I'm thinking about building a position, but my problem with the case is that I find it difficult to see what’s unique about it. Seems very easy to copy. Very volatile quarterly reports. High debt ratio. Requires large investments to continue expansion at the previous pace. I’m concerned they may be spreading too much geographically. The question is how far we are from drone deliveries? Technological changes could disrupt existing infrastructure.
My opinion is that Inpost is well-positioned to capitalize on the continued growth in the e-commerce sector and delivery market. I’m missing something unique to make my investment. I think any current logistics company could set up parcel lockers. However, I must admit they are performing exceptionally well, so maybe I’m missing something.
Thanks for reading! While physical lockers themselves are easy to copy, they are just a small part of InPost's success. There’s a reason why InPost is the dominant player in Poland, whereas many others in Poland and Europe have struggled or gone bust trying to replicate its model.
Regarding "very volatile quarterly reports," I’m not sure what you mean, as InPost has consistently reported solid numbers for several quarters now.
Debt is a key funding source for physical infrastructure. Funding this infrastructure through equity would be highly dilutive to shareholders. Building a moat requires significant investment, and that's exactly what InPost is doing. The more InPost invests, the harder it becomes for competitors to catch up, and these large investments are delivering a high ROIC.
I don’t believe the company is spreading itself too thin geographically. InPost holds a dominant market position in Poland and is now aggressively pursuing growth in France and the UK following recent acquisitions. Beyond that, its presence in the other four countries it operates in remains limited.
As for drones, while they represent an interesting technological advancement, out-of-home delivery will always be cheaper than door-to-door delivery, regardless of technological innovations.
Just finished reading this for a second time. Great summary! This is a business I wasn't familiar with but am now spotting their collection boxes everywhere (in England). I think another potential risk in this model could be the lease terms to support growth. I am believe they lease the space in their chosen locations, and wonder what controls there are to ensure they retain profitable sites, can exit poorly performing sites quickly and can manage the costs on the leases i.e. are the leases index linked, subject to parcel volumes etc? On the flip side, I would imagine InPost is an attractive tenant as they often make use of space that has no alternative use and will drive footfall in the chosen location - feels compelling from a landlord perspective.
Thanks for the feedback. They’re expanding rapidly in the UK, so it’s no surprise that they’re becoming more visible. While the specific terms may vary depending on the location and partner, my understanding is that InPost’s model focuses on mutually beneficial partnerships rather than traditional leasing arrangements. The lockers are highly attractive to businesses and property owners, such as gas stations and stores, because they help drive additional foot traffic, as you mentioned.
I live in Poland, and I admit that ever since InPost appeared, I have no desire or need to use other courier companies. If they maintain their high level of service in other markets as well, they will soon become a true monopolist in this industry.
Thanks for sharing your perspective from Poland. I think the value proposition from out-of-home delivery is compelling. There is a huge opportunity for InPost to become the dominant force in Europe if they can execute successfully.
I would think with the migrant situation in Europe, crime would also be increasing (not sure if delivery groups otherwise leave people's parcels on front steps in Europe) + urban areas are more compact there and thus its easier for people in a small town or village to go to a central location when they do their daily shopping to also pick up their packages...
Thank you for the reference. Leaving parcels on doorsteps or even in rubbish bins is still a very common practice. The use of APMs adds an extra layer of security and protection. I agree that InPost lockers could offer even greater value in rural towns and villages, where last-mile delivery costs are much higher than in urban areas.
Thanks for posting!
I'm thinking about building a position, but my problem with the case is that I find it difficult to see what’s unique about it. Seems very easy to copy. Very volatile quarterly reports. High debt ratio. Requires large investments to continue expansion at the previous pace. I’m concerned they may be spreading too much geographically. The question is how far we are from drone deliveries? Technological changes could disrupt existing infrastructure.
My opinion is that Inpost is well-positioned to capitalize on the continued growth in the e-commerce sector and delivery market. I’m missing something unique to make my investment. I think any current logistics company could set up parcel lockers. However, I must admit they are performing exceptionally well, so maybe I’m missing something.
Thanks for reading! While physical lockers themselves are easy to copy, they are just a small part of InPost's success. There’s a reason why InPost is the dominant player in Poland, whereas many others in Poland and Europe have struggled or gone bust trying to replicate its model.
Regarding "very volatile quarterly reports," I’m not sure what you mean, as InPost has consistently reported solid numbers for several quarters now.
Debt is a key funding source for physical infrastructure. Funding this infrastructure through equity would be highly dilutive to shareholders. Building a moat requires significant investment, and that's exactly what InPost is doing. The more InPost invests, the harder it becomes for competitors to catch up, and these large investments are delivering a high ROIC.
I don’t believe the company is spreading itself too thin geographically. InPost holds a dominant market position in Poland and is now aggressively pursuing growth in France and the UK following recent acquisitions. Beyond that, its presence in the other four countries it operates in remains limited.
As for drones, while they represent an interesting technological advancement, out-of-home delivery will always be cheaper than door-to-door delivery, regardless of technological innovations.
Just finished reading this for a second time. Great summary! This is a business I wasn't familiar with but am now spotting their collection boxes everywhere (in England). I think another potential risk in this model could be the lease terms to support growth. I am believe they lease the space in their chosen locations, and wonder what controls there are to ensure they retain profitable sites, can exit poorly performing sites quickly and can manage the costs on the leases i.e. are the leases index linked, subject to parcel volumes etc? On the flip side, I would imagine InPost is an attractive tenant as they often make use of space that has no alternative use and will drive footfall in the chosen location - feels compelling from a landlord perspective.
Thanks for the feedback. They’re expanding rapidly in the UK, so it’s no surprise that they’re becoming more visible. While the specific terms may vary depending on the location and partner, my understanding is that InPost’s model focuses on mutually beneficial partnerships rather than traditional leasing arrangements. The lockers are highly attractive to businesses and property owners, such as gas stations and stores, because they help drive additional foot traffic, as you mentioned.
Thanks for the response. Feels like a genuine 'win-win' for InPost and landlord.
I live in Poland, and I admit that ever since InPost appeared, I have no desire or need to use other courier companies. If they maintain their high level of service in other markets as well, they will soon become a true monopolist in this industry.
Hi Tomasz,
Thanks for sharing your perspective from Poland. I think the value proposition from out-of-home delivery is compelling. There is a huge opportunity for InPost to become the dominant force in Europe if they can execute successfully.
I linked to your post my weekly Monday emerging markets links roundup: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-september-30-2024
I would think with the migrant situation in Europe, crime would also be increasing (not sure if delivery groups otherwise leave people's parcels on front steps in Europe) + urban areas are more compact there and thus its easier for people in a small town or village to go to a central location when they do their daily shopping to also pick up their packages...
Thank you for the reference. Leaving parcels on doorsteps or even in rubbish bins is still a very common practice. The use of APMs adds an extra layer of security and protection. I agree that InPost lockers could offer even greater value in rural towns and villages, where last-mile delivery costs are much higher than in urban areas.