Deutsche Post-DHL announces heavy investment in e-commerce parcel shops

Deutsche Post-DHL has announced an aggressive move into the European e-commerce market through a major expansion of its network of drop-off points. “By the end of 2013”, the company states that it intends to open 20,000 new parcel shops in Germany giving it a total of 50,000 drop-off points across the country.  These will be in addition to the development of its ‘packstation’ network and the evolution of concepts such ‘parcel boxes’ for individual homes.

The strategy is to establish the infrastructure required to match the growth of online retailing and stay ahead of its competitors. DP-DHL forecasts that the e-commerce sector will grow from 10% of the total retail market to 20% over the next ten years. In Germany, at present, e-retail related revenues are valued at €30bn.

In order to capture such business, DP-DHL is focusing on partnerships with retailers selling over the internet, but also upon physical last mile capabilities. Jurgen Gerdes, who leads the Deutsche Post-DHL Mail division, commented that “the success of e-commerce will increasingly be decided during the first mile and, above all, during the last mile”.

Deutsche-Post DHL’s business in this area is substantial, with parcel revenue growing by 10.5% per annum since 2009; and it now accounts for 25% of revenues at the Mail business. However, this is less than the near 50% of revenue seen at Britain’s Royal Mail for example.

The cost of such a commitment is substantial with the company intending to invest €750m into the e-commerce orientated parcels business over the next couple of years. It is unclear what size the new shops will be, but presumably the properties will represent a substantial capital asset on DP-DHL’s balance-sheet. Such investment also illustrates that the entry barriers into e-commerce logistics could be substantial and might represent a considerable opportunity for incumbent national mail providers with large legacy property portfolios. Furthermore, they might also represent a threat to Amazon which has been a heavy investor in logistics infrastructure but has not yet invested in a last mile capability.

Find out more about Europe’s e-commerce logistics sector in Ti’s recent report.