Nova Post Europe will focus on development in countries of presence, continue to open new markets - CEO Nova Post Europe
Exclusive interview by Interfax-Ukraine with Nova Post Europe CEO Oleksandr Lysovets
Text: Olena Manzhelo
- Tell us more about Nova Post Europe: what is the structure of the company, its main functions? How does the company interact with the directorates in all countries of operation?
- Nova Post Europe was created in 2022, after the start of a full-scale invasion, when Nova Poshta entered the EU market. The first country was Poland. At that time, the company had experience working only in Moldova (note: the company has been operating in the country since 2014 and as of the end of 2024 had 31 branches in the country). Currently, we have increased our coverage to 16 European countries. Nova Post Europe manages all representative offices in Europe and forms standards and development strategies. Each country has a manager and a team responsible for operational activities in its market. And this is justified - after all, each country has certain characteristics both in consumer behavior and in cultural terms: Germans like address delivery, Poles - postmen, Ukrainians, on the other hand, actively use branches. Accordingly, for each country we build our own hypotheses regarding the development of the network. Based on information from our teams on the ground, we choose the focus of development in each country, depending on demand. In some markets, we emphasize the development of a branch network, in others - address delivery. All our teams actively share their experience with each other.
- Last year, there were comments in the media that Nova Poshta was revising its development strategy, favoring a moderate scenario. Have such changes been approved? What is your strategy for 2025?
- We have remained true to our strategy. Both in Ukraine and abroad, we are moving according to a single strategy that the company formulated even before the war. Its client part is embodied in three words: fast, easy, safe - quickly, easily, reliably. This is exactly what our clients need - Ukrainians, volunteers, entrepreneurs, local residents, etc. Therefore, we did not change our course, but focused on its implementation even more.
Firstly, we are entering the markets of new countries and will continue to do so this year. We plan to enter the markets of the largest European countries within five years. This is our global goal and we have given ourselves a little more time to implement it.
Secondly, we want to take root more in those countries where we are already present - we plan to actively develop our own network, open new branches, increase the number of points of issue and receipt of shipments, develop our own address delivery, accelerate the speed of delivery between countries, develop new products for C (client, clients are individuals, - IF-U) and B (business - business clients, - IF-U) clients, etc. That is, to attract more and more customers among Poles, Germans, Czechs, Estonians, etc. Now, for example, we are completing the launch of our first own central sorting warehouse in the Czech Republic with a team of our own brokers. It will help us speed up the passage of all customs processes, and therefore speed up international delivery in general. We also plan to launch the same one in Germany.
- Why are your own shared service centers (SSCs) important for your business?
- When we enter the market of a new country, we always look for a partner who will provide customs brokerage services. Over time, the volume of shipments increases and there is an urgent need for our own customs brokerage warehouses that could process shipments not five days a week, but also on weekends if necessary. Contractors do not do this.
- Do your own sorting terminals in Europe also contribute to the speed of processing shipments?
- Yes. We are opening our own sorting terminals in Europe right away. This is one of the main back-end processes and, like international flights, we never outsource it. We independently sort parcels for local European markets and for transit markets. For example, the terminal in Warsaw processes a lot of transit for the Baltic countries, France, and in general for all Northern European countries. And the sorting terminal in the Czech Republic processes shipments aimed at Southern Europe. It was opened last year and, as I said, now the Central Shipping Service is being launched at its facilities. It has an area of 420 sq m and is located in Prague.
- How many sorting terminals are currently operating in Europe, and do you plan to open new ones in 2025?
- Currently, we have enough sorting capacity. Sorting hubs are operating in Warsaw, France, Lithuania, Italy, Moldova, and the Czech Republic.
- How are logistics routes organized? What border crossing points do you use?
- Our logistics routes are built to ensure maximum delivery speed. Most shipments from Ukraine pass through Poland. If we talk about delivery between European countries, then, for example, a shipment from the Czech Republic to the UK first goes to Poland, is sorted there and, as part of a consolidated shipment, goes to Britain. This allows us to optimize routes.
As for checkpoints, we use almost all Polish multilateral road border crossing points. Our team of logistics specialists carefully monitors the situation at the border, including queues and speed of passage, and selects the least busy points to avoid delays. If, for example, there are technical problems or long queues at a point, we quickly redirect transport to another. Why Polish checkpoints, because Poland has simplified customs clearance procedures for C2C cargo and we can quickly transport tens of thousands of parcels per day. By the way, not every customs office has enough resources to handle customs clearance of tens of thousands
- What is the current average delivery time from Ukraine to European countries and vice versa? And in general, will the delivery times for shipments from Ukraine to European countries and between European countries change in 2025?
- Today, we deliver from Ukraine to Poland in an average of three days, and if you send a parcel from Warsaw to Lviv by 12:00 noon, it is most likely that it will reach the recipient in 24 hours. We are constantly speeding up. Back in 2022, we delivered to Poland in about 5 days, and today it is about 3. In Germany, we started with eight days, now it is less than five days. Similarly, in Britain, we started with nine days, and now it is less than five days.
To speed up delivery, we use direct flights. If earlier all flights were carried out only through Warsaw to other European countries, now direct flights to Germany, the Czech Republic, etc. have already been introduced. This increases our costs, but it speeds up delivery by 2-3 days and we are ready to do this for our customers.
- In terms of costs, what is the amount of investment for 2025 for development in Europe?
- In 2025, we plan to invest about EUR10 million.
- Is this amount on par with last year's investment?
- Last year it was about EUR7 million, for 2025 we plan 10 million. We plan to invest about EUR2 million in Moldova alone, which is twice as much as last year. In Moldova, which is one of our most dynamic markets, in 2024 we significantly increased volumes: they increased threefold. Such rapid growth was the impetus for the search and relocation to a new sorting hub, which is five times larger in area than the previous one and has much better infrastructure: more ramps, a more convenient location and entrance, etc. This terminal is currently being renovated and modernized for our needs. Investments in this terminal alone amount to EUR500,000.
- In Moldova, Nova Post was the first company to introduce parcel delivery points on the basis of an existing business: in shops and cafes. Do you plan to develop this format in Europe?
- Nova Poshta really became the first logistics company in Moldova to introduce such a format - parcel delivery points on the territory of another operating business (coffee shops, gas stations, shops, etc.). For example, last year, Moldovans received 600,000 shipments, which is 16% of the annual turnover, precisely at these service points. This format has proven its effectiveness, and we see potential in it for other markets. In general, we are trying to develop all possible service formats for our customers: branches, post offices, delivery points and, of course, courier delivery to the address.
This is important for international e-commerce logistics, as it allows us to be more flexible in cooperation with international retailers and offer customers even more service points in convenient locations. Therefore, in 2025, we will move in this direction.
- According to our information, it was Nova Poshta in Moldova that became the first company in Europe to make a profit? What are your expectations for 2025: in which countries will the company be able to make its first profit this year?
- That's right, Moldova is generating profit. In some countries we are still at the stage of active development, and in a significant part of the countries we have not even worked for a year (France, Austria, the Netherlands, the United Kingdom, etc.), so it is too early to talk about profit.
We expect that in 2025 Poland and the Czech Republic will turn into a sustainable profit.
- Let me clarify, are we talking about the net financial result?
- We amortize all our investments over 5-8 years. Their return takes time. For now, I meant operating profit - this is EBITDA. In the countries I mentioned, it is planned to be positive by the end of 2025.
Regarding the return on investment - based on current indicators, will the rate be higher than your expectations, fully meet them or slower?
We are growing as planned. Last year (2024, - IF-U) there was an increase compared to the previous one (2023 - IF-U) almost twice.
- Is it based on EBITDA?
- No, it's in the number of parcels we processed. EBITDA is not growing so fast because our expenses are also growing. We continue to invest, increase expenses for opening new branches, developing address delivery, etc.
- You said that in 2025 you will maintain your focus on the countries where Nova Poshta is already present - should we understand that we should not expect to open in new markets and increase our presence during the year?
- This year we are exploring the possibilities of entering the markets of Switzerland, Belgium, Portugal and Ireland. These are countries where we see potential, but we are still at the stage of analyzing the market and cooperation options.
- Will it be through the opening of Nova Poshta branches or, as in Austria, through targeted delivery without its own branches?
- When entering markets, we use different formats. In each case, we analyze which format will be more effective for a particular market. So, last year we experimented and entered the market of two countries only with address delivery - Austria and the Netherlands. In fact, it was very useful, so we saw the regions where our customers are concentrated and recorded where the maximum activity is. Recently, for example, we have already opened a branch in Utrecht, the Netherlands.
As for new countries, we have not yet agreed on what the format of our work will be.
- Do you plan to open any new branches in the Netherlands, besides the ones you have recently opened?
- Yes, of course. We plan to open branches in The Hague, Rotterdam and Amsterdam.
- What are your plans to develop and increase your presence in the UK in 2025?
- We have already opened a third branch in Manchester (in addition to two branches of Nova Poshta in London, - IF-U). In 2025, we plan to open a branch in Edinburgh. In this way, we will cover the main logistics hubs from south to north. We are opening branches and, in parallel, developing our own address delivery. We also plan to expand the network of branches in London and the suburbs during the year. We see great potential in this city, because London is like almost the entire Czech Republic in terms of population. In addition, many Ukrainians live there.
- What is the total number of Nova Poshta offices in Europe?
- We have already opened 128 branches and over 87,000 service points in 16 European countries. By the end of 2025, we want to open another 135 branches. These will be branches in locations of already operating businesses, such as shops or cafes. They will be able to receive the full range of our services.
- Do you plan to develop a full-fledged franchise scheme in Europe, as Nova Poshta is successfully and actively developing it in Ukraine?
- In Europe, we also plan to develop a franchise model, but we are approaching this very carefully. We are currently testing this format in Poland and working out the parameters of the package for franchisees in Europe. We are trying to make cooperation profitable for the partner and at the same time provide our clients with stable prices for services.
- In the future, when the franchise scheme in Europe is fully operational, do you plan to involve small European private operators in cooperation?
- We already involve local partners for delivery to the final destination (to the collection point or to the address), and use their network of service points. We mainly work with large logistics operators: DPD, InPost, GLS, Emons, etc.
- Are you developing your own network of post offices in Europe?
- We are developing our own network of parcel terminals in Moldova, we already have 270 parcel terminals on the market of this country, and in 2025, we plan to double this number.
- Which countries, for example, do not have partner post offices?
- We are currently looking for partners with a network of post offices in Austria, the Netherlands and Germany. But, for example, in Germany we work on the market with DPD, which helps us deliver to the address and to the pick-up points of their company. (Dynamic Parcel Distribution is one of the leading international courier services, founded in 1976 in Aschaffenburg (Germany). The company is part of Geopost, a subsidiary of the French national postal service La Poste. In Germany, DPD is the second largest operator in the parcel delivery market. It is represented in more than 220 countries around the world, - IF-U).
If we give an example of companies with which we already cooperate in Europe and deliver to their network of post offices, then in Poland, Spain, France (in France the company is called Mondial Relay), Great Britain it is InPost, in the Baltic countries it is Venipak, in the Czech Republic it is Alza, etc.
- Does Nova Poshta provide fulfillment services in the EU and in which countries? How do you plan to develop this area in Europe?
- We started this service in Poland in a test format. But it is difficult to develop this direction at a rapid pace here, because all processes are strictly regulated. Fulfillment employees must first take appropriate courses, receive certification and only then start working. In addition, we plan to open a customs warehouse on the basis of fulfillment. The service will allow Ukrainian businesses to store goods in our warehouse in Warsaw without customs clearance for a certain period of time. They will undergo the customs clearance process only after receiving an application from a real buyer.
- When will it happen?
- We are planning this year. It is not a quick procedure, but we are moving in this direction.
- When testing fulfillment in Poland, do you work with local e-commerce?
- Our clients now are mainly Ukrainian entrepreneurs who want to sell their goods in Europe.
- In which other European countries do you plan to start providing fulfillment services besides Poland?
- This will depend on the demand and requests of our customers. We are already negotiating with customers in the Baltic countries and the Czech Republic.
- Are you planning to change postal tariffs in Europe?
- In December last year, we optimized the tariffs for international delivery. First, we canceled the volumetric weight for shipments up to 30 kg. That is, now the client pays only for the actual weight of the shipment. Second, we introduced a new weight gradation and added tariffs for 0.1 kg, 0.25 kg, 0.5 kg. This combo (the absence of volumetric weight and the new weight gradation) helps to economize.
Regarding changes in tariffs for international delivery, in March an increase occurred in a number of countries within 10% of the current tariffs. However, for example, in Moldova, an increase in delivery tariffs is not expected.
- One of the focuses of Nova Poshta's foreign expansion was to increase local customers - have you managed to achieve satisfactory results? What is the ratio with Ukrainians?
- The ratio is different in each country, the closer the European country is to Ukraine, the higher the percentage of our compatriots among Nova Poshta users. For example, in Poland, over 86% of the total number of customers are Ukrainians, in Germany 60%, in Austria less than 50% of Ukrainians, in Spain the same. Because we provide not only delivery services to Ukraine, but also deliver within the countries of presence and between European countries.
When we first open in a new market, of course, our first customers are mainly Ukrainians. They know our company well, our speed, the quality of our services. Gradually, more and more locals join them. This is a natural process and we see prospects for expanding customers among Europeans in all countries of our presence.
- After Nova Poshta launched a delivery service between European countries in May 2024, has the number of local customers (foreigners) increased?
- Of course, there has been growth. Europeans, for example, actively send suitcases when they travel. When planning a vacation, they entrust their luggage to us. This allows them to reduce their air travel costs. That is, it is cheaper to deliver suitcases by Nova Poshta than to buy luggage space on an airplane. Most suitcases are sent to Spain, Italy, and the French Riviera. We observed this last year during the holiday season. Now the service is actively used by tourists from many European countries.
- Who are the main competitors of Nova Poshta in Europe and do you compete with Ukrposhta?
- We consider other companies as partners. And this strategy will only strengthen in the future.
As for Ukrposhta, it is worth understanding that we have different models of work, different clients and different approaches to development. Each of the companies develops the delivery market and the more companies, the higher the quality of services for customers.