Poland’s parcel king, Rafal Brzoska has gone from near-bankrupt to billionaire by not delivering packages to individual houses.



It was the summer of 2016, and the walls were closing in on Rafał Brzoska. The then-38-year-old Polish entrepreneur had spent nearly two decades transforming InPost, a college dorm-room business that shoved supermarket coupons through letterboxes, into a $120 million–a-year commercial mail business. But competing against the government’s postal service was taking a toll. He had $65 million in debt and was frantically trying to find new investors while staving off the repo man.



“One of my key points with the new investors was, ‘I want to repay all the bonds, all the banks, all the people that have lent us money,’ ” recalls Brzoska, who is now 43. “The investors wondered why, and I told them, ‘I want to live in this country, and you only have one name, one face.’ ”



Those investors weren’t interested in Brzoska’s dying postal business but in the automated e-commerce lockers spinoff he had started in 2010. Amazon and other online retailers ship packages for pickup to these refrigerator-sized street lockers, which cost around $20,000 to install. They are popular because mailmen in Europe will rarely leave a parcel unattended on a stoop. That effectively stops porch piracy (54% of Americans say they’ve had a package swiped), but if you miss the doorbell you’re in for a slog to the post office.



On the brink of bankruptcy, Brzoska moved to shut down the mail business in summer 2016 ahead of talks with his rescuer, Advent International. The Boston-based private equity group took InPost private the following April. The $110 million deal paid off the company’s debts and gave Brzoska a further $125 million to nearly double the size of his parcel locker network to 4,400 in a year.



It was both a sweetheart deal and a shrewd one. Poles were late to embrace online shopping, but by 2017 e-commerce sales were growing at a steady 20.4% per year. Then came the pandemic, and online shopping jumped 36% in just 12 months. InPost’s revenues soared to $677 million, up 104% in 2020. Brzoska’s lockers handle 36% of all parcels shipped in Poland.



“There were a lot of reasons to say no to this one, and a lot of people did say no,” says Paul Atefi, a managing director at KKR, which loaned InPost $145 million in 2018 to build new lockers. Brzoska now has 11,734 lockers in Poland and more than 1,100 in the United Kingdom, plus a few hundred in Italy. “But when we started looking at a machine-by-machine basis, it was really compelling. Sometimes the payback was as low as 1.5 years per machine. . . . We love this company.”



The margins are enviable, too. Brzoska charges around $2 per package, and his costs are limited to locker setup, labor and leases for locker space. InPost pocketed $97 million in profit in 2020. “Our automated parcel machines are doubling revenue year-over-year,” he says.



“In Poland they’re targeting to increase Ebitda margins to more than 50%,” says David Kerstens, an analyst with Jefferies International. “And that’s compared to Ebitda for postal operators, such as Royal Mail, that are low single digits.”



Putting lockers within “slipper distance” of shoppers’ homes and offices transformed the business, says Marek Różycki, a consultant who advised Advent on the InPost deal. “If you have to trek a mile to your nearest locker in the pouring rain, that’s not appealing. But in Poland, my nearest locker is 350 meters away. It’s almost like home delivery—and more convenient.”



InPost learned the “slipper rule” the hard way. Advent rolled back Brzoska’s wild expansion to four continents, which left the company thinly spread and overextended. “This was a classic scenario where you have a charismatic, very entrepreneurial individual managing a business that was growing very fast,” Różycki says. “But he took on too many projects with too few resources.”



InPost went public again in January on Amsterdam’s stock exchange, valuing the business at $9.7 billion; Brzoska’s stake is currently worth $1.1 billion. He has persuaded investors that his lockers are a cheaper, greener alternative to fleets of delivery trucks crisscrossing Europe’s cities. One storage unit can do the work of 24 trucks, Brzoska says: “That’s why lockers are the future.”



While Brzoska was mastering the locker business, his main rivals—Europe’s postal services, plus UPS and Amazon, which have experimented with lockers—took a different tack, boosting home delivery and signing up thousands of corner stores to handle package pickups and returns. It was a quick, cheap way to scale versus lockers, but the pandemic-driven e-commerce boom has left bodegas from Berlin to Bilbao with aisles crowded with packages and long lines for returns. “Convenience stores aren’t that convenient for parcel collection, and particularly not during the pandemic,” Kerstens says.



Brzoska’s plan is to cut those lines—and leap ahead in Europe—with a $675 million deal, announced in March, to buy delivery giant Mondial Relay and drop his lockers at the busiest stores in its France-wide network.



Brzoska’s dramatic results have not gone unnoticed. Alibaba and Allegro—Poland’s e-commerce powerhouse, which accounts for a quarter of InPost’s sales—now have lockers in Poland, while Europe’s postal giants, such as Germany’s Deutsche Post, are also betting on parcel machines.



Brzoska isn’t the underdog this time, and he won’t shy from a fight. He credits his star sign and lucky bead bracelets—incongruous against his tailored suits—for the fact that he survived earlier rounds with postal heavyweights. “I told my team: ‘I am a Scorpio. I will survive, and you will survive with me, because Scorpios are always like this, fighting until the very end.’ ”



By Iain Martin, Forbes Staff

Amazon Warehouse Employees Prepare For Their Busiest Time Of Year

The Future Of Internet Shopping Might Not Be Home Delivery

Covid-19 led eCommerce revolution



The Covid-19 crisis has redefined the retail playing field.&nbsp; This has seen retailers scrambling to accommodate changed consumer behaviour as shopping surges online.&nbsp;&nbsp;



The pandemic has exposed the precariousness of a solely bricks and mortar model.&nbsp;&nbsp;According to a recent report by&nbsp;<a href="https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-south-african-consumer-sentiment-during-the-coronavirus-crisis" target="_blank" rel="noreferrer noopener">McKinsey</a>,&nbsp;consumers expect a relative shift to online shopping in most categories in the short term,&nbsp; driven primarily by a sharp decrease in in-store shopping. In the longer term, 40 percent of consumers plan to increase online shopping once the crisis is over.



Fear of infection drives move to online



“Previous epidemics have foreshadowed this online trend,”&nbsp;&nbsp;says Derek Cikes, Commercial Director at buy now pay later fintech, Payflex.&nbsp;&nbsp;



“The<a href="http://weforum.org/agenda/2020/05/digital-payments-cash-and-covid-19-pandemics/" target="_blank" rel="noreferrer noopener">&nbsp;SARS epidemic in 2003</a>&nbsp;expedited China’s path in launching digital payments and eCommerce in the country, creating a permanent shift in consumer behaviour.&nbsp; Similarly, the Coronavirus has caused a marked change in South Africa’s consumer behaviour and habits, with social distancing, hygiene measures and self-quarantine now integral parts of our everyday realities,” says Cikes.



With the crisis expected to remain for the foreseeable future, these behaviours are anticipated to become further entrenched and remain even as the crisis eventually ebbs.



Shopping:&nbsp; an altered reality



Shopping is no longer a leisurely, sensory-filled experience.&nbsp; Instead, retailers have replaced sampling of beauty items or delightful food temptations with an antibacterial touch averse world of hand sanitizers and plexiglass barriers.&nbsp;&nbsp;



This interaction or rather fear of interaction is driving new shopping behaviour, with consumers opting for the safety and convenience of eCommerce. And retailers are hastening to adapt to what they view as lasting changes in the way that people choose to shop as millions of consumers choose online as their preferred medium of shopping.



Epidemics’&nbsp;impact on retail



According to a&nbsp;<a href="https://public.tableau.com/profile/salesforcecommercecloud#!/vizhome/SalesforceShoppingIndex/SalesforceShoppingIndex" target="_blank" rel="noreferrer noopener">Global Shopping Index</a>&nbsp;published by Salesforce, the number of unique digital shoppers rose 40% year-over-year for Q1 2020.&nbsp;



In a South African context, 29% of online consumers say they are doing far more shopping online than before the coronavirus outbreak while 65% say they are visiting physical stores less, according to a&nbsp;<a href="https://www.nielsen.com/za/en/insights/article/2020/overcoming-online-shopping-obstacles-amid-lockdowns-in-africa-and-the-middle-east-is-not-only-retailer-driven/" target="_blank" rel="noreferrer noopener">Nielsen study</a>&nbsp;of 10 markets in Africa and the Middle East, including South Africa.&nbsp;



“The pandemic has fast-tracked trends that were already budding in the eCommerce space including digital and alternative payments.&nbsp;The 40% increase in shoppers and 25% increase in eCommerce merchant sign-ups to our platforms highlights this monumental shift towards digital as an increasingly preferred avenue of shopping and transacting,”&nbsp; says Cikes.



Cikes says the increased availability of click-and-collect models, digital payment models like buy now pay later platforms and other alternative payment options,&nbsp; as well as faster delivery models, are anticipated to further fuel this online revolution.&nbsp;



Global players wake up to eCommerce opportunity



Major tech and retailer stores are waking up to the huge potential of eCommerce as millions of consumers choose online space for their shopping. Facebook is making a major push into e-commerce with the launch of&nbsp;<a href="https://www.facebook.com/business/shops" target="_blank" rel="noreferrer noopener">Shops</a>,&nbsp;a way for businesses to set up free storefronts on Facebook and Instagram.&nbsp;



While<a href="https://edition.cnn.com/2020/06/10/business/zara-inditex-online-investment/index.html" target="_blank" rel="noreferrer noopener">&nbsp;Zara-owner Inditex&nbsp;</a>recently announced plans to close up to 1,200 smaller-sized stores, and to invest 3 billion dollars in digital commerce.&nbsp;



“Retailers and tech companies are recognising the significance, need and value to move online in order to accommodate consumer behaviour and sentiment for safer, seamless shopping alternatives.&nbsp; It will be interesting to see the kind of personalised, targeted spin they can put on it based on their collected user data around interests and geolocation,” says Cikes.



How SA retailers can harness this opportunity



The consumer mindset has changed in terms of their relationship to eCommerce.&nbsp; Online has become an accepted, go-to shopping alternative with the digital environment providing consumers with convenience, safety and access to a wide range of shopping options.



And while hygiene and safety concerns have provided the initial impetus in driving consumers online, shoppers have now experienced this environment as a feasible option with its accompanying convenience and benefits. This is entrenching the shift to online shopping, extending its impact to long after the pandemic has passed.



“We’re reaching a tipping point for eCommerce.&nbsp; Standalone bricks and mortar are no longer sufficient as consumers demand more rapid digitisation solutions.&nbsp; The fact that more people than ever are relying on the internet to shop for their everyday needs makes it imperative to have an online shopping model in order to remain competitive and viable.



The eCommerce revolution is here.&nbsp; Those that will survive will be retailers who have a multichannel approach to sales that provides customers with an option for a seamless shopping experience from the comfort of their own homes.&nbsp; This is no longer a luxury. It’s critical,” concludes Cikes.&nbsp;



&#8211; Paul Behrmann, Founder &amp; CEO of Payflex

Excited Woman Shopping Online At Home

Op-Ed: The eCommerce Lifeboat For South Africa’s Retail Industry

When Raphael Afaedor and Tunde Kehinde met a few years ago, they exchanged business cards for more than one reason.
Ghanaian-born Afaedor quit his job as a business development manager at Notore Chemical Industries to start an e-commerce company. Shortly after that , he was contacted by the Samwer brothers’ German-based incubator, Rocket Internet, to bring their African ambitions to life.
“I thought e-commerce was an area that required people with a specific type of experience and know-how. I believed I was one of those people. My heart was also bent on building something from scratch. So, I took the opportunity,” says Afaedor.
Nigerian-born-and-bred Kehinde—who worked as a business development manager for multinational beverage company Diageo and later launched a dating site for African professionals in the diaspora—had a constant itch to do something bigger on the continent.
“The opportunity came up when I found Raphael: a strong co-founder, a good financial backing and a chance to do the project in my own country. We immediately went for it and decided to launch Kasuwa, now Jumia,” he says.
Their ideas aligned and the timing couldn’t have been better for these two Havard Business School MBA graduates.
Together, they set off to pioneer the internet revolution and to organize retailing and the e-commerce market place in Nigeria differently. They rolled out two services: Sabunta and Kasuwa. The former is an online fashion store and the latter sells general merchandise. These services were merged to house a wider range of merchandise. This saw the birth of, the now-well-known, Jumia.
At the Jumia head office in Lagos, there is a beehive of activity: a young, energetic workforce taps furiously at their keyboards and engages customers telephonically, in a bid to build a one-stop shop for Nigeria’s ever-demanding consumer market.
At one end, doors are being opened to receive ordered goods. Products range from clothing and cosmetics to electronics and household merchandise. Merchandise is hand delivered from a warehouse in a matter of days, regardless of their location within the country.
Nigeria has more than 45 million internet users, around 28% of its population, which makes it the African nation with the highest number of internet users—followed by Egypt and Morocco, according to the latest internet world statistic figures. The introduction of mobile phone data and fixed wireless access services coupled with higher computer and internet literacy rates in the past few years have contributed to this boost in online shopping trends in Nigeria. According to Funke Opeke, CEO of Main One Cable Company—which has laid a 7,000km fiber optic cable linking West Africa to Europe—this number is about to increase.
“At least one in three people in Nigeria could have direct internet access during the course of 2013.”
Nigerian consumers, however, have shown little confidence in online purchases in the past for fear of fraudulent activity. A few players are taking advantage of the burgeoning e-commerce space, which helps local brands get their merchandise online. As a result, similar services in Nigeria, such as Konga and DealDey, have emerged in the past few years. These websites provide an alternative shopping experience for Nigerians.
“Lagos is the prime location to be in. The numbers are here, the banking systems are better developed here and there is a lot of activity,” says Afaedor.
Despite a growing popularity in Nigeria, the journey was hardly a walk in the park for the two business partners. As many Nigerian start-ups will agree, challenges are inevitable.
The operational costs of doing business in Nigeria, with infrastructural deficits, was more than a concern. So was finding and building a competent team.
“In our case, it was necessary to have a mind shift and focus on the bigger picture. The opportunities are here in Nigeria. This was a gap we identified and had to fill, regardless of the existing bottlenecks of doing business in Nigeria,” says Afaedor.
Barely a year old, Jumia now boasts around 50,000 online visits a day, with a daily subscriber base of more than 150,000 and is already ranked as the seventh most viewed local content site in Nigeria. It has grown significantly with new product lines and brands on its site with a good consideration for Nigeria’s online payment skeptism, which has been cleverly allayed by introducing a cash-on-delivery feature.
While their ultimate goal is market domination, the immediate concerns for Afaedor and Kehinde are new services, brands and products and to sell everything any Nigerian could possibly need. As it turns out, the fastest moving goods are fashion products, particularly clothing items.
Besides bringing a wide range of products to Nigerian households, Afaedor and Kehinde are also focused on building a dynamic in-house team.
“We pride ourselves in making this a great place to work as service is key,” says Kehinde, who co-manages a team of 200.
E-commerce is here to stay as Afaedor and Kehinde are on a mission to mitigate the tedium of shopping. So, click away as shopping is about to become faster and more convenient.

Tag: Online Shopping

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