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Gaining a foothold in the international e-commerce delivery market

Postal Technology International speaks to Paul Carvell (center), chairman of The Delivery Group, parent company of CMS and Secured Mail, following the acquisition of international e-commerce logistics operator P2P Mailing.

Why has The Delivery Group acquired P2P?
Our research showed that the international e-commerce market is set to double or even treble over the next three years, so we were looking to see how we could be a part of that. P2P was one of those companies that we identified straight away, as it’s capable of delivering an international delivery service to 200 countries around the world. We found P2P to be a like-minded entrepreneurial company, which was privately owned, so it fitted our specifications.

Why now?
Secured Mail started off as a mail company but now focusses on direct mail and marketing materials. The company moved into the domestic e-commerce world around three years ago, mainly on the back of Amazon, and that has really become a big growth sector for us. While the company has some international arrangements, it was strategically better to have a player that was already focused on the international market and that’s why we brought P2P into the fold.

As it stands, approximately 70% of our turnover as a group is in e-commerce. In terms of P2P alone, around 90% of the company’s business is in e-commerce. It also has its Trak Pak product, which has been designed for online retailers sending international packets of up to roughly 2kg (4.5 lb). It has all the benefits of a courier service, in terms of door-to-door tracking and an audit trail, but is available at two-thirds of the price.

The trade off, however, is that it takes three to five days to arrive. It’s good for customers who want to know where their package is, but don’t necessarily want to pay courier rates to have that.

So the timing of the acquisition was purely down to strategy. We obtained CMS in March 2015 and wanted to give some time to show that the combined business model with Secured Mail could work. We then set our sights on obtaining an international e-commerce delivery firm and it has taken more than a year to go through the acquisition process.

How will the two businesses be incorporated?
One thing we are trying to avoid with the Delivery Group is to bind all of the companies together. We’ve got each of them because they have a specialism, they face a particular set of customers and offer a particular sort of service that those customers want.

What we didn’t want to do was smash them together with a single brand and destroy some of the value of the company. So they stand alone with their own management team, their own brand, their own customers and their own services.

We will now encourage all three businesses to work closely together to share best practice, information and offer a broader range of services to each other’s customers, and accelerate the growth faster than they could do by themselves.

What does it mean for existing Delivery Group operations?
We expect there to be more growth so this could mean expanding our depot in Warrington as it’s already very busy. But in terms of P2P operations, there won’t be any difference except more business and growth.

Will the branding change?
In the past we’ve seen big companies come along and purchase smaller companies and obliterate their brand and the management team, and in the end the company they have has no resemblance to the one they acquired. So we’re quite clear that we want to keep those three public facing brands alive. They’ll all be part of The Delivery Group and the website will carry The Deliver Group logo as well as their own, but they will remain independent.

How do you plan to move the P2P business forward?
We noted that P2P outsourced all of its transport operations and only had a couple of vehicles for local collections, the rest was outsourced across the country. Within The Delivery Group, we have more than 100 vehicles being used everyday in the UK, so potentially we could take on some of the company’s collections and keep it within the group.

We’ve already identified some of P2P’s customers that would benefit from this in terms of later pick up times, audit trails and tracking services. It won’t be a wholesale change but we will look at one client at a time.

What will the next stage be?
The key will be getting the three companies to work together harmoniously and to demonstrate that working together grows each business quicker than on their own. We don’t have another acquisition planned for the near future, although we do have potential acquisitions in our sights, so the next stage is really about showing that the companies can achieve more together than apart. On a separate note, we are also looking at maybe incorporating click-and-collect services, not through our own lockers but in terms of having access to them, probably by partnering with some form of supplier.

Any potential challenges ahead?
The real challenges are the market challenges. This includes having the operations to be able to cope with growth; dealing with market exchange rates, which can work for and against you – the upside being that exports increase and therefore the UK customers are spending more abroad, the downside is you have to buy euros and dollars, and pay in euros and dollars to your suppliers.

However, because P2P is already so well managed, we don’t have the classic problems often experienced by parent companies during an acquisition.

October 27, 2016


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