less than a square mile radius might handle 230 items.
This is a snippet of the transcript.Contact Salesto get full access.
I'm not on one side or the other, just listening. So InPost says that out-of-home delivery, not at a PUDO level but at an APM level, is more convenient than home delivery because many people aren't at home. If you're not home and have door delivery, you have to call back to a call center or get a message about where your parcel was delivered. It's different in the UK. If there's a dense network and you have a locker 50 meters from your home, not at a super scale or something.
In the UK, over the last 10 years, we've encouraged consumers to sign up for a self-certified safe place, so if they're not at home, the courier is directed to leave the package over the side gate, in the front porch, rear garden, or shed. This is to change the mindset where people think, "I can get a free delivery to home, so why would I want to take a free delivery to an APM or PUDO unless it's going to cause me significant inconvenience?" Some people will allocate their neighbors or the neighborhood for this. The importance of this factor is that if a consumer goes onto a retailer's website and the retailer offers free delivery, until you can convince a retailer to charge for home delivery and make out-of-home or PUDO delivery free, it will take time to convert people.
This is a snippet of the transcript.Contact Salesto get full access.
But isn't it cheaper for the retailer to deliver to an APM or PUDO? Wouldn't they choose that option based purely on price, or do you think it affects end customer conversion?
It affects the basket 100%. It affects the basket because even if a retailer says, "I love the fact you can give me 30 pence off a delivery because we're going to consolidate and it's all going to go to an APM," you still have to convert the consumer to believe they need to go to an APM. You can't get cheaper than free. The only way to change this is to start charging for home delivery. However, there aren't any retailers in the UK willing to be the first to say they're going to charge for home delivery because it would drive customers to another brand.
This is a snippet of the transcript.Contact Salesto get full access.
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