Bpost has announced it had made an offer to buy Post.nl
This important (and clever) move by Bpost should be understood within a larger historical context. We will explain you in a another article this context but for the moment we’d like to give you in a nutshell the reasons behind Bpost’s announcement to buy Post.nl
Biggest competitor eliminated
Post.nl has been Bpost’s biggest competitor for decades and has just launched a 100 % coverage parcel delivery network in Belgium. One illustration of this competition is the fight for the Amazon contract which led Bpost to be awarded deliveries on weekdays whereas Post.nl got the weekend days.
Bargaining power games
The split of the Amazon contract is the evidence of postal operators’ diminishing bargaining power against e-commerce giants. A merger between Bpost and Post.nl would allow to better defend margins.
Acquisition of largest network in The Netherlands
The purchase of Post.nl will allow Bpost to acquire the largest distribution network in The Netherlands and to further reinforce flows between those two countries.
Economies of scale
Economies of scale can be expected in the two main operational areas: outbound foreign flows (everything that is sent to a foreign country) and inbound flows (everything that is sent from abroad)
Economies of scale in outbound flows
Sending letters or parcels abroad requires any postal operator to negotiate with transport companies prices to carry all this merchandise. Most flows (80%) are to neighboring countries (transportation by road) and the remaining by air to more distant countries. As a result of bpost acquiring Post.nl, bigger volumes would have to be handled which would allow the new company to optimize routes and negotiate better rates per kilo.
This may however result in routes being changed and volumes shifted from one country to the other. Once can for instance wonder whether Zaventem airport would still be used as the departing airport for outbound flows, given than Schipool is bigger and that daily transport by road occur anyway between Belgium and The Netherlands.
Economies of scale in inbound flows
Inbound flows require specific processes (especially as far as customs are concerned) and most of the time specific facilities next to an airport. A logical step, after Post.nl is acquired by Bpost, would be to let all merchandise enter through one facility only. The redundant facility would then be closed. Chances are high in my opinion that the Zaventem hub would be the victim.
Conclusion
The acquisition of Post.nl by bpost is motivated by the need for further growth and ever growing returns for shareholders. One can wonder however what will be the tribute to pay by the Bpost workforce as shareholders will always require more ROI and dividends.
Posted in Marketing.
