In just ten years, bpost has worked itself up from the lower ranks of European postal companies to the very top. According to CEO Koen Van Gerven, the postal company is now even one of the most innovative companies in Belgium.
bpost's head office in the heart of Brussels has been under renovation for a year. The three lower floors are being completely refurbished and the shopping center is being ushered into the 21st century. You still have to search a bit to find the temporary main entrance, and the inside is a maze. But, once upstairs on the fourteenth floor, with a stunning view across our capital, CEO Koen Van Gerven begins his crystal clear story. As he puts it: "You scarcely notice it from the outside, but over this past decade bpost has booked fantastic progress. We have made impressive innovations in our products, processes and also our technology. We have gone from being a lumbering public enterprise to one of the healthiest postal companies in Europe."
Faster, everywhere you look
The innovations bpost has implemented were definitely necessary in order to stay relevant. Its market is currently experiencing massive upheaval. Traditional letter mail continues to crumble, while parcel services continue to grow quarter after quarter. The solution for bpost seems as clear as day: take the business model, replace "letters" with "packages" and Koen is good to go for the next 10 years. Wrong, that is not the answer. Koen Van Gerven: "Packages generate different expectations than letters. No one is waiting impatiently for their telecom bill to arrive, but they definitely are for the new iPhone they just ordered. Packages not only have to be delivered faster, people also want to choose where their package is delivered. This may be your home address, via various post collection points, or wherever you happen to be at that moment."
Cobots and parcel lockers
Having a clear idea of expectations is one thing, meeting them is another. bpost has already built a new sorting center in Brussels to handle sorting for all the parcels in Belgium. A single sorting center means later opening hours are possible, and offers extra options for same day delivery. The postal company is also experimenting with cobots, a next generation of robots that further automate sorting post. bpost also introduced deliveries during the evening, and on Saturdays and Sundays. Back in 2012, bpost launched parcel lockers to provide more flexible delivery addresses. In early September, bpost supported the Parcify start-up, that directs parcels to wherever customers happen to be, for example, right now when they are walking the dog in the park.
Expanding the ecosystem
"We rely on our robust and extensive "last mile network" for all of these initiatives. bpost still employs 16,000 postmen and women who make deliveries to the farthest flung corners of our country, each and every day. Few of our competitors can handle the volumes and the peak volumes they create," says Van Gerven. "Nevertheless, we continue to expand our ecosystem to remain flexible and agile. For example, we will soon be able to deliver within two hours, or handle oversize parcels that require two employees." Normally, bpost will kick off concepts with smaller, external partners, because new initiatives tend to get going more rapidly in a smaller environment. Take, for example, the launch of CityDepot with smart, city-wide distribution, or Bringr, a kind of Uber-platform where anyone can submit a bid to deliver a parcel.
Paper still relevant
Doesn't this mean that bpost is cannibalizing its own services? "I get this question a lot in elevators and at roadshows. I can appreciate all the uncertainty in this ever-changing world, but with these types of initiatives, all we are doing is opening new markets and making our range of services more complete. We are not cannibalizing, in this way we are attracting larger volumes, which also use our current "last mile network". Furthermore, the traditional letter post will not disappear any time soon. Every day, we still deliver over 9 million letters, representing 60% of our EUR 2.4 billion revenues. Paper is still relevant, for both businesses and private individuals. "A direct marketing letter has greater 'stopping power' or 'call to action' than an email message. Postcards are hung on the fridge, looked at, held and elicit more emotions than a text message or email," says Van Gerven.
Parcels not only generate different expectations to letters, but they also cross our borders more often, which makes their handling more complex. Half of what Belgians purchase online comes from abroad. This trend is a good reason for bpost to do more takeovers abroad. The Bel20 company is now active in the US and since 2016, they are also in Poland, Canada and Australia. In these countries, it can capitalize on its expertise in international routes and create benefits of scale for purchasing and implementing technology.
© 2021 KPMG Central Services, a Belgian Economic Interest Grouping ("ESV/GIE") and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.