Secrets to Investing Success in the Local CEP Market
Adrian Mihai, Managing Partner of FAN Courier, the local CEP market leader, speaks to The Diplomat – Bucharest about the local CEP market reality, further opportunities and successful investments strategy.
FAN Courier has been the local CEP market leader for more years. You have marked a constant increase of business, even during financial crisis. Did you have the luck to operate on an increasing market or is there a success rec
The CEP market in Romania is an increasing market, we have said this many times in the past years, but it is not enough to have a place to succeed. In the same time, the last years' context, with markets that decreased dramatically or others that developed very fast, can help you, but only if you are ready. Thus, I can say that the answer is just about a business strategy built on realistic pillars, where we aligned the growth intentions with the possibilities to achieve a sustainable increase. In other words, we forecast the increase based on the investments that we could make by own means.
The investments can be, thus, considered, the secret of success?
Yes, the investments and the capacity to feel, anticipate, as truly as possible, the tendencies of the market on medium and long term. It does not make sense to initiate an investment that you will amortize in some years, if the signals that the market is sending show that is not the right path. Some years ago, there were signals that the delivery services market will have a new increase niche, the online commerce. FAN Courier analyzed this opportunity and understood that the investments necessary to cover the demand of the new area impose some specific investments also. As it was seen, the reality exceeded the initial expectations and the electronic commerce is an important increase engine for all the delivery market. At the last edition of GPeC, the most important event of electronic commerce in Romania, where we constantly participate, it was stated that only last year, the e-tail market exceeded 1.1 billion euro in Romania and the tendencies are still on increase, as the number of internet and mobile internet users is still growing. For that matter, at the consumer level, the tendency is becoming a consumption behavior, more and more stores and networks choosing to offer online purchase services for the products they are producing or selling. This market needs delivery services, but especially needs quality services. Here is where our role starts, to invest in the infrastructure that ensures a quality service.
The investments refer to the car fleet?
The car fleet for delivery companies is both investment and consumables. Do you know that, almost daily, our vehicles are making routes that exceed the length of Ecuador? The investment in fleet is permanent, but in order to comply with the quality standards that we offer to our customers, especially for rush moments, such as Black Friday, strict investments are necessary. The Black Friday orders from 2013 increased with 375% against the previous year so, to comply successfully, we extended our fleet in 2014 with 140 new vehicles of which: 17 TIRs, 15 trucks of 20 tons, 15 trailers of 18 tons and 50 small utility cars, 25 utility cars of 3.5 tons, we increased our personnel, we invested in IT and equipment. All the investments aimed the delivery times' reduction of the products to customer, because it is disagreeable to order online and to wait the product some weeks, until the courier arrives. But the fleet is not our only priority at investment level.
Which are, in 2015, the main investment directions and how many funds will you allocate this year?
This year, a priority direction is the development of new branches and a reorganization of the territory activity by modernization and automation of more regional HUBs, the investments being estimated at 8.5 million Euros. Last month we started the construction of the first modernized regional HUB, in Brasov. The funds are, thus used to build the new center in Brasov, to open and modernize new branches, IT infrastructure and trainings for employees. Only for the regional center in Brasov, we will need additional personnel, about 200 people, for who we will organize a training program.
We chose Brasov as the second regional center, after Bucharest, because it is an important point, regarding transport and delivery services and it is in continuous development.
Where did you invest in new branches and what is the level of these investments currently?
FAN Courier operates nationally and we proposed to open new agencies or to move in new branches, with more space and in more accessible areas, so that we can be as close as possible to our customers. In March we inaugurated a new branch in Sibiu, where we also tested a new model of interaction and feedback with our customers. The reactions of over 150 customers and partners which answered our invitation convinced us to extend the project for other important points in Romania, also.
At the end of June, we inaugurated the new branch in Baia Mare and we rejoined with over 250 customers and partners with activity in this area. We moved in a more generous space, for the over 50 employees, in a building of 1600 sq. m, placed on a field of 20.000 sq. m. The total investment in the new branch exceeded 70.000 Euros and we consider the investment as a benefic one for us and the customers. Baia Mare is a point from which we load about 70.000 dispatches per month and with this change we will supplement the FAN personnel with 10%.
The development of new branches is a consequence of the development of our activity. FAN Courier launched in the last two years, new services with added value and entered in the cargo, e-fulfillment and batch transport segments, which imposes an increase of infrastructure and spaces.
Another solution that we adopted to optimize the receipt and delivery times is opening work points, where our customers can choose to go at the branch and pick-up or deliver a dispatch. We decided to be as close as possible to our customer's needs and this means not only to deliver fast from one point to another, but to really be close to the customer. Last year, we signed the partnership with OMV Petrom, through which we opened Collect Points in 300 of the group's gas stations. In June we inaugurated the first 2 new delivery-receipt points in Bucharest, from the 4 which are due to be opened until end of August. At 114-116 Stirbei Voda Street and 172 Calea Calarasi, anyone that wants to send or receive a parcel or an envelope faster, can deliver or pick it up directly, without waiting the courier home. In short time the inauguration of the work points from 256 Serban Voda Street and 63 Calea 13 Septembrie, will follow, thus the total number of Bucharest branches where we serve the customers, will be 8. It is an extension of the services range, because we sometimes determined that, due to lack of time, people prefer to come to us, while sometimes they prefer to wait for the courier.