Achieve growth. Domestic parcels. We grow

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1 We grow

2 Achieve growth We grow To grow we need to capitalize on the many opportunities the world now offers us. With this in mind, in 2016 we took advantage of the further expansion of e-commerce to increase our parcel volume significantly, both in Belgium and internationally, linked to improved convenience for our customers. We also want to enlarge our proximity and convenience offering, by making optimal use of our strengths to offer innovative solutions and by continuing our diversification efforts, through Ubiway, for example. Our growth strategy is focused on three areas: parcels in Belgium, international parcels, and proximity and convenience. We are convinced that we have the right assets and expertise to make a difference in these fields. The goal is always the same: making it easier for customers to work with us. Domestic parcels We achieved growth on the domestic parcel market of no less than 17.1% in 2016 compared with That growth outpaces overall e-commerce growth in Belgium, the engine that powers the expansion of the parcel market. bpost is active in three parcels segments, with a complete range in parcels and express items: B2C (goods sent to consumers by businesses, such as e-tailers), B2B (goods sent between businesses, such as spare parts and retail stock) and C2C (goods sent between consumers, such as gifts and second-hand items). In 2016 we particularly saw a strong rise in parcel volumes sent by major senders, not only within Belgium but also from neighbouring countries. Also in 2016, bpost and DHL Parcel set up a nonexclusive partnership for the delivery of B2C parcels at pan-european level. That gives DHL Parcel access to bpost s leading B2C delivery network for the constantly growing number of private parcels recipients in Belgium. In turn, bpost gains access to the DHL Parcel Europe network, which currently offers a single, standardised, high-quality crossborder product - DHL Parcel Connect - in 18 European countries. This partnership allows both parties to tackle the fastgrowing B2C e-commerce sector in Belgium and across Europe. Continuing to put our growth strategy into practice, in 2016 bpost joined forces with Belfius (bank) and Proximus (telecommunication company) to strengthen the local economy through a digital platform, Citie, which brings together merchants, consumers and local governments. The digitization of our world and the growth of e-commerce create new possibilities but also new challenges for SMEs and their customers. The Citie app is already available in various towns and cities, including Bruges, Antwerp, Roeselare, Ostend and Genk. For merchants, Citie is a digital display window with integrated online store. This enables their customers to shop and pay online, ahead of delivery by bpost. Our growth strategy is focused on three areas: parcels in Belgium, international parcels, and proximity and convenience. We are convinced that we have the right assets and expertise to make a difference in these fields.

3 bpost ACTIVITY REPORT 2016 In 2016 bpost took a strategic stake in Parcify and de Buren, two start-ups that capitalize on promising innovative technology for lastmile delivery services, characterized by greater convenience for both senders and receivers. The more consumers adopt e-commerce, the more important it is to offer them maximum convenience. bpost aims to play a leading role in that, making e-commerce as accessible as it can be. That s why, in 2016, we took big strides in our ambition to make it even easier for our customers to receive and send parcels. We continued to work with a number of major shippers to enable parcel delivery in the evenings and at the weekend, and we even trialled same-day delivery. In addition, we enlarged our parcel network on the basis of innovative solutions, allowing customers to select the solution that suits them best. That way we are building a hybrid network that provides flexible solutions for specific personalised delivery needs alongside our long-established distribution network for standard deliveries by our postmen. In that regard, in 2016 bpost took a strategic stake in Parcify and de Buren, two start-ups that capitalize on promising innovative technology for lastmile delivery services, characterized by greater convenience for both senders and receivers. Formed in 2015, Parcify was the first to launch an app to enable delivery of parcels to the addressee s precise location. The technology uses the geolocation of the customer s smartphone. So Parcify ensures that you never need miss another parcel delivery. Parcify is now available in Brussels, Antwerp and Ghent. The technology also fits in with the ambition of bpost to get to know its customers better. Knowing where and how customers want to receive their parcels is another step towards a stronger network and even better service.

4 de Buren is a Netherlands-based company that operates an open network of 50 locker walls in that country. This network consists of secure (and sometimes chilled) lockers that are accessible 24/7 and can be controlled with an app, which makes it possible to offer a large number of services. It is an open network, which means that every customer can use unoccupied lockers in the de Buren network. Everyone, including e-commerce players but also businesses like dry cleaners, pharmacies and retailer stores can leave a parcel for pick up by the customer. The ultimate goal is to cover the whole of Belgium with 500 locker locations in addition to our existing parcel lockers, and to expand the current offer in the Netherlands from 50 to 1,000 locations. Lastly, bpost also launched bringr, an innovative sharing platform that enables smartphone users to find a driver to transport goods they wish to send. With bringr, a first for Belgium, bpost supplements the existing range with a complementary service that enables users to find a driver to pick up their goods at point A and deliver them to point B. The role of bpost is to facilitate the sharing platform. People who want to work as drivers are not under contract at bpost but they are required to follow all applicable rules and regulations. For the pilot, bpost selected Antwerp province as goods pick-up location. The delivery address is agreed between the two parties, which means it is not restricted to Antwerp. By the beginning of April 2017, about 3,600 drivers and 7,800 users had already registered with the platform. The service is now also available in Ghent and Brussels, including their environs. International parcels Through its Landmark Global subsidiary bpost also aims to be a player on the international parcel market, offering its customers the best solutions. This cross-border parcel strategy, driven by e-commerce, was supported by the acquisitions of FDM and Apple Express in FDM (Freight Distribution Management) is specialized in providing a personalized service to customers for the storage and distribution of products in Australia. FDM s business is third party logistics, warehousing, transport and distribution. Apple Express is a Canadian company that primarily provides last mile delivery, transport and fulfilment services to customers in Canada and the United States. Landmark Global has various strategic facilities that are located close to customers in the United States, Canada, the United Kingdom, the Netherlands, Belgium, Poland, China, Hongkong, Singapore, Australia and New Zealand. To further strengthen our position on the international parcels market our domestic and international parcels organizations were merged in The new organization goes by the name Parcels & Logistics. This enables us to capitalize more readily on the growth of the parcel market and develop new e-commerce activities. We grow In 2016 our domestic and international parcels organisations have been merged into an adapted organizational structure that goes by the name Parcels & Logistics.

5 bpost ACTIVITY REPORT 2016 As part of our hybrid network strategy, the 2016 acquisition of DynaGroup enables us to add more logistical solutions to our service for e-commerce customers. DynaGroup, which was formed in 1995 and has its head office in Sittard (Netherlands), offers a range of logistical services and software, including the repair of electronics (from smartphones to coffee machines) and personalized e-commerce delivery services for both small products (ranging from passports to smartphones with contract finalization on the doorstep) and large consumer products (such as the two-man delivery and installation of washing machines). The company has thus successfully specialized in integrated end-to-end solutions and software, which offer clear added value to our parcel customers. In 2016 we further modernized our post offices and continued to put effort into multichannel ways for our clients to contact bpost. We want to lead, and to do that, we have to innovate. bpost is happy to contribute in this respect. Frederik Wybo, e-commerce manager Schoenen Torfs Schoenen Torfs has made a name for itself in the footwear and clothing industry. The company is best known for its customer focus. By innovating continuously and responding to important market trends, we try to offer the best service in order to make the entire process as easy as possible for our online customers, Frederik Wybo says. Customers in control Online customers can always choose from four different delivery methods. This type of convenience is very important to us. They must be able to choose where and when they receive their parcel. We can offer these options, thanks to bpost. Customers can have their parcels delivered at home or at the office, collect them from a pick-up point or go for a parcel locker. We also allow our customers to choose their time of delivery. Our customers can simply choose a time that suits them best. They can specify any weekday they like for their parcel s home delivery during the day, but they can also choose an evening delivery between 6 and 9 pm or a Saturday delivery. Sustainable processes Torfs is all about customer focus, but also sees sustainability as an absolute priority. We think it makes sense that our delivery partner also pays a lot of attention to their environmental impact. bpost delivers its letters and parcels with as little impact on the environment as possible. We support this and we consider it important. Contributing to innovation Besides sustainability, we also focus constantly on innovation. We want to lead, and to do that, we have to innovate. bpost is happy to contribute in this respect. Evening and Saturday deliveries are an example of this. They also seek different opportunities to optimize home delivery, for example by delivering parcels to the neighbors or at a safe place in our customer s garden. bpost understands that e-commerce is a very important growth area for us. Because it continues to innovate itself in order to respond to important market trends, it is an excellent logistics partner for us.

6 We grow Proximity and convenience A third growth hub alongside domestic and international parcels is proximity and convenience. Our dense point-of-sale network and our postmen, who enjoy the confidence of our customers, ensure that we are close to our customers and able to offer them innovative solutions. Our network Our close-knit sales network ensures that we are never far from our customers. At the end of 2016 there were 662 post offices in the sales network, which is completely in line with the agreements in the management contract between bpost and the Belgian state. In 2016 we continued to work on modernizing those post offices: The visual aspect of the exterior of 41 offices was freshened up. The interior of 102 offices was renovated. In 2016 a lot of initiatives were also launched to improve the customer experience: 82 offices opened a dedicated SME counter staffed by an expert in the specific needs of SMEs. An improved queuing system was rolled out in 149 offices. A great many improvement actions regarding parcels were set up in 2016 too: Parcel fast lanes were set up in 9 offices, enabling parcel service customers to get immediate assistance from a member of staff. Unstaffed parcel counters were set up in 37 offices. Here, customers can drop off parcels for sending without having to queue. 83 offices were equipped with drop boxes, primarily in the self-service areas, where customers can drop their parcels between 6 am and 11 pm, seven days a week. The opening times of some post offices were changed in 2016, based on a selection of parameters, such as the number of customer contacts, the nature of the transactions and the time they take, the customer average waiting time before being served, and busy and less busy periods. In 2016, the number of visitors and transactions in the post offices actually increased for the first time in seven years, as a consequence of the rise in the number of parcels. Lots of customers actually prefer to drop off or pick up their parcels at a post office or post point. The post points (there were 675 of them at the end of 2016) also recorded a rise in the number of transactions compared with 2015 (+10%). As well as the post offices and post points, customers have a range of ways to contact bpost and use our services. These include 3,830 stamp shops, contact centers, parcel lockers and online services like e-shop, e-banking and apps. Bank and financial products After acquiring credit firm Krefima in 2015, bpost bank had a special focus on mortgage credit in After an intense training program for all customer advisors, office heads and deputy heads, mortgage products are now offered at 160 post offices. bpost recorded a gradual rise in the number of applications and approved applications, with exponential growth towards the end of the year on the back of a marketing campaign in November ,000 In 2016 we have sold bpaid cards and special attention went to mortgage credit.

7 bpost ACTIVITY REPORT 2016 Our dense point-ofsale network and our postmen, who enjoy the confidence of our customers, ensure a lot of opportunities to offer our customers innovative solutions. Worldwide money transfer through Western Union remains a successful financial business for bpost. The number of transactions grew by 4.5% in 2016 and the service was rolled out to an additional 40 post points. As a result, Western Union is now available at all post offices and at 200 post points. This service certainly adds value to the bpost product range, not least because Western Union offers cross-selling opportunities, such as opening a bank account or buying a bpaid payment card. More than 125,000 bpaid cards were sold in This card is not only a safe means of payment when shopping online. It also hands users the possibility of keeping their spending under control as they cannot spend more than the amount they have put on the prepaid card. Solutions Our proximity to customers is a huge advantage we are able to capitalize on. Our dense point-of-sale network, but also our postmen, who enjoy the confidence of our customers, offer a lot of opportunities. That proximity enables us to offer innovative solutions. Solutions that simplify administrative or operational processes. These are often solutions for public services and public sector companies, which bpost helps to set up simple, user-friendly processes when new measures or procedures are introduced. These solutions were expanded and refined in Examples include the management of traffic fines, the processing and delivery of RIZIV/ INAMI health care provision certificates and the delivery of number plates. The scope of this last contract was enlarged to include the registration of old mopeds.

8 We grow Solutions relating to observation or enquiry. For example, in 2016 we continued our checks ensuring that building permits were displayed where they should be. The bclose project was also very successful. Here postmen gather information during their round on a group of senior citizens as identified by the client, the local social security department (OCMW/CPAS), to assess whether they are socially isolated. In 2016 a pilot was conducted on behalf of a telecommunication operator, in which postmen collected information during their round needed in connection with the renewal of cables (such as distance between the house and the street and the type of subsoil). The home delivery of food shopping services, provided under the combo brand name in 2015, was rolled out to the inhabitants of Ghent, Deinze, Wetteren, Lokeren, Dendermonde and Aalst and surrounding towns in We also continued with the delivery of new decoders and modems for telecommunication operator Proximus in Together with its subsidiaries bpost prints information letters for customers, agrees delivery windows, and delivers the decoders. bpost had delivered almost 300,000 decoders by the end of Diversification through Ubiway Another step within our growth and diversification strategy in proximity and convenience was the finalization of the acquisition of the Belgian activities of Lagardère Travel Retail, which was approved by the Belgian Competition Authority at the end of LS Distribution Benelux and Lagardère Services Travel Retail Benelux have changed their name to Ubiway and Ubiway Retail respectively. The commercial entities such as AMP, the Press Shop/Relay network, the kariboo! pick-up points and the subsidiaries Alvadis and Burnonville will continue to operate under their existing name. As part of the deal, bpost and Lagardère Travel Retail have signed a franchise agreement to operate and develop the international brands of Lagardère Travel Retail, including Relay, hubiz, Hello!, So! Coffee and Hub convenience. Ubiway enables bpost to invest in the proximity and convenience sector by opening more points of sale and diversifying the range of products and services for our customers. At the same time, that allows us to expand our network of pick-up points, so that we are able to offer a wider range of services and delivery options for parcels. Through this, bpost also aims to be a reliable long-term partner within the press industry and will continue to work hard to provide a high-quality press distribution service. Ubiway enables us to expand our points of sale and pick-up points network.