The delivery process for online purchases has come a long way since the early ages of eCommerce. Inspired by one of the success stories in Poland and internationally, we seized the opportunity to interview Rafal Brzoska, CEO and Owner Integer.pl/Inpost/easypack Group and learn more about the Paczkomaty service.
G2A PAY (GP): Can you briefly discuss the structure of your company?
Rafal Brzoska (RB): The Integer Group is the mother holding company, which is currently active via two main business divisions: the locker and the traditional courier business.
There is also a third one, more related to R&D and manufacturing. We are the only player which is also the producer of the lockers and selling them across the world. In other words, we provide the lockers, but we also deliver the parcels, not only to lockers, but door-to-door, as well.
“We are always flexible in creating the right solution for market conditions.”
GP: When was the Paczkomaty delivery method launched? How does it work and how many partners are currently using it?
RB: Actually, we started the locker business in 2010, with the first 100 machines in Poland. But being already aware of the dramatical market change across the logistics chain, we were sure that this solution would be very successful. Moreover, I was convinced that door-to-door will not be a scalable solution due to the eCommerce growth, as well as the volume of parcels coming from that direction. As a result, at that time I was strongly pushing our company towards locker solutions.
“We are currently integrated with 25,000 e-merchants in Poland, which represent nearly 90% of the market.”
Looking back into the past, I now realize it was a big, successful decision. But I still remember that the first 4 years were very tough, and the rampant curve was very slow. Even so, we invested a lot of efforts in educating people how to use our delivery method. Today, we actually dominate the market completely in Poland, but also in some other countries, as our lockers have become the obvious choice for both online retailers and users. In addition, we have expanded our solution across 22 markets.
GP: What is the manufacturing process behind the product (design, where is it built, what materials are used, recycling issues, etc.)?
RB: The life cycle of the machine itself is around 15 years. These are outer machines 24/7, made of steel and we use Polish-only components. We have our own factory in Krakow, but also collaborate with some contractors.
Our machines are available in countries with different weather conditions, such as Dubai, Australia, Iceland, but also Chile or Colombia, which means we had to ensure there are no limitations in terms of the solution’s reliability for this kind of activities.
When it comes to recycling, it’s pretty difficult since they are made of steel, as already mentioned. Of course, there are some components that are made of plastic, as well, which partially comes from recycling.
GP: How scalable is the Paczkomaty project, in terms of size, location and infrastructure? How flexible are you when it comes to incorporating this onto different markets, weather conditions? Are there any limitations?
RB: Actually, the solution is fully scalable and modular, which means that we can install a small machine and then increase the capacity, once the traffic is growing.
In addition, our solution is equipped with a certain degree of flexibility, which is also based on market circumstances. To give you some examples, in Eastern markets such as Russia or Ukraine, cash is still the most popular payment method for parcels, so we had to adapt our process accordingly. On the other hand, in Poland, we have the NFC technology and implemented mobile apps like BLIK.
GP: How do B2B, B2C and C2C dimensions within your ecosystem differ?
RB: Ever since the beginning, we knew we wanted to create a solution for the B2C commerce. B2C parcels coming from online retailers to end-users represent the majority of the parcels, but we are now also pushing the C2C stream, which is becoming more and more popular and for a good reason. People do not want to go to the post office and wait in lines to drop a parcel. They are already educated enough when it comes to Paczkomaty’s ease of use.
Probably the least popular dimension is still B2B. The main reason is the following: for these types of operations the key delivery method constitutes the traditional courier door-to-door. In this segment, we are already the number 2 player on the market and growing 3 times faster than the leader. I think that next year we will become number 1, in terms of door-to-door delivery.
GP: Is hacking a concern for Paczkomaty?
RB: So far, we haven’t encountered any software hacking-related issues. All machines are secured with the proper software that automatically cuts off any potential hacking attacks. This means the machine is automatically switched off by the security system, so it would not affect the entire network.
“Looking at what is going on across the world and the way hackers are advancing in their illegal actions, we always try to stay up to date when it comes to the best security solutions.”
Also, physical hacking is almost impossible: the machine has got cameras and very safe locks. Although we had a few similar hacking attempts in the past on a few machines, people were easily identified and the Police did their job.
GP: You’ve recently reached almost 4,100 pick-up points. What is the ultimate goal? How do you choose locations for new ones: rural vs urban areas, other criteria?
RB: Our plan is to reach nearly 4,300 machine locations altogether until the end of the year, but since the machines themselves need to be modular, we are going to ensure additional capacity by adding thousands of extensions to the overall lockers.
As for the criteria we have in mind, this is actually our own know-how and I do not want to disclose these details. Suffice it to say that simply based on our vast experience, we have learned a lot regarding what type of locations really work (or not) for the lockers. Also, a potentially new location needs to fulfill almost 30 different conditions. Of course, some of them are “a must”, while others are a “nice to have”. We have gained a lot of knowledge that is very specific to our kind of business, but also guarantees market success.
GP: You have established a huge partnership with Allegro over the last few years, now Allegro Smart came along and on paper it looks like it is going to be huge. Are you planning to expand your cooperation with other Polish online stores?
RB: Actually, Allegro Smart was an idea that we passed to Allegro many years ago and I am more than happy that they have implemented it.
We are already in talks with some of the biggest retailers, planning to launch similar programs for their end-users. I strongly believe that next year we will be witnessing a multiplication of so-called smart solutions, whether it is a subscription for the end-users, data-related or maybe target users of the biggest brands online.
“For now, our core business is definitely around the parcel.”
GP: Have you thought about expanding the existing functionality of Paczkomaty by adding services such as paying bills, exchanging money, topping up phones, etc.?
RB: We have different solutions and just to give you an example: now we are trialling refrigerated lockers for the e-grocery segment. We are constantly testing new functionalities, but also as of now, our core business is definitely around the parcel.
The second part of this interview, which is focused more on current and general industry trends, market potential and future directions, can be found here.