Asheville Capital Management's Jake Barfield on InPost's scaling moat
Dec 5, 2024
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Jake Barfield, Founder & Portfolio Manager at Asheville Capital Management, dives into InPost Group, Europe's leading e-commerce logistics innovator. He highlights InPost's unique automated delivery system and explores why it's gaining traction in Europe. Barfield discusses the competitive landscape, contrasting InPost's strategies with giants like Amazon, and examines their expansion plans, especially in the UK. He also reveals how InPost's gamification and loyalty programs are reshaping consumer engagement, positioning it for future growth amid market challenges.
InPost's automated parcel machines enable cost-effective and efficient last-mile delivery, distinguishing it from traditional services like UPS and FedEx.
The company's successful expansion strategy relies on replicating its Polish model in other European markets while maintaining operational efficiency and partnerships.
InPost enhances customer engagement through gamification in its app, promoting user loyalty and increasing frequency of use within e-commerce logistics.
Deep dives
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Understanding InPost's Business Model
InPost operates as a parcel delivery service, mainly using automated parcel machines (APMs) rather than traditional door-to-door deliveries. This method offers remarkable advantages in terms of efficiency, allowing delivery personnel to drop off multiple parcels at once, which results in significant cost reductions. Unlike competitors like UPS or FedEx, who deliver directly to homes, InPost's strategy aligns with European consumers’ preferences, making it a familiar and convenient option. Their effective use of small lockers distributes delivery points across urban areas, capitalizing on existing foot traffic at key locations.
Competitive Advantages of InPost
InPost stands out because it can achieve much higher operational margins compared to traditional delivery services, making it an attractive option for e-commerce businesses. The company leverages its APM network to lower last-mile delivery costs, which often make up the majority of shipping expenses. This model allows InPost to provide faster service while maintaining lower prices, making it appealing during economic downturns when consumers prioritize cost-saving options. Moreover, their partnership with merchants and dense network of APMs facilitates quick scaling and enhances their price proposition against larger shipping firms.
Potential Risks and Challenges
Despite InPost’s strong positioning in Poland, potential risks loom as they seek to expand into other European markets such as the UK and France, where they currently hold minimal share. The competition could ramp up in these new markets as major shipping firms consider adopting similar models, which may pressure margins. Additionally, if economic conditions worsen, consumer purchasing and e-commerce volumes may decline, leading retailers to prioritize cost-efficient delivery options. Such scenarios could challenge InPost’s growth strategy and financial stability, necessitating careful management of expansion efforts.
Future Outlook and Growth Strategies
InPost's growth strategy hinges on successfully replicating its Polish model in new markets while focusing on operational efficiency and strategic partnerships. The company aims to capture greater market share in e-commerce, particularly in the fast-fashion sector, while maintaining high customer satisfaction through conveniences like easy returns and returns drop-off options. Furthermore, their initiative on gamification within their app aims to reward frequent users, thereby increasing engagement and usage rates. Overall, as they continue to scale and innovate, InPost presents a compelling growth narrative within the competitive logistics landscape.
Jake Barfield, Founder & Portfolio Manager at Asheville Capital Management, joins the podcast to share his thesis on InPost Group, Europe’s leading e-commerce logistics enabler.
[2:23] What is InPost and why are they interesting to Jake
[4:24] What Jake is seeing with InPost that the market is missing
[5:46] Push back on Jake's thesis + European parcel delivery differences to US
[14:48] Relationship with Allegro
[20:27] Why aren't landlords sticking it to InPost
[23:55] Competitive analysis
[34:32] Market penetration; Polish market and how they are trying to gain market share in UK and France
[45:06] Valuation
[55:26] Call options and gamification of customer experience
[1:00:56] Advent involvement; how does Jake think about empire building risk
[1:05:45] What would have to happen for InPost thesis to not work and final thoughts
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