Trans.iNFO: Nowadays, FoxPost is the market leader for parcel locker services in Hungary. However, looking back, how did this all start just under a decade ago?
Ádám Bengyel, FoxPost CEO: We began our journey in 2014 with the goal of revolutionising and making the last mile in Hungary sustainable, even though the project was initiated two years prior. Our mission was to introduce a more convenient and eco-friendly last-mile solution to the Hungarian market.
This solution, where parcels are not delivered to the recipient’s home but to parcel lockers, had already gained popularity in Tallinn, Estonia around 2012, where most parcels were shipped using this method.
When we presented our business plans to investors in 2012, there were hardly any parcel lockers in Hungary. At that time, there was only one pick-up network, the Pick Pack Point, and still, Hungary was ahead of other European countries as alternative package delivery solutions were not very common elsewhere either in the early 2010s.
However, by the time we secured funding to start the business, Magyar Posta (Hungarian Post – the ed.) had installed 52 parcel lockers, and another company called Webox had 84 lockers, which were rented from the Polish company InPost.
We launched our network in April 2015 with 52 parcel lockers and expanded it by ten within a year, bringing the total to 62 machines by 2015.
Before founding FoxPost, you had worked in the logistics sector abroad, in places such as Italy and Belgium. How did your experiences differ from the Hungarian market?
The Hungarian market is interesting because it is relatively small, yet highly competitive. Compared to Poland and the Czech Republic, where the last-mile sector is more developed, there are more players in the Hungarian market.
When FoxPost launched in 2015-2016, major players such as GLS, DPD, Express One, Magyar Posta, Sprinter, Pick Pack Pont, and many smaller courier services were already present.
However, in 2022, there was an influx of investments in parcel lockers in Hungary; eMag (now operated by SameDay) and Packeta entered the market, GLS installed 900 parcel machines, and Magyar Posta expanded their service to about 380 machines.
This environment presents the challenges we face. In some countries, the main challenge is to educate people about what a parcel locker is and why it is a better choice than home delivery, but in Hungary, this is no longer the biggest task.
FoxPost is the leading parcel locker service provider in Hungary with the most lockers. How does FoxPost differ from other such services, and how was this impressive growth achieved?
Our service is much more advanced than any other Automated Parcel Machine (APM) service on the Hungarian market, and we are among the most developed worldwide. We offer B2B, B2C, and C2C services, and our system is easy to use and transparent for customers.
The turning point for us was when the local marketplace, Vatera (eBay is not present in the Hungarian market, Vatera is one of the similar marketplaces), listed us.
Our volume increased twentyfold from one month to the next, resulting in an explosion in traffic. During this period, we took ten times as many packages as Webox, despite having fewer machines.
Following this, the decision was made to buy Webox, with the expectation of expanding our network by 146 machines. However, this plan was thwarted when InPost went bankrupt, taking away the 84 machines we were due to acquire. This setback spurred us to develop our own machines and IT systems, and we now have a development team of over 30 members.
We define ourselves as a log-tech company, with IT know-how that is unique even on a global level. We also have our own service team to fix any malfunctions within 36 hours.
What does FoxPost’s customer portfolio look like?
We serve more than 20,000 businesses, with over 80% of them being webshops. We are present on 10 of the top 15 Hungarian webshops, but we are also very popular among small and medium-sized businesses because our system provides them with freedom.
For a beginner or medium-sized webshop, it is vital not to have to wait for the courier to pick up the package or to be able to leave several packages in a parcel locker. Typically, the operators of smaller webshops run their business as a second job or while working, and our system provides them with the flexibility they need.
You can easily put all the packages you want to send into one single locker when you have the time – this takes about 10 seconds – and you already have access to our entire network in Hungary.
How much further do you think the parcel locker sector can expand in Hungary? Has the situation reached the point where it is difficult to find a place for another locker?
If we use the (international) InPost equation, which calculates one machine per ten thousand residents, the Hungarian market can handle roughly nine thousand machines. However, this formula only applies to the InPost lockers themselves, not to all the lockers on the market.
Currently, there are approximately 2,500 parcel lockers in Hungary, and we estimate that around 3,000 will be the limit when we need to consider where to go next. But you must take into consideration that the market is still constantly developing, and customer service is improving, so by the time we reach 3,000 lockers, there may still be more space and further demand to meet.
Finding a location for a parcel machine is not difficult for us. It may be more challenging for our competitors, since we have already secured many locations. However, I am not concerned about our competitors because we have observed a trend followed by them according to which they prefer to expand in places where we are already present.
Furthermore, local councils in smaller places are reaching out to us to install parcel machines since we are providing an important improvement to the place’s infrastructure.
Interestingly, there is a preference for parcel lockers over home delivery in the countryside. The situation is different in Budapest, but we are seeing this trend changing in the capital as well.
Location is a pivotal point when it comes to parcel machines: residential blocks, petrol stations, small shops, and shopping centres all have their advantages and disadvantages. How does FoxPost choose which locations to install its parcel machines?
Our goal has always been to have the parcel lockers put where people do their daily grocery errands anyway, and they do not have to make a detour because of the package. That’s why our primary targets are shops and shopping centres.
Placing a parcel locker in a block of flats is difficult because you have to get consent from all the residents of the apartment building, and if even only one resident does not approve it, then, in most cases, you can do nothing about it. In addition, they charge a much higher rent than shops.
There is no such problem in stores or shopping centres, as FoxPost parcel lockers now attract purchasing power. If we can install the parcel machine in a shopping centre that is not so popular, we can increase the traffic in that place, since we will bring thousands of people there every month and we will be able to generate foot goal. The value of the given place is increasing, and businesses are going to thrive with us.
A few years ago, it seemed that same-day delivery would be the next big thing in the last-mile segment, but this trend seems to have faded. What is your experience with this?
In 2017, when our network was smaller, we did offer same-day delivery. Our vow was to deliver all packages received by 1.30pm anywhere in the country by 8pm the same day for a surcharge of HUF 900, i.e. EUR 3. However, we had to discontinue this service in 2018 because there was no real demand for it.
Why was there no demand for it? Because the webshops couldn’t manage to complete the order by 1.30pm, and they also found the surcharge to be too high.
Last year, we tested same-day delivery once again, but we turned it off again because there was no significant or at least noticeable demand from either the seller or the customer for the service.
The customer prefers to know exactly when they will receive the package. It is not such a big deal if they receive the package in one or two or even three days, as long as they know exactly when to expect it. It is significantly more inconvenient for them if they have to wait until 8pm and cannot plan their own time.
Even the sustainability of next-day delivery is questionable, as it requires a labour force willing to work at night, which is both very difficult to find and very expensive.
By the way, I question how even next-day delivery is sustainable at an industry level. At what point will we encounter a labour scarcity as workers start to refuse to work at night?
How is FoxPost doing with sustainability?
When it comes to air pollution, I think there is no reason to complain about FoxPost, since our warehouse is highly energy-efficient.
Based on the GHG protocol, scope 2, tank-to-wheel measurement, our CO2-equivalent emissions per package are between 0.18-0.20 kg. We cannot achieve less than this with current technology. In 2022, we received significant professional awards for our conscious sustainability initiatives.
While we are experimenting with electric cars in transportation, electric vehicles still have at least three problems at this stage of development: their range is shorter than diesel, their cargo space is smaller than diesel, and they are much more expensive to purchase. The cost per package is at least three times what it is now if it is moved by an electric car.
We have been using electric vans for over four years now, but technology cannot replace diesel for us, as our vans cover longer distances, up to 800 kilometres a day. In shorter distances of 150-200 kilometres, the situation may be different. Therefore, our goal is to be able to deliver packages in Budapest completely carbon-neutral.
We are looking forward to green technologies with which we can bring and take packages in a carbon-neutral way, even over long distances.
Photo credits @ FoxPost