CROSSING BORDERS __________________________________

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The changing state of retail in Eastern European countries

Levente Laszlo, Magyar PostaVienna, 25 January, 2012

� Briefly about Magyar Posta and International Division

� Briefly about our business models

� Proposals for c ooperation

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� Proposals for c ooperation

� Next steps …. ?

� Hungary and CEE market size

An average of 60-75% of the population is living in urban areas.

COUNTRY POPULATION

Bulgaria 7’700’000

Czech Republic 10’200’000

Hungary 10’000’000

Poland 38’200’000

Romania 23’700’000

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Slovakia 5’400’000

Slovenia 1’990’000

TOTAL 95’190’000

� Strategic location of Hungary on the EU Corridor-Ne t

To Ukraine• Lviv • Kiev

Towards Russia and Asia

Corridor 5To Germany:• Dresden• Nuremberg

To Northern Sea ports

Corridor 4

Corridor 7

River Danube:

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River Danube:

From Southern Germany...

Corridor 5

To Adrian ports • Koper• Rijeka• Ploce

Corridor 7

... to the Black Sea

Corridor 4

To Black Sea ports• Istanbul• Constanta

Corridor 10To Aegean Sea Ports

� Strength of Magyar Posta

� Nationwide access : every door, every day

� Reliable logistic network in letter mail and parcel business

� Country-wide branch network for retail customers

� Good value for money : high quality

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� Good value for money : high quality at acceptable price level

� Customer knowledge and customer loyalty

� Recognized international presenceand activity

� Clear strategy

� International strategy - milestones 2005 - 2015

Traditional internationalservice

- 2004

Regional postal operator„CROSSING BORDERS”

2010 - 2015

2005 - 2009

„ Earning the right to play on international market ”

• improving distribution

• Multilevel strategic partnerships

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• improving distribution quality

• joining REIMS-East

• joining IPC-IDM

• joining IPC-EPG

• improvement of the product portfolio

• joining Pay-for-Performance EMS

• bilateral agreements & partnerships

• outbound and inbound standard postal products

• UPU-conform product-portfolio

• new sales & distribution channels in CEE-region

• tailor-made „commercial”product portfolio

• low cost CEE logistic network

• focusing extensively on the customers’ needs (IT-support, GIS, web 2.0 support)

� There are aprox. 1,4 billion people online daily

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� World is changing … very fast … too fast …

ARE WE FOLLOWING THE CHANGING COMMUNICATION

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COMMUNICATION AND SHOPPING HABBITS OF OUR CUSTOMERS ?

� Top 10 goods for physical delivery

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� Return services – methods for returned goods

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� Drivers and barriers of cross-border e-shopping

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� Magyar Posta „all inclusive e-commerce” business mode l

1 Distribution of unaddressed items

2

4

5Distribution of addressed items

COD

Reverse Logistics Management

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.

3

Management

Distribution of parcel items

6 Reports

� Briefly about the complex business model

Case Study� Distant Seller (DS) located in ex. Germany is selli ng via

catalogues and internet goods on the ex. Romanian m arket � Magyar Posta offers all inclusive e-commerce servic e

(operations and liability)

The business model = full control on the processes� Local distribution of unaddressed items (flyers)

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� Local distribution of unaddressed items (flyers)� Local distribution of addressed items (catalogues and DM)� Local distribution of parcels with / without COD� Cash collection and transfer � Return of undelivered items � Return logistics management (RLM) � Other linked services (GIS, reports, etc.)

� New business model: geomarketing

New ways for building customers /buyers databases:

Offering GIS modells

Kerület NépességHáztartások

számaÖsszes

vásárlóerı

Egy háztartásra jutó

vásárlóerı

fı db millió €€ /

háztartás

index / háztartá

sMo.=10

0

Családi házas

címhelyek

száma

Budapest I. kerület 24 665 13 770 184,8 13 421 113,7 6

Budapest II. kerület 88 187 42 114 668,6 15 875 134,5 8 327

Budapest III. kerület123 737 54 464 842,8 15 474 131,1 11 751

Budapest IV. kerület 98 381 42 328 648,8 15 329 129,9 5 086

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Budapest V. kerület 27 023 14 309 194,1 13 568 115,0 0

Budapest VI. kerület 41 784 22 534 250,7 11 127 94,3 0

Budapest VII. kerület 62 034 34 263 350,1 10 218 86,6 0

Budapest VIII. kerület 81 447 40 351 415,5 10 297 87,2 263

Budapest IX. kerület 60 892 31 671 350,3 11 060 93,7 490

Budapest X. kerület 78 484 34 961 446,3 12 765 108,2 3 670

Budapest XI. kerület137 426 65 691 921,5 14 028 118,9 7 198

� Value-added solution : InsertPack

� Wrapping publications into plastic or paper

� Enclosing inserts or product samples

� Addressing of the items (by using leporello address or ink-jet printing)

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jet printing)

� Sorting of mail (based on the addresses)

� Dimensions� Max. 400x300x70� Min. 110x105x8

� Outsourced solutions (labeling at customer’s warehouse)

Customer

Receiver

� New (outsourced) solution for offering direct labeling + shipment, but keeping the full control

� Next step – buildingplatform using the existing digital technology

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Magyar Posta FTP

Home delivery

Receiver

� Delivery from Budapest to Romania

Budapest to Sibiu-HUB

daily 17:00 – 7:00Delivery in Iasi next day 11:00

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Page: 17

Delivery to Constanta next day 13:00

Delivery in Timisoara next day 11:00

� Reverse Logistics Solution - Romania

� Posta Romana > 7,000 outlets

� Pick up and delivery to Magyar Posta HUB in Cluj

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� Collection and transport to Budapest -HUB

� Hungary – expectation for 2012 on-line spend

Forecast is 160-165 mrd HUF for 2011

� On-line spend has reached by the end of 2011, EUR 550 million

Aprox.1,5 million transactions in 2011

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Source: GKIeNET

Increase of 25% despite the downturn

� Romania – expectation for 2012

� 6% from the Romanian population is expected to buy online in 2012

� 1,2 million transactions

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� 1,2 million transactions

� 1,2 million parcels (incl. International as well)

� Trend of B2C e-commerce originated from Asia

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� Budapest HUB – the regional access point

The regional HUB offers:

� „point of entry” for all the customers outside of EU and from oversea (CN, US, etc.)

� Regional distribution service� Customs clearance

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� The International HUB located on Budapest airport

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� Areas of cooperation

Comprehensive distribution B2C parcel :

� Single operator – common operations for cross-border delivery into Hungary, Romania and other CEE countr ies

� Attractive delivery times� COD possibilities

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� Track and Trace � Insurance up to EUR 400 / parcel or value of COD� Returns management � Personal service from competent sales personal

� What is e-commerce about ?

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� Thank you for your attention !

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email: sales.international@posta.hu