This year DPD is celebrating its 25th anniversary in Russia. The company started its operations by transporting large-size equipment for the oil sector. In 1998, the Swedish post acquired a share in the company. In 2004, GeoPost – an international holding which is part of Groupe La Poste – acquired it. The company started serving online stores four years ago, and as of today cooperates with all the leading Russian e-commerce players. In early 2017, DPD Russia announced a merger with SPSR Express, a leading B2B and B2C shipment company and a key player in cross-border orperations.
DPD Russia’s Commercial Director Leonid Zondberg shared with East-West Digital News his vision of the latest and future developments of e-commerce delivery in Russia, including the growing role of innovation in the field of logistics.
Do you consider the Russian e-commerce delivery market to be essentially different from that of Western Europe? Do you consider it to be “mature?”
Probably there are no fundamental differences. However, there are some peculiarities – for example, cash-on-delivery and partial returns are widespread practices in Russia, which leads to increasing delivery costs. In Russia, there are fewer delivery options – it is not natural to leave a parcel at neighbors, in boxes by the house, in a secret place or in a trunk. Thus, a German courier makes more than 100 stops per day vs. 30 for his Russian counterpart.
Moreover, delivery time differs depending on a country. For example, in Europe it usually takes one or two days to deliver a parcel by car. Meanwhile, in Russia, because of its huge territory, poor-quality roads and unfavorable weather conditions, delivery time is usually longer.
Another difference is that in most European areas, DPD organizes the delivery within a one-hour slot, while in Russia we’ll offer a two-hour slot, using our service Predict, starting from 2017.
It is worth noting that the rates, which have been decreasing steadily over the past few years, are today comparable to those in Europe, regardless of the distance difference.
Pickup point networks are growing very fast. Recently, for example, our partner network has reached nearly 1,000 pickup points in Russia and in the countries of the Customs Union.
What about innovation?
In this field, western companies tend to be quicker at testing new delivery tools and implementing new services – but Russian industry players quickly adopt and localize all the innovations.
Thus GeoPost has recently acquired a share in Stuart, a UK crowdsourcing platforms operating with motorbikes in London, Paris and Barcelona. In Moscow, we have been cooperating successfully with Bringo. So far, such services operate in the capital exclusively, however, they will expand to other major cities sooner or later.
Most significant recent innovations in shipment services are on the IT side. They affect internal processes (analysis and forecast of traffic and pickup points occupancy rate, etc) as well as client services (web interfaces for senders and addressees, online change of delivery terms, parcel tracking, etc.). These online services allow better integration with the retailer’s IT system and closer interaction with end users.
As driverless transport is expected to develop in the future, it is quite possible that the Internet-of-Things will allow the logistics industry to reach a new level of development.
How do you envision the development of the Russian e-commerce shipment market in the future?
Since online consumers in the regions are getting more and more active, logistics both inside and across regions is developing. Retailers’ capacities need to be adapted accordingly.
If e-commerce keeps developing as quickly as it has been doing for the past years, we will witness thorough changes in the nearest future. As a major improvement, delivery time will be reduced to up to one day, at least in major cities. Such a system will require retailers to build a network of intermediary warehouses, from where goods can be delivered to customers within one day. This is done already by Amazon [in other countries] as part of Amazon Now.
Another visible trend is the progressive extension of the shipment service offer to new product categories. This concerns, in particular, large-size goods such as household appliances and furniture. We’ll launch a pilot project to ship such goods in Moscow in the nearest future. Another niche is the delivery of groceries, which requires special equipment for transportation and storage.
DPD claims to deliver orders from the USA to Russia “at low prices.”
Which types of customers does DPD serve in the field of B2C e-commerce in Russia?
We are mostly focused on Russian businesses, however, we also deliver from more than a hundred of foreign stores. For example, we deliver sporting goods from Europe and China for one of the world’s largest sportwear brand. In cooperation with them we’ve introduced an international returns service.
We serve many other renowned brands and online stores form the US. Among our other partners are Chinese logistics service provider SF Express and marketplace Nazya.com.
DPD saw its B2C deliveries increase by 59% in terms of parcels in 2016. Why such figures amid relatively moderate market growth?
As a market leader, DPD partners with almost all major online stores. If a new strong player enters the market – as a rule, an offline retailer launching online activities – we are always short-listed as a delivery service provider. Major clients, including western ones, often hire several service providers. Therefore we seek to extend the scope of our existing contracts both geographically and in terms of new services. For example, in November 2016, MediaMarkt started using our pickup point network in Siberia, in addition to our courier delivery services. Other regions will join in a further stage.
Since last year there have been several cases of mergers or acquisitions involving both domestic players and international ones (Posti, GeoPost). Why is the market consolidating in such a way, and how will DPD and SPSR position themselves in this context?
Indeed last year saw a number of such moves on the express delivery and courier service market. Posti [the Finnish post and its dedicated Russia subsidiary Itella] acquired MaxiPost while [Russian service providers] TopDelivery acquired Maxima-Express and Boxberry took control of Axiomus.
These companies aimed to strengthen their positions on the e-commerce service market, which has become the main driver of Russia’s logistics market. By absorbing even small players, they sought to acquire additional specific resources or competencies – for example, to develop deliveries in Moscow or St. Petersburg, or a pick up point network.
The consolidation of the logistics market is a reflection of the consolidation of the e-commerce market itself. Major online stores tend to develop more actively than smaller ones [which have suffered from] decreasing demand [in certain market segments]. Thanks to strong promotion, these major players manage to attract many of the customers who switch from offline to online. In addition, market leaders often offer better pricing and delivery conditions.
The share of foreign players – including, first of all, AliExpress – is increasing too. Obviously, only large providers are able to address the needs of such customers. Our merger with SPSR Express will allow us to become the leader in all the main segments of the express delivery and courier service market, including B2C. By uniting our material and intellectual resources, we can improve the service offer in the country and, ultimately, stimulate the development of Russian e-commerce.
- EWDN has published reports on the Russian e-commerce market as well as, more specifically, the warehousing and fulfilment service market. Click here to download your free copy.
