Hungary’s largest automated parcel terminal operator Foxpost is set to turn profitable in a few months’ time, the company’s CEO and founder Ádám Bengyel said in an interview with the Budapest Business Journal. Achieving a bottom line in the black would come parallel to the expansion of the online retail sector in Hungary.
“E-commerce currently takes up about 4.5% of total retail in Hungary. This compares to 10-15% in Czech Republic, which indicates the massive growth potential here,” Bengyel says.
The company has been profitable at an operating level for the past two years, he says, but it has been reinvesting into expansion and development. It also acquired its peer Webox Hungary in 2016. This, in addition to organic growth, has given Foxpost a network of more than 100 terminals across the country, with 11,500 lockers altogether.
Foxpost is the leader on the parcel terminal market, with the logistics service provider of the incumbent Magyar Posta operating 49 terminals, and GLS, part of the United Kingdom’s Royal Mail, only 15. On the clients-to-clients market, such as buying goods on a classified ads site, Foxpost has a market share of around 15% or 600,000 parcels annually.
On the businesses-to-clients market, or purchase and delivery from a webshop, Foxpost has a share of only about 1.7% in terms of the number of parcels. There is more potential in this area, Bengyel says: the goal is to boost the share to a double-digit ratio by 2022. This could be fueled by several factors, including the growing popularity of major international e-retailers in Hungary, and a hopeful change in locals’ approach to delivery.
“The game changer would be when Hungarians start to consider the delivery of their items to a parcel terminal – where they can decide on the optimal time of the pickup – superior to home delivery, which usually means staying at home half the day, to say the least,” Bengyel says.
Another potential area for growth is partnership with businesses for returning goods. “We offer the opportunity of delivering items to the seller that were not delivered by Foxpost in the first place,” Bengyel explains.
The lion’s share of investments at the firm are still channeled into the growing network. Within the country, Foxpost is focusing on locations “where GDP is made”, including shopping centers, or other landmark social meeting points in the proximity of workplaces, offices.
Besides expansion in Hungary, Bengyel says he plans to seek possibilities past its borders, too.
“Hungary is a very small market. A company only has a future if it ventures outside the country,” he confirms.
Foxpost now operates terminals in 103 locations across the country, and offers one-day delivery between them. Prices range from HUF 990 to HUF 2,190 apiece depending on the size of the parcel, but registering in the Foxpost system cuts the prices to up to HUF 690.
Besides expansion, the company is also investing in IT development, using Estonian Cleveron’s original software as a basis but tailoring it to meet local needs.
Unlike its competitors, the company is operating on a non-outsourcing basis. Since it considers quality of primary importance, Foxpost runs its own fleet of delivery vans and organizes warehousing at its own space.
“This is the only way we can take full responsibility for our service,” Bengyel says. “And this is why independent market research firm GKI has chosen Foxpost as the best quality provider among the so-called pick-up-and-drop-off networks, or PUDOs, for three consecutive years.”
The firm boasts the most advanced fleet in the industry by running EURO 6 engines only, to leave the smallest possible carbon footprint. It also manages to save fuel since there are no second- or third-time delivery attempts if someone is not at home.
According to publicly available data, besides private individuals, the owners of Foxpost are venture capital funds Finext Startup and Perion, the latter part of Wallis Group. While they have been enthusiastic about investing further into Foxpost upon occasion, Bengyel expects an eventual exit sometime in the future.
“Venture capital sooner or later wants to exit and make money on its investment,” Bengyel notes. “If there are partners we could imagine an exit with, we’re open to opportunities.”