e-commerce growth powers Germany’s Hermes Group

The Hermes Group’s annual results saw a solid growth rate on the back of a strong operating performance for its fast-growing international parcel and logistics businesses. According to the group, as stated on 20 April, this growth was driven “by booming e-commerce”.

The Hamburg-based trade and logistics services provider saw turnover rise by 11% to €2.46bn from about €2.2bn in 2014. In Europe it moved around 580m shipments – 11% more than in the previous year, when shipments stood at 530m.

Equally important, some 74% of this order volume came from retailers from outside its parent Otto Group, with “third-party business expanding by 16%”. At the end of March, Otto Group said that its service segment, which is dominated by Hermes, reported a 16.6% rise in revenues to €1.7bn, according to preliminary calculation and based on the revenues that Hermes generated with customers outside the Otto Group.

Hermes continues to expand in the US and Asia and plans to strengthen its position as a preferred partner for e-commerce retailers, targeting new investment along the retail supply chain. In this context, it said it also won market share in “two-man” handling sector of last mile deliveries of heavy consumer goods such as white goods and furniture.

“In 2015 the Hermes two-man teams transported around 4.5m pieces of furniture and large equipment – approximately 15% more than in 2014,” it said.

Hermes also won new, large-scale clients, including Yves Rocher and Glossybox. New partnerships were made possible by over €300m of investment in its logistics network, while the introduction of new digital services also contributed to grow the business and is seen as a key value driver in future. Given its size, a particular mention went to its parcel division in the UK, whose growth rate outpaced the market’s.

“The 4,500 Hermes ParcelShops located there have made a significant contribution in this respect, and since their introduction in 2012 have become established as an alternative delivery address in e-commerce,” the company said.

Investment in technology and infrastructure is hugely importance: Hermes UK is investing €23m in new handheld scanners with satellite-supported tracking software, while a parcel centre in Rugby is being set up “at a cost of €40m, and will have an area of 270,000 sq ft” to support processing the growing volume of outbound packages.

Elsewhere in Europe, “the 1,600 Hermes ParcelShops in Austria have also been supplied with parcels on Saturdays for the first time in 2015 – a feature that sets Hermes apart from its direct competitors,” it said, adding that its start-up BorderGuru, which teamed up with Alibaba in mid-2015, focuses on international cross-border shipping, and in particular arrangements for tolls and payments.

Finally, the services offered by Hermes Fulfilment, which is responsible for storing goods and processing returns are becoming increasingly relevant given the market growth. The division has a total product range of around 1m articles, and moved around 300m items in 2015, primarily on behalf of clothing and fashion retailers.

Source: Transport Intelligence, 18th May 2016

Author: Alessandro Pasetti