DPDgroup focuses on e-commerce in ambitious growth strategy
DPDgroup is aiming to double revenues by 2025 through new delivery services, acquisitions and international partnerships to profit from the worldwide e-commerce boom under an ambitious growth strategy presented by CEO Boris Winkelmann today.
Apart from strong organic growth and M&A deals, the ‘Together & Beyond’ strategy, which follows a record-breaking year, also aims to bring the diverse businesses of La Poste’s international subsidiary closer together, he told European media (including CEP-Research) in an online press conference.
Financially, the parcels operator aims to increase turnover from €11 billion in 2020 to €21 billion by 2025 and then to €27 billion by 2030. This would be achieved half through organic growth and half through external growth in the form of acquisitions, the CEO said.
Federator, not integrator
Overall, by 2030, DPDgroup (the trading brand for La Poste’s international holding GeoPost) wants to become ‘the international reference in sustainable delivery and a leading enabler of the e-commerce acceleration’.
“2020 had a profound and lasting impact on the e-commerce and logistics industry,” Winkelmann declared. “I am proud of my team’s resiliency and success and believe we are better positioned than ever to become the international reference in sustainable delivery and a leading enabler of e-commerce.
“There are numerous opportunities to be seized, we can rely on our operational excellence and innovation spirit, so there is no limit to what we can achieve in 2025 together and beyond.”
Winkelmann explained that DPDgroup would follow a ‘federator’ model combining better internal leverage across an expanded group with commercial and operational partnerships with postal operators and other companies. This would be “an alternative to the integrator model”, he commented in a reference to the business model of DHL, FedEx and UPS.
E-commerce first
Winkelmann explained that there were many growth opportunities in e-commerce. Despite strong growth during the COVID-19 pandemic, online sales still only represented about 13-15% of retail sales in countries such as France and Germany compared to as much as 30% in “mature markets” such as the UK, the USA and China, he pointed out.
In addition, he predicted strong future growth for food deliveries as this trend would remain after the pandemic along with a rising need for urban logistics services in future.
At the same time, DPDgroup needed to diversify its services and move closer to consumers to counter the risk of ‘commoditisation and disintermediation’ from e-retailers (such as Amazon) expanding their own logistics activities, he explained.
Three growth pillars
Winkelmann outlined three ‘growth pillars’ over the coming decade. DPDgroup would expand its core business by defending its B2B activities and helping retailers to go omnichannel. In addition, it would develop its European cross-border service towards “a day definite” service, the CEO said. DPDgroup sees itself as ‘the current leading B2B player in Europe, as well as the leading European road network with around 25% share in volumes’.
In terms of consumer deliveries, DPDgroup will continue to build on its current position to become ‘the most innovative premium X2C player in Europe’ with a 15% annual growth rate until 2025. It will stay focused on the ‘premium’ market but also develop a ‘smart, selective mass market approach’ tailored to each country with lower cost options.
In parallel, it will expand its ‘out of home’ (OOH) network to 100,000 Pickup points by 2025, including 70,000 parcel shops and 30,000 lockers. The company expects OOH deliveries to rise to about 25% of total consumer deliveries by 2025, bolstered by the growing C2C segment.
In terms of services, DPDgroup will continue to capitalise on healthcare and food services, leveraging its expertise in temperature-controlled delivery and its highly developed urban logistics network. Stuart’s express urban logistics services will be expanded to Poland and Portugal this year.
While DPDgroup already has a large stake in urban logistics, it wants to accelerate its development with a strong offering relying on five high potential services: same day, urban hub-to-home deliveries, time slot evening deliveries, ship from store, grocery “proximity points” as an infrastructure for urban services and micro fulfilment capabilities to enable h+ delivery in urban areas.
Conquering new horizons
Moreover, geographical expansion will play a big role to double DPDgroup’s intercontinental (non-European) revenues from 10% to 20% by 2025, given that markets outside Europe are expected to grow faster over the next decade than in Europe. The company plans to expand in South-East Asia, Middle East and Africa, and Latin America in particular.
Overall, it will “evolve from a multidomestic network to an interconnected international network”, aiming to offer solutions for the intercontinental e-commerce market. “Beyond transport and delivery, such services will also encompass e-commerce platform solutions to accompany and enable our customers to take part in the ecommerce acceleration,” the company stated.
Asendia synergies
“Asendia will help us reach this capability,” Winkelmann said. La Poste will transfer the €1.8 billion turnover cross-border specialist from its French mail division to DPDgroup this year. Asendia is present in 15 countries in Europe, Asia and the USA, and has more than 1,000 employees. DPDgroup will use Asendia’s e-commerce services unit e-ShopWorld to help retailers to go online.
Dynamic e-commerce growth to continue
In response to questions from CEP-Research, Winkelmann stressed that e-commerce would continue to grow ‘post-pandemic’ due to various factors, including the large number of new customers and new product categories. “This dynamic will stay,” he predicted. Another growth factor was the ‘deconsolidation’ of bundled B2B deliveries into individual B2C deliveries.
Against the background of the struggling retail sector, DPDgroup needed to “help retailers with conversion” from traditional shop-based sales to omnichannel. Parcel shops could assist by generating footfall from ‘click & collect’ shoppers who could be incentivized to make additional in-shop purchases, he suggested.
Regarding potential international partnerships, the DPDgroup chief highlighted opportunities in the area of transportation, last-mile delivery, digital enablement and e-commerce platforms.
30% more investments in 2021
DPDgroup is set to increase investments significantly this year on its path to these goals. CFO Cédric Favre-Lorraine said the parcels operator invested €300 million in capital expenditure (Capex) projects last year and this year’s figure would be “much higher” with a 30% increase.
Winkelmann declined to disclose how much DPDgroup might have available for acquisitions in the coming years but stressed: “We have support from our shareholders for external growth.”
The group has already made a fast start to M&A deals this year, winning regulatory approval for a majority stake in Bulgarian company Speedy. Explaining the recent decision to sell off Tigers, Winkelmann said: “Freight forwarding is not an activity that we want to pursue. And synergies with Tigers did not materialize (as expected).”
Colissimo stays separate
Moreover, although La Poste last week signalled closer cooperation in future between the French B2C parcels unit Colissimo and GeoPost/DPDgroup, Winkelmann ruled out a transfer of Colissimo from La Poste’s mail division (in the style of the Asendia transfer).
He explained that in France, like in most European countries, there was a “clear logic” to keeping the parcels service close to the mail service given that postmen and postwomen were delivering fewer letters but more parcels on their daily rounds.
Sustainability commitment
Finally, DPDgroup stressed its commitment to sustainability and reiterated its target of reducing by 30% its CO2 emissions per parcel by 2025 (vs. 2013). A key part of this is the plan to provide low-emission delivery in 225 European cities for 80 million Europeans by 2025. This plan aims to reduce carbon emissions by 89% and pollutants by 80% in the cities concerned.
