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.

InPost’s European Expansion Strategy

INPSTInPost ALEAllegro AMZNAmazon PKNOrlen DPWDeutsche Post

Executive Bio

Former Sales Director at Inpost

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.

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I'm trying to understand, as this business matures, in five to 10 years, will the locker industry be dominated by a few vertically integrated logistics-to-locker players? Or will a more open system, like what Allegro is attempting in Poland, become the norm across many markets? The reason I ask is whether this matters for InPost in terms of business profitability?

The biggest risk, in my opinion, is in Poland in the future. In other countries, it really depends on how the market will grow with these small networks. The capital expenditure of building the network is very high, and building the operation around it is very expensive, making it a significant bet. InPost has stable fundamental know-how, so they are expanding and utilizing the growth of their current network. New players are not there yet. For example, Allegro has a network of about 2,000 to 3,000 lockers, but the utilization rate is low, and they are losing money daily because they still need to maintain those machines. Betting that they will be eager to double that network or expand into other markets is a high-risk bet.

This is a snippet of the transcript.to get full access.

Right, because they know that if that were to happen, it would ruin their model.

Yes, from the retailer's perspective, it's not just talk. The adoption of parcel lockers has significantly influenced customer behavior in Poland. If you remove the parcel locker option from your website, customers will search on Google for competitors offering the same product with parcel lockers.

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Right, they don't care about which parcel locker specifically, as long as it's available, like in Poland?

No, it needs to be InPost. That's the main case. The drama in Poland is that Allegro is trying to push customers to use Allegro boxes, but there's a lot of negative PR because people prefer the service, not just the locker itself. Only InPost offers nearly 99.9% delivery within 24 hours. Only InPost also has excellent customer service, answering calls within the first 10 seconds, unlike competitors. Customers want that level of service and don't want it compromised.

This is a snippet of the transcript.to get full access.

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Why is InPost interesting?

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Interview Transcript

Right, because they know that if that were to happen, it would ruin their model.

Right, they don't care about which parcel locker specifically, as long as it's available, like in Poland?

Free Sample of 50+ Interviews

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