InPostINPST

Why is InPost 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.

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InPost: Mondial Relay & the French APM Market

INPSTInPost Vinted DHL ALEAllegro ROYMFInternational Distributions Services plc

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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.

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Can you talk about the execution of the InPost integration?

This required higher capital expenditure initially compared to a Polish warehouse, where labor is about five times less expensive, and thus managed differently. When InPost came, they wanted to drastically change how things were done. This approach didn't necessarily go well with the teams in France because InPost came with a different way of doing business, accustomed to cheaper labor in Poland, and entered a very cost-conscious culture in France. This clash created some internal issues.

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Let's continue with the unit economics and the differences between PUDO home delivery and APM.

The first reason is that the last mile for out-of-home delivery is completed by the end customer, which is the most expensive part of home delivery. The second reason is that with out-of-home delivery, there are fewer stops for delivery drivers, so network density is not necessary to make it profitable. When you use PUDO or APM, you can deliver 50 to 80 parcels at once to one location, as opposed to delivering one parcel here and another there. So, directionally, out-of-home delivery costs much less.

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InPostINPST

Why is InPost interesting?

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Interview Transcript

Can you talk about the execution of the InPost integration?

Let's continue with the unit economics and the differences between PUDO home delivery and APM.

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