E-retailer to Build 1 of Hungary’s Largest Automated Logistics Centers

Logistics

Minister of Foreign Affairs and Trade Péter Szijjártó (center left) and Balázs Várkonyi, CEO of eMAG-Extreme Digital (center right), plant the first of 150 trees at the site of the new logistics warehouse.

Retailer eMAG-Extreme Digital will soon serve its customers from a near-117,000 square meters automated logistics center. The HUF 35 billion warehouse, being built in Dunaharaszti on the southern outskirts of Budapest, is scheduled to start operations as early as this year’s Christmas season. The Hungarian Investment Promotion Agency is financially supporting the investment.

E-commerce in Hungary has continued its rapid growth in the last two years: in 2021, the sector was driven by a turnover of HUF 1.203 trillion, generated by nearly 70 million domestic orders, bringing stable growth of over 30%, according to the GKI Digital Online Retail Index.

The business argues that establishing a vast, ultra-modern logistics center in Hungary will ensure efficient operations for eMAG-Extreme Digital in the coming years. The development is justified by the rapidly growing range of products, it says; the eMAG.hu webshop now offers almost four million different products, from washing-up capsules to electric scooters.

The e-commerce sector, perhaps the most visible segment of the digital economy, is also of national economic importance. That is acknowledged by the fact that the warehouse is being built with the support of HIPA, alongside the HUF 30 bln of its own money eMAG-Extreme Digital is plowing into the investment.

In addition to further strengthening the role of the company and its thousands of Hungarian retail partners in the Hungarian e-commerce market, the investment will also create jobs: eMAG-Extreme Digital will employ around 350 people in the first year, but the company expects the number of logistics staff working here to grow to 600 within four years.

“The Hungarian Investment Promotion Agency will provide HUF 4.8 billion in non-refundable support to eMAG-Extreme Digital for the establishment of the warehouse base in Dunaharaszti, as it is a major advantage for Hungary that this logistics center serving six countries can be established in Hungary,” said Minister of Foreign Affairs and Trade Péter Szijjártó, who visited the site for the announcement. “This is another indication that the logistics sector has now become a flagship of the Hungarian economy.”

Given the large footprint of the Dunaharaszti facility, automated solutions will be essential to its operation. Products will be shipped not only to Hungary but also to six other markets: Austria, Croatia, the Czech Republic, Germany, Slovakia and Slovenia.

High Degree of Automation

In addition to the construction of the logistics center, eMAG-Extreme Digital is investing more than HUF 5 bln in purchasing logistics equipment offering a high degree of automation, which will further speed up the processing of orders. The warehouse is integral to the group’s long-term strategy to invest the equivalent of HUF 255 bln in regional expansion, technology, and infrastructure.

“The e-commerce sector in Hungary has developed significantly in recent years: the expectations of Hungarian customers are also getting higher; they don’t want to wait days for a product to arrive. They want faster and more convenient pick-up,” said eMAG-Extreme Digital CEO Balázs Várkonyi.

“Since the beginning of May, we have been offering our entire portfolio of services and products on the eMAG.hu platform, which has allowed us to focus more on technical and logistical improvements. We are building a larger warehouse base than ever before to provide our customers with a more efficient, faster, and higher quality service,” he explained.

“The new warehouse base will not only speed up the processing of eMAG-Extreme Digital’s orders but also those received by more than 6,000 businesses in Hungary and the region that offer their products and services to Hungarian customers on the eMAG Marketplace. Our investment will also help Hungarian small businesses to become professional online merchants and remain competitive against foreign online giants expanding in our region,” Várkonyi added.

The e-retailer says it is important to operate as sustainably as possible. In addition to recycling packaging and rolls at the warehouse, the company is continuously expanding its Easybox network of parcel pick-up machines, which it says is the most environmentally friendly delivery option.

As part of the company’s commitment to sustainability, 150 trees will be planted near the Dunaharaszti base, the first of which was planted jointly by Szijjártó and Várkonyi.

The new warehouse will be the Romania-based eMAG Group’s first self-financed logistics center established in a foreign country. Construction of the facility has already started, and the general contractor for the project is Baupartner Construct, which has built several similar warehouses for the group in Romania.

This article was first published in the Budapest Business Journal print issue of July 1, 2022.

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