Ádám Bengyel, Founding Member and Chief Executive Officer
The relationship between the founding team of Foxpost was based on serendipity, with each member having some experience in home delivery and logistics before starting the company. “The real beginnings date back to 1996, when I met Robert Domok, who later became the founder of Foxpost. We were students; the internet didn’t really exist yet. Robi moved to Estonia in 2000. There he completed an MBA course and became a successful entrepreneur. And he learned an important principle, which he kept telling himself for a long time: you don’t need money to start a big company, capital is the least important thing. Three things are needed: a good idea, good management and a good business plan. There is so much free cash in the world looking for investment that it is possible to find capital for a good idea”, said Ádám Bengyel, founding member and CEO of Foxpost Zrt.
This idea has come up many times and seems to have been the guiding principle behind the birth of Foxpost. Almost ten years had passed when Róbert Domok invited Ádám Bengyel to Estonia to show him the business model that would later serve as their model. “In Estonia, people buy and sell parcels from parcel lockers, and there it’s so good that there is no home delivery, because everyone uses it.” It came in handy that the third co-founder of Foxpost, Péter Lányfalvi, was working as an external consultant for this vending machine manufacturer: he was researching how the product, which worked very well in Estonia, could be introduced to international markets, primarily Scandinavian ones, in a similar business model as Foxpost later launched in Hungary. The idea is that the foreign partner gets the licence, and it is up to the local entrepreneur to get investors. This ultimately failed in Scandinavia, but Peter Lányfalvi’s work eventually led him to understand the detailed workings of the licence.
Peter and Róbert met in Estonia, and Ádám Bengyel was working for DHL in Belgium at the time, so the three founders, interested in parcel delivery, ended up sitting around the same table in the Baltic country. “We looked at the Estonian system and found it to be a very good idea, a competitive solution. We knew that the most expensive link in the logistics chain is the first and last link, the delivery, when you have to take things one by one. The parcel locker was the solution to this.”
The original plan was to raise the necessary capital of EUR 5 million in six months, but it ended up taking two years. The financial backing was eventually provided by Wallis and the Futureal Group, but the road to get there was not easy. “At the time, in the early 2010s, there was no venture capital know-how structure in Hungary. The few investors that can be considered venture capitalists have not yet been able to create a start-up culture; it has been the JEREMIE funds that have put large amounts of capital into the market, forcing players to try. Everyone was learning about venture capital, including us. Wallis is fundamentally not a venture capital firm; it doesn’t invest in start-ups”, added Gyula Mező, CFO of Wallis Asset Management Zrt.
Although the company was founded in 2014, due to the complications of raising the necessary capital, it was only in April 2015 that it was able to start its operations with 51 lockers. Even so, this period did not end without results. “The big advantage we had was that we had been negotiating with the locations since the beginning of 2013, which meant that many of our competitors were no longer allowed to go there. They couldn’t get to the good places, the quality locations, so we had already booked the busy indoor places”, recalled Ádám Bengyel. This is partly why Foxpost acquired one of its competitors, Webox, in 2016. Another source of competitive advantage for Foxpost is that they also work with online shops, helping them to deliver their products cheaply and quickly.
The difficulty in the early days was that nobody really had any idea of the size of the market to plan for, as the parcel locker solution was just emerging. Foxpost still managed to get the parcel number within 5% accuracy. The Hungarian parcel locker market is currently worth around HUF 40 billion, and is set for significant growth in the future. Foxpost predicts that the number of parcels delivered will double within five years.
Today, the Hungarian market, and Foxpost in it, is remarkable for several reasons: the use of parcel lockers in Hungary is high in Europe, but other countries, with few exceptions, do not have such a developed network. The technological knowledge that Foxpost’s system has developed is unique in the world.
According to Foxpost, its services have already been used by more than one and a half million individual customers; they currently have around 360,000 registered customers and have been in contact with 12,000 companies since their launch.
The typical Foxpost user today is between 30 and 60 years old. Interestingly, the system is successful in reaching different age groups: there are as many Foxpost users over 65 as under 24, and more than 10% are over 75. However, the proportion of young people is expected to grow dynamically: they want convenience, speed, price, no queuing and simplicity. In addition, the carbon footprint of parcel locker delivery is significantly lower than that of home delivery, another key consideration for users under 30.
Foxpost plans to have a network of over 1,000 parcel lockers in three years’ time and aims to be the market leader in Hungary with the vision that people will make parcel lockers their first preference, ahead of home delivery.