RP handles one million international parcels a day, runs 42,000 post offices, has 350,000 staff on its payroll, and operates 17,000 vehicles: Moscow-headquartered Russian Post is the largest Russian logistics enterprise. However, innovative business models have not been part of its repertoire in the past – until now.
About a year ago, a bold knight appeared on the scene, willing to modernize the ponderous giant, eager to enlarge the reach of RP and offer end-to-end services on a global scale for the e-com
industry. The name of the man responsible for triggering this revolutionary transformation: Denis Ilin.
To underline the plausibility of his transformation strategy, the manager states a few key figures: Russian Post holds an impressive 80% cross border market share of parcels and packages transported into and out of Russia. Including the missing 20%, the total yearly cross border e-Commerce market totals US$6 billion. Together with domestic e-Trade, the market of goods ordered or sold online is forecast to grow an average 19% a year in the next few years, with the Russia market enjoying healthy growth of 24% in 2019.
Shifting mindset as well as parcels
The external development poses a huge challenge for such a traditional company as RP. So, it is time to rethink and change the outdated business model in order to keep pace with new things happening outside the fence. Only through a root-and-branch transformation can RP keep pace with changed purchasing habits and customer preferences for securing existing or even gaining additional market shares, Mr Ilin is convinced. “We have to evolve from a traditional postal operator into a full-scale end-to-end logistics service provider,” RP’s Deputy CEO of Int’l Business points the way.
Practically, this means that RP is determined to set up a global logistics network to serve top tier clients such as AliExpress, eBay, Amazon or Pandao on a global scale by providing integrated logistics and transport services end to end, be they by air, road, rail or sea. “A modern post organization cannot limit its operation to one country alone,” Mr Ilin exclaims. This applies particularly at times when cutthroat competition is rapidly increasing, putting tremendous pressure on logistics players to enhance quality and speed up deliveries at ever-shrinking prices. “People expect next or even same day delivery but are not willing to pay more for this extra and customer-tailored service offered by organizations such as Russia Post.”
Key component of his company’s new cross-border approach is the founding of two subsidiaries: RusPost GmbH in Germany, and Russian Post Logistics Ltd in China, thus expanding its reach. The subsidiaries will cooperate closely with local marketplaces and logistics firms to ensure seamless services on the first and/or last mile from merchant to final consignee. This way, the organization’s most important customers who account for the lion’s share of parcels transported by RP, namely first-tier clients such as Joom, Alibaba, Pandao in China or YOOX, Notino and ASOS in Europe, can be serviced according to their individual needs.
While Europe delivers 27% of e-Trade purchased by Russians, Chinese e-Traders contribute even 40%, worth €40.5 bn in total.
In addition to the two aforementioned outposts, similar projects are planned to be set up in North America, Hong Kong, Turkey and India, Mr Ilin announces.
Asked by CargoForwarder Global whether RP’s employees are willing to go along with the new strategy, leaving well-trodden bureaucratic paths and adopting to the revolutionary, service-oriented features, he says: “Our staff has to understand that we are not any longer a traditional Post company that transports and delivers letters, but a modern service provider that has to reinvent itself every day anew to meet needs and expectations of the growing e-com industry.”
Indeed, a Herculean task lies ahead. Yet this does not seem to faze him, since as the former chief of freight carrier AirBridgeCargo Airlines, he is used to mastering such challenges.
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