Exclusive interview: Diversification key to growth in challenging market, says Geopost CEO

Geopost plans to continue exploring all “alternative sources of growth” during the remainder of 2023 and into 2024, including health, food, international, B2B, and SMEs, as it tries to drive revenues amid a stagnant European e-commerce market, CEO Yves Delmas told CEP-Research in an exclusive interview.

Speaking at yesterday’s (October 11) ‘Leaders in Logistics Last Mile’ event in London, Delmas noted that currently, for the first time in the history of e-commerce, the market is declining “in almost all European countries.”

He said: “I have been in this industry for 32 years, before e-commerce even existed, and I have never seen this much of a significant decline before. No European countries have escaped this tough reality of sluggish B2C volumes. We are seeing B2B performing better as more consumers shift to physical commerce, rather than e-commerce.”

Volumes lower than expected

This declining e-commerce market, as well as rising inflation leading to higher costs, has resulted in volumes being “a bit below expectations in 2023,” Delmas said. “I can’t provide specific figures right now. Geopost volumes are not dropping massively, but we are, like everyone else in the market, struggling right now,” he added.

Geopost’s most recent figures revealed that revenues rose by 2.2% to €7,639 million between January and June 2023 as higher prices compensated for a 1.6% volume decline. However, operating profits were down to €19 million. Excluding large-scale material non-recurring items, operating profit decreased by €73 million on a like-for-like basis.

Focus on quality

Despite the challenging environment, the parcel operator remains focused on quality to ensure that increasing customer expectations are being met. These expectations were highlighted during Delmas’s keynote presentation at the Leaders in Logistics event and included affordability, reliability and sustainability. He also revealed during his talk that the next e-Shopper Barometer, delving into consumer trends in more detail, will be released in February next year.

“I know it sounds like a nice advertising campaign, but it is reality – we never make concessions on quality,” he told CEP-Research. “The reason customers stay with us is because our service performance is excellent. It’s important to remember that building extra quality into operations doesn’t cost more, it can actually save you money if you do it right.”

Temperature-controlled deliveries

La Poste’s international division, which dropped its DPDgroup brand earlier this year and embraced the “more global” Geopost brand to support its growth and diversification ambitions, is now taking its reputation for quality service to new market segments, including healthcare, food and international, which Delmas notes “are less sensitive to the overall economic environment.”

One of the biggest growth areas for Geopost now, according to Delmas, is temperature-controlled food delivery. “We are already very successful with this in France and Spain, and now we plan to duplicate this success in five other European countries including Portugal, Poland, Italy, Belgium and Holland,” he said.

In the Netherlands, Geopost in 2022 acquired Cool Runnings Transport, which provides conditioned transport, particularly for fresh and frozen foods. This followed the acquisition of BK Pharma Logistics and BK Sneltransport the year before. BK specialises in conditioned transport for major national and international businesses in the healthcare, food and laboratory industry.

Niche business

“These acquisitions will help us build our temperature-controlled food delivery network in the Netherlands,” Delmas continued. “We are building from scratch in Belgium, Portugal, Italy and Poland, like we did in France and Spain.

“We really see food as a key growth lever. First, there will always be a clear demand for food. And second, in most European countries there is a gap in the market for next-day temperature-controlled food delivery, which offers national coverage. We have an opportunity here to build solid market positions in this very specific segment,” Delmas added.

Cross-border growth

For international delivery, Geopost is currently experiencing “very solid growth.” And thanks to the launch of a new day-definite delivery service for cross-border shipments, the firm hopes to strengthen its position in international further.

“Cross-border currently represents more than 23% of our total turnover,” explained Delmas. “We are currently number one in Europe when it comes to cross-border flows. And our Day Definite service, which offers cross-border delivery on a specific date, from postcode to postcode, is an important element for expanding our business in this area.”

Under its ‘Together and Beyond’ strategy, presented in March 2021, Geopost aims to “conquer new horizons” by expanding increasingly outside its historic home market of Europe, including through stakes in strong regional players such as Aramex, Ninja Van in South-East Asia and Brazil’s Jadlog.

E-commerce ambitions

“We have strong ambitions to strengthen our presence in Asia in particular,” Delmas noted. “Furthermore, we also have strong ambitions with eShopWorld.”

In 2022, Geopost strengthened its footprint in the e-commerce value chain through the acquisition by eShopWorld of Scalefast, a Los Angeles-based provider of global e-commerce solutions. eShopWorld is a subsidiary of Asendia, whose operational management Geopost has been responsible for since July 2021.

The contribution of Asendia to Geopost’s turnover reached €2,514 million in 2022, a 16% increase versus 2021. “I think the growth of eShopWorld will reach amazing speed in 2024. We are currently in the ramp up phase for this,” Delmas added.

OOH delivery

During his presentation at Leaders in Logistics, Delmas also highlighted the growing out-of-home (OOH) sector and how Geopost believes that this area will grow three times as fast as home delivery in the next five years, driven by surging C2C volumes.

“We have invested heavily in PUDO solutions in recent years,” he said. “We currently have 95,000 contact points in Europe. I think we have the densest OOH delivery network, which operates in all Geopost countries, on the continent. In France, for example, pre-COVID we had 10,000 PUDOs, but we now have 16,000.”  

Future predictions

Looking ahead to this year’s peak season and to 2024, Delmas noted that it will be hard to predict how volumes and the e-commerce market in general will fare, but his hope is that the industry will return to “steady and robust growth.”

He concluded: “The economy is tough right now and e-commerce is declining, so we must be agile and target growth where it is available. We believe that even in this tough market there are still some good sources of growth, and this will be our focus for 2024, while continuing to service our existing business in the best way possible. 2024 will be another demanding year, but there will be opportunities.”