From +2% in the first half of 2020, to +38% in the second. How to grow in the year of the pandemic. Delivery experience.
The Delivery Group began operations in 2001. The main specialization of the group is the provision of transport and logistics services for the B2B sector (business entities and the corporate sector) both in Ukraine and abroad.
Over the years, the group has become a reliable partner for more than 500,000 corporate clients working in all sectors of the economy.
Olena Serhiivna Lakatosh, General Director of the company, comments on how the company and logistics for the B2B segment have changed.
Olena Serhiivna, tell us how the logistics market for the B2B and B2C sector has changed in 2020.
2020 was a challenge for most companies around the world, but let's be honest, for logistics companies, this challenge was a little different. While most companies hastily switched to communicating with customers online, the task of logistics companies was to best prepare for customer service in a pandemic, because logistics companies are the only link between customer and seller. Those who succeeded in such a transformation the fastest, and won. Of course, I emphasize that this applies mostly to logistics companies in the B2C segment.
Regarding B2B, the situation is somewhat different. The first wave of quarantine (ed. From March 12 to April 3) created a forced pause in the production and sale of goods and formed the so-called deferred demand. Of course, the pause was reflected in the financial performance of logistics companies, which work mostly with the corporate segment. Those companies that used this pause for internal change and adaptation were able to get out of the steep peak with dignity.
Is Delivery one such company?
I think so. Delivery turned 19 this year. If we look back and see how many political and economic changes we have experienced in the country, we can say that we are generally constantly working in a state of permanent crisis (smiles). Therefore, the ability to optimally adapt to a rapidly changing situation has long been developed and honed in the company.
First of all, of course, in the shortest possible time, for the safety of customers and employees, all warehouses were provided with masks, gloves and disinfectants, and all employees were transferred to a special mode and read the instructions of preventive measures from the Ministry of Health.
In a difficult period for all, we tried to think not only about our survival, but also about the survival of our customers. That is why the next step was the introduction of the most relevant services for this period - "Postpaid in cash", the cost of which still remains the lowest on the market - only 10 UAH + 2% of the amount of postpaid, "Postpaid non-cash" and "Secure transaction" - a service for online stores, which allows the recipient to inspect the goods before payment, and the sender to receive payment immediately to your current account.
Realizing that the quarantine period is temporary and spring with sowing will come, we have introduced a small bonus for farmers, expanding the industry tariff "AutoPrice" with tires of different sizes for heavy-duty vehicles and tractors and agricultural machinery.
Did this affect the company's traffic volumes?
Of course. Freight traffic in the second half of 2020 increased significantly. In general, if we compare the figures of 2020 with the relatively stable 2019, we have an increase of 12.6% in the number of shipments of parcel format up to 30 kg, which is logical during the pandemic, because the e-commerce segment has grown significantly. However, the volume of freight traffic over 30 kg increased by 25.7% and pallet transport increased by 7%. The average weight of shipped goods was almost 270 kg per customer. During this period, we managed to somewhat standardize the delivery time of goods. We have increased the number of flights and improved transportation routes. Our clients receive cargo mainly in 24, 48 and 72 hours to the most remote settlements of Ukraine, depending on the direction of transportation. With increasing traffic volumes, we significantly reduced the share of loss and damage to cargo, which in turn helped increase the loyalty of our customers and, as a result, the number of our customers increased by 37.8% compared to 2019. Companies working with the corporate segment understand no one, how important it is, because working with business is based mostly on successful long-term relationships. Another important fact is that during the period of strict quarantine, we did not reduce or dismiss any employees, did not close any branch. Instead, 96 new ones were opened and the company currently has 435 branches.
As you can see, statistics are a strict thing. If we evaluate 2020 in general, we can safely say that the company passed the quarantine test successfully.
At the beginning of the interview, you said that most companies had to reformat their online activities. What digital innovations have taken place in the company?
This participation did not escape anyone. The world gradually went online and quarantined, I think, only accelerated this transition process. In logistics, the most popular were cargo delivery to the customer's door, tracking and auto-return of cargo. Ideally, all actions can be performed remotely: order cargo pick-up, track your cargo online or order auto-return of cargo and its address delivery. And today we meet the demand of our customers for these services.
We focused primarily on convenience for our customers. So we prepared a refresh and restart of the site, prepared a new mobile application, opened additional communication channels (ed. We are talking about the possibility of ordering delivery and collection of goods via telegram and viber channels), slightly improved the client's personal account and continue to improve it.
What are the main vectors of development for logistics companies for 2021 do you see?
The market requires mobility. For logistics of the B2B sector the main thing is convenience and simplicity of registration. For example, orders for address pick-up and delivery of cargo, fast processing of documents in electronic form, cargo tracking, etc. Taking these needs into account, in 2020 we started a global innovation of our digital channels - a website and a mobile application that will include all the listed opportunities for the client and a little more. The release is scheduled for the first quarter of 2021.
The market requires more customer focus. I would call it involvement in our client's business. It is necessary to know your client and his needs, to be able to offer special industry tariffs for ease of understanding the calculation of the cost of transportation, to be able to offer customers individual tariffs for joint successful survival. We are side by side with our client in resolving all current work issues.
The market requires innovation. Drones delivering packages or unmanned cargo delivery vehicles no longer seem unrealistic to us. Of course, in 2021 this is unlikely to become a reality in the Ukrainian market, but the winners will always be companies that implement innovations. Delivery Group is one of them.
And what are the main goals for Delivery for 2021?
The first half of 2020 seemed to completely ruin our plans, but the second half was a breakthrough of the year and we managed to reach + 38% in terms of cargo turnover compared to December 2019. Therefore, I sincerely believe that 2021 will be a continuation of successful records of 2020.
Of course, for some time to come we will feel the effects of the pandemic and business will be "feverish" in economic terms. But we do not set ambitious goals for the company and try to calculate possible risks in advance.
We always work for the maximum comfort of our customers. Therefore, our 2021 goals are primarily related to improving the service and the availability of our services to customers.
The first, of course, is territorial expansion. We plan to increase the number of branches to 500. This will once again confirm our status as the company with the largest network of branches without weight restrictions among logistics companies in Ukraine in providing services for the B2B sector.
Second, by the end of 2021, 70% of our branches will provide a full range of financial services. Services such as Secure Agreement, Cash Postpay and Cashless Postpay will operate even in small towns.
Thirdly, we are already developing new direct routes aimed at reducing the delivery time of cargo both to the branch and to the customer's door.
We systematically improve and increase the list of our industry tariffs, optimizing the costs of our customers, and once again prove that the purpose of our work is not only to make a profit. Although, frankly, we have plans to increase profits in 2021 (smiles) by at least 20%. But I am sincerely convinced that this is possible only as a result of responsible, coordinated work of the team and the ever-growing number of satisfied customers who are ready to recommend Delivery.
