InPost inks Amazon deal to tighten grip on Polish e-commerce

Parcel locker company InPost SA has clinched a five-year deal with Amazon Inc. as the U.S. giant enters Poland’s revved up $19 billion e-commerce market.

Fresh from last week’s successful initial public offering, InPost Chief Executive Officer Rafal Brzoska revealed the contract in an interview with Bloomberg. The Amsterdam-listed company will handle some Amazon deliveries in Poland through its network of automated lockers as well as directly to homes, he said.

The deal, which doesn’t cover shipments abroad, will help maintain InPost’s revenues if Amazon eats into the dominant position of Allegro.eu SA, the east European country’s e-commerce leader and the biggest client for its parcel lockers. The Polish company is boosting capacity to accommodate what it expects to be a gradual ramp-up of operations by the U.S. giant.

“We expect our friends from Amazon to pace their entry -- this is not going to be a Blitzkrieg,” Brzoska, 43, said by phone. Amazon’s step is “very positive, because it means increased volumes. For the entire market, it means faster e-commerce penetration.”

InPost shares gained as much as 3.1% and traded 1% higher at 10:42 a.m. in Amsterdam, while Allegro dropped 5.1% in Warsaw before recouping most losses. The Amazon-InPost deal shows that the U.S. giant has “serious plans” for Poland, and making use of a delivery method often preferred by Poles may help it grow, Erste Group Bank AG’s analyst Konrad Grygo said.

Lifestyle Change

Amazon last week invited sellers to start registering for its new Polish website that will go live soon. The move coincided with InPost’s market debut via a 2.8 billion euros ($3.4 billion) IPO which turned Brzoska into a billionaire. The company jumped 24% since its listing and is worth 9.9 billion euros.

InPost, which has more than 10,000 lockers, plans to add 4,000 to 5,000 more this year, predicting market growth after better-than-expected volumes in the fourth quarter. The company isn’t changing its mid-term capex plan of as much as 625 million zloty ($168 million) per year after Amazon’s decision, the CEO said.

Brzoska is betting that Poles’ embrace of online shopping is a lifestyle change that will outlast the pandemic and that the eventual lifting of virus-related restrictions won’t be a big hit for InPost’s business model.

InPost shrugs off competition risk from companies that seek to encroach on its home turf, including Alibaba Group Holding Ltd’s AliExpress, Poland’s post office and state-run refiner and retailer PKN Orlen SA. Even as these companies may install as many as 5,000 lockers in Poland over next few years, they would still lack the technology to undermine InPost’s position, he said.

Tech Tandem

While clinching the Amazon agreement, whose business or financial details haven’t been published, Brzoska remains confident about InPost’s relationship with Allegro.eu.

The two companies signed a seven-year delivery deal in September, even as Polish marketplace plans to launch its own machines. Brzoska wants to see such step as diversification only. About 70% of Allegro’s merchandise go through InPost lockers.

“We created a tandem that has generated the biggest tech IPOs in Europe,” he said. “We achieved so much together already and I believe we can achieve even more.”

Erste’s Grygo said he expects the entry of Amazon to potentially push Allegro toward foreign expansion so it can maintain its rapid growth.

Brzoska is also looking to expand in western Europe. InPost wants to double its U.K. network of automated lockers to 2,000 machines this year. In France, where about 40% of all online purchases are delivered through the out-of-home model, it will seek to buy logistic companies running pick-up and delivery chains in early 2021.

He said the pandemic has exposed the shortcomings of the western European model based on pick-up and drop-off points located in convenience stores or in cafés, which became overwhelmed during peak shopping seasons. That creates a lifetime opportunity for InPost.

“Merchants in Western Europe have reached their limits,” Brzoska said. “Pick-up points can serve about 20-40 parcels a day while our lockers even 700. Polish merchants have learned their lesson, now it’s time for Western Europe.”