Case study « bpost by appointment »

Peter Somers Member of the Executive Committee

bpost at a glance

3

Some figures

Mass Retail & Channels

• 669 post offices • 674 post points • Others: stamp shops, e-shop, contact center, …

Mail Service Operations

• ~13,200 red boxes • 5 sorting centres, 280 operational platforms • Collect and distribution 5x/week • 10,000 daily rounds • 5.3 million addresses • ~10 million mail items/day • ~100,000 parcel items/day

Normalized EBIT

bpost at a glance

Employees Average FTEs

Key financial indicators

EUR million

Reported EBIT

Total Operating income

2010 2011 2012

Total operating income (revenues) 2013

85%

Note: Only reported results have been audited; the presentation of normalized results is not in conformity with IFRS and is not audited 3

29,311 27,973

26,625 25,683

2010 2011 2012 2013

2318 2365

2416 2429

2013

319 359 404 436

322

69

323 451

Other sources

of revenues

26%

Parcels 10%

Domestic Mail 64%

4

Our strategy is simple and focused

Continue to focus on core mail

business

Innovate / grow within core

competencies

Generate continued productivity

gains

Keep stakeholders

on board

Cash generation

and dividends

Case study ‘bpost by appointment’

6

THE STARTING POINT

THE MODEL

WHY A POSTAL OPERATOR?

CONCLUSION

1

2

3

4

THE STARTING POINT 1

Our mission

We bring everything that really counts to

every door

We believe home delivery has the future

e-Commerce growth

Home delivery is preferred

2,2 m senior citizens (2020)

10

4 interesting customer segments

Young busy families

who seek comfort and

time gain

Frequent online

shoppers

Less mobile and elderly

people

SOHO’s who are looking for service

11

“Food” has an

enormous potential

as delivery market

12

Half of all spendings of a household

(Part of) grocery shopping is “boring”

Other heavier items

Big tickets

Regular (daily, weekly) purchases

“Food” has an

enormous potential

as delivery market

13

In this context, we test “bpost by appointment”

Starting from the consumer

To deliver & collect any good anywhere anytime

Responding in a sustainable way to trends in society

That builds on the strenghts of bpost

An innovative service

THE STARTING POINT

THE MODEL

1

2

15

The model: 4 key steps

for consolidated

delivery, paid by the receiver”

16

The model: 4 key steps

for consolidated

delivery, paid by the receiver”

• The customer agrees on a delivery time with bpost and pays for it. He goes online via the merchant’s webshop or via bpostopafspraak.be

• All purchases and parcels are delivered together at that time

• The customer can also return goods (empties, ironing, etc.)

• The customer pays for the goods safely and securely online or by bankcard at the time of delivery

17

STEP 1

On www.bpostsurrendezvous.be

• The consumer selects a time slot to have his goods delivered at home by the postman

• He can manage his personal delivery preferences

• He can track the status of his orders

• He can find all information on participating merchants and their latest offers

• He can see which stores are available to deliver on his appointment

Make an appointment (or go shopping)

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STEP 1

The bpost website is an open online shopping mall, offering supermarkets, non-food retailers and specific food webshops

• The consumer can start shopping from the bpost platform or from the merchant’s webshop

• Participating merchants meet certain predefined criteria: o Sufficiently broad or deep productassortment o Deliverable on all weekdays and online accessible 24/7 o State of the art webshop integrated with the bpost website oWillingness to participate in co-marketing o Excellent operational preparation and logistics

Shop via bpost or the webshop of the merchant

STEP 2

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STEP 1

Ordered goods are delivered at home in a consolidated way by the postman on the appointment of the consumer • The cold chain is rigorously respected (fresh (0-4°C),frozen (-18°C))

o Isothermic boxes, ambient transport o Follow up of temperature with data loggers (sampling) o Temperature control of every box at the consumer

• Sending back goods is possible as well

o Laundry, ironing, drycleaning,… (hanging transport) o Empties, return packages,…

Receive all your groceries and parcels together on appointment

STEP 2 STEP 3

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STEP 1

Goods which have not been paid online yet, are paid to the postman The postman accepts: • Debit cards • Credit cards • Electronic meal vouchers bpost deposits the money on a weekly basis to the merchant

Pay everything at the moment of delivery

STEP 2 STEP 3 STEP 4

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Digital platform serves as “shopping mall” & scheduler service

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Transparent business

model for all

Merchants

Consumers

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Merchants

• Pay per order • Based on number & type of

boxes • Based on first mile service (e.g.

pick-up or drop-off)

Consumer

• Pays per visit • Tariff can vary according to

service asked and supplements apply, e.g. delivery on a higher floor

Grow with a qualitative service

at variable cost, and without bothering

about the last mile

Get all your groceries

and parcels delivered

when & where you want, also after 17h

* Indicative tariff, depends among others on number of boxes per order, size of merchant and service requested

~4€* per

order

9,95€ per visit

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THE STARTING POINT

THE MODEL

WHY A POSTAL OPERATOR?

1

2

3

We have

the right infrastructure

We have the right people

We have the right people

The postman as service provider

• People = our strength on which we can build our future. • 11.000 postmen on the payroll • 1 network for the delivery of mail and parcels Groceries will only be delivered by postmen. • Trainings (also on service providing) Our current ‘bpost sur-rendez-vous’ customers consider the postmen as a hero.

We have

the right infrastructure

Largest operational network in Belgium to deliver mail and parcels

• 2 full automatic sorting centra for parcels, 5 cross-dock platforms and 297 distribution platforms with loading docs • 10.000 daily distribution rounds @ 4,5 mio families • >100.000 parcels / day, delivered at D+1 • > 10 mio letters /day • Now also delivery of parcels on Saturday

AX

CX

LX

BX

GX

Collect

Masspost

Customers

DistributionOffice

AX

CX

LX

BX

GX

Collect

Masspost

Customers

DistributionOffice

We have

the right infrastructure

We respect the strict Belgian regulation on hygiene and cold chain

• We use cooling elements for fresh and carbonic ice for frozen products. • The postmen measure the temperature before delivery on the basis of samples. • All info is registrered and communicated to the merchants EPP Boxes for fresh and frozen (inside ): 503(L) X 304(B) X 404(H)

We have

the right infrastructure

Platform for consumers and merchants Payment system

• bpost built a consumer portal to: o Access e-shops of supermarkets, food and non-food e-

tailers, service providers to shop and book appointment for home delivery through API integration;

o book appointment (www.bpostsurrendezvous.be) • bpost built a merchant portal to receive orders, announce orders and print labels

• bpost developed a ‘pay at the door’ system.

THE STARTING POINT

THE MODEL

WHY A POSTAL OPERATOR?

CONCLUSION

1

2

3

4

This is one of the

projects in a transformation

from mail to goods

Parcels

Goods Mail

Mail

FUTURE

PRESENT

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A relevant service to

society

A response to ecologic challenges

Home delivery of groceries reduces CO2

• 20 – 75%: compared to using own

car • 80-90%: with optimised routing

A response to the challenge of the ageing population

Cfr. Study by University of Washington Cfr. Study in Turnhout

Meals

Local shop-ping

Para-medic

Laun-dry/

ironing Parcels

Pharma

…

Groce-ries

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2011

2012

2013

?

Concept

Tests

Evaluation

Roll out (tbd)

A project built step by step

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Evaluation: tests

encouraging

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Evaluation: tests

encouraging

After >10.000 deliveries

• Food safety and cold chain completely under control (only 0,2% major incidents)

• 99,5% of deliveries as agreed

Observed consumer behavior:

• 19,8: average usage frequency per year; 73% of consumers use service at least every 2 weeks

• 106 €: average basket value at a supermarket

• 1,95: average number of orders consolidated per visit

Waver Sint Niklaas

37

Why now?

Online food growing rapidly worldwide

New ‘pure players’ in food successfull in several markets

Google en Amazon launched groceries (incl. fresh) in the U.S.

Recent examples of consumers subscribing/ paying for delivery services: Shutl.com, Amazon premium, UPS my choice

Recent examples of home delivery of food by other postal operators: Switzerland, Germany, France, Scandinavia, …

thank you

for your

attention