The strategy that propelled Nova Poshta into the European market is nothing short of textbook material. In May 2022, the company made the bold decision to enter Europe, and by October of the same year, the first branch was up and running in Poland.
Today, Nova Post serves customers across twelve countries, with plans to expand into all major European markets by next year’s end.
trans.INFO recently caught up with Oleksandr Lysovets, CEO of Nova Post Europe, to discuss the company’s European expansion.
Anna Skripal, trans.INFO: Could you outline the overarching strategy guiding your expansion into Europe, or do you tailor your approach to each country?
Oleksandr Lysovets, CEO of Nova Post Europe: We adhere to standardised company protocols across all our operations. We typically kick off with the launch of a flagship branch in each new market.
Our operational strategy in Europe closely mirrors our approach in Ukraine. We offer a consistent range of services everywhere, including fast document, parcel, and cargo delivery, packaging, storage, and digital tools.
Our branches operate on weekends (excluding Germany, where Sunday operations are prohibited by law) and maintain extended working hours from 9 a.m. to 8 p.m.—surpassing the industry norm.
While we aim for consistency, we recognise the unique characteristics of each country. We conduct thorough market analyses, adapt to local business environments, and forge partnerships with key players accordingly.
Who do you mainly collaborate with in Poland?
We collaborate extensively with InPost, a prominent logistics operator in Poland. Leveraging their post machines, we facilitate “last mile” delivery of items from Ukraine, while also partnering on the “first mile” delivery—from post machines to Ukraine. Additionally, we engage with other local entities to ensure seamless address delivery services.
And what about Germany?
In Germany, we’ve established partnerships with DPD and DHL for “last mile” home delivery and access to a network of delivery points. However, integration with German post offices for shipment issuance is still pending.
Has it been easier to enter culturally similar markets, like Poland or the Baltic countries?
The ease of entry isn’t solely determined by cultural proximity, but also by the reception from local authorities and customs procedures. Poland exhibited remarkable openness early on, implementing various facilitations for refugees and businesses amidst the conflict.
This included streamlined customs clearance for C2C cargo, enabling rapid transportation of tens of thousands of parcels daily. While customs clearance in the Baltic countries and elsewhere may be slower, the warm reception from locals compensates for procedural differences. In Lithuania, for instance, we received an exceptionally warm welcome during the inauguration of our flagship branch in March 2023.
Which market presented the most formidable challenges?
Each market comes with its own set of challenges. Some require additional licences, which entail meeting stringent conditions and enduring lengthy wait times of up to three months. In certain countries, even company owners must undergo vetting to open a bank account, further prolonging the process.
However, such challenges are typically encountered during the initial establishment phase. Subsequent operations tend to proceed more smoothly.
For example, while we initially anticipated a three-month setup period in Germany, it extended to over six months. Nevertheless, operations normalised post-launch, with 15 branches established across Germany by January 2024.
Did bureaucratic hurdles pose significant obstacles in Germany?
Indeed, we encountered delays in obtaining permits and setting up accounts in Germany. Various activities require specific permits, each with its own procedural intricacies.
Despite bureaucratic challenges, we adapt to each country’s nuances. Our legal department meticulously assesses the landscape prior to market entry, engaging locally to address contractual and logistical matters. Initially operating from Ukraine, our legal and accounting teams transition to local counterparts for ongoing support.
Do your top executives primarily operate from Ukraine, or do you recruit locally?
Upon entering a new market, we initiate a recruitment process that includes internal employees seeking advancement opportunities, as well as local talent.
For instance, CEOs in the Baltic countries, Germany, and Poland are internal appointees, while those in France, Italy, and Spain are Ukrainian expatriates residing in those countries. Regardless of their origins, all executives share a common desire to learn, grow, and contribute to our company’s success.
One of your prerequisites for employees is bilingualism. Does this limit your recruitment to Ukrainians?
While a significant portion of our workforce comprises Ukrainians residing in the respective countries, we also welcome individuals of Ukrainian descent who are proficient in both languages.
For example, in the Czech Republic, our marketing manager, Dara Haiduchena, boasts Ukrainian roots and is fluent in both languages. Such linguistic diversity enhances our operational capabilities and fosters a dynamic work environment.
How many employees are currently working across different countries?
We have approximately 200 employees in Poland, 55 in Germany, and around 500 across the Baltic countries—particularly in Lithuania, where 19 employees were operational by the end of 2023.
With the majority of your clientele being Ukrainians, how do you plan to attract local customers post-war?
Strategically, we’re diversifying our focus to include domestic delivery and inter-European shipping. While our infrastructure in these countries may be limited, we collaborate with local partners to offer these services to residents.
However, we’re currently in the exploratory phase, analysing market dynamics and processes. Our founders have likened our foray into the European market to a startup endeavour, requiring us to recalibrate our approach as we navigate new territories.
What motivates customers to choose Nova Post over established local operators?
Customer surveys indicate that proximity plays a significant role in customer decisions. The convenience of shipping nationwide from our branches, coupled with extended operating hours—including weekends—appeals to customers seeking flexibility and convenience.
Additionally, our comprehensive range of services, including packaging assistance and streamlined documentation processes, enhances the customer experience. Cross-border shipping is also attractive to both individual consumers and businesses, facilitated through partnerships with local and international players.
Do you take advantage of tax breaks or subsidies in European countries?
We operate as regular local enterprises, adhering strictly to local regulations and funding our endeavours internally. While we’ve petitioned authorities for expedited licence issuance in certain instances, we refrain from seeking or utilising tax breaks or subsidies.
You’re currently expanding into the British market. When can we expect the inaugural branch?
We’re targeting a spring launch for our first branch in the UK. We’ve secured premises and are in the process of finalising contracts for customs and brokerage services. Renovations will follow, alongside equipment installation and systems integration. Concurrently, we’re in discussions with local partners for “last mile” delivery services, leveraging their expertise and networks.
Have you encountered challenges securing suitable premises in European cities?
Maintaining specific standards for branch premises can pose challenges, particularly in urban centres where architectural heritage is prevalent. Renovation restrictions and space constraints necessitate careful consideration during the property search. However, we’re committed to finding suitable locations that meet our operational requirements, even if it means overcoming logistical hurdles.
Yourselves and InPost are both expanding into foreign markets, including Great Britain. How do you navigate partnerships with competitors?
We view competitors as potential partners, recognizing that collaboration can yield mutual benefits. By increasing parcel volumes, we contribute to market growth while leveraging existing infrastructure and expertise.
InPost, for instance, operates over 6,000 post offices in Britain, presenting ample opportunities for collaboration. Our partnerships extend beyond competition, fostering a spirit of cooperation and shared success.
Post-war, you aim to facilitate connections between European and Ukrainian businesses. Could you elaborate on this strategic objective?
Our goal is to facilitate cross-border trade, enabling Ukrainian businesses to access new markets and vice versa. We’re currently in talks with potential partners to facilitate market entry and expand business opportunities.
Conversely, European companies are expressing interest in the Ukrainian market, contingent on favourable post-war conditions. Our role extends beyond logistics—we aspire to bridge economic divides, fostering mutually beneficial relationships and sustainable growth.
Which European companies’ products can Ukrainians expect to access via Nova Post?
We collaborate with various European companies across sectors, facilitating imports to Ukraine. Notable partners include MemberShop in the Baltic countries, PUMPA in the Czech Republic, and Partsbase in Lithuania.
In Germany, our clients span diverse industries, including Starlink Langenfeld, Mahr GmbH, Carl Wittkopp GmbH, and OKUMA Europe GmbH. Conversely, European businesses utilise our services to import goods from Ukraine, ranging from books to industrial equipment.
Despite persistent border challenges, how do you ensure operational continuity?
We’ve tailored our operational model to prioritise agility, enabling us to navigate border challenges efficiently. Leveraging low-tonnage vehicles and strategic partnerships, we minimise transit times and adapt to evolving circumstances. Despite occasional disruptions, recent normalisation efforts have mitigated border-related challenges, ensuring seamless operations.
Have alternate corridors, such as Romania or Hungary, proved viable amidst border challenges?
While we’ve explored alternate routes, including those via Hungary and Slovakia, logistical constraints and increased transit times rendered them less viable. As such, we continue to prioritise the Polish border for transit operations, optimising efficiency and reliability.
With sorting terminals established in Poland, do you plan to expand similar infrastructure elsewhere?
Expanding our operational footprint necessitates corresponding infrastructure enhancements. While we’ve established sorting terminals in Poland and Germany, we’re exploring options for additional facilities in Western Europe to support international operations.
Nova Post’s substantial investments in Poland underscore its commitment to expansion. What are your future investment plans?
Our investments reflect our ambitious expansion goals, with plans to establish a presence in major European markets by 2025. We’re piloting a franchise model in Poland, with plans to scale this approach to other countries. Additionally, we’re exploring opportunities for further franchise representation abroad, augmenting our operational capacity and market reach.
What differentiates Nova Post in its plans for a rapid expansion across Europe?
Our success can be attributed to several key factors, foremost among them being speed. We prioritise swift parcel delivery, outpacing competitors to meet customer expectations. Our customer-centric approach ensures personalised service and flexibility, further enhancing the customer experience. Ultimately, our passion for what we do, coupled with operational proficiency, fuels our rapid expansion and sets us apart in the market.