Omniva is part of the explosive growth of Chinese e-commerce
The multiplied parcel volume of Post 11 – the joint enterprise of Omniva and the Chinese courier company S.F. Express – indicates that the Chinese e-commerce market that is the fastest growing in the world has also boosted Omniva’s international business.
In 2015, the volume of global e-commerce was approximately 2.1 trillion euros with an average e-commerce growth of 25% in the last four years. There were 1.4 billion global e-shoppers in 2015 with an average spending of 1448 euros in online stores per year per shopper. The largest e-commerce market being, naturally, the Chinese market with a turnover exceeding 700 billion euros.
According to Omniva’s Chairman of the Board Aavo Kärmas, it was the rapid development and growth of e-commerce in China and the whole world really that led to the establishment of a joint enterprise with S.F. Express. “We launched Omniva’s international business with the aim of also gaining control over the international trade flow in order to be a competitive enterprise on our home market, the Baltics, in the long run. The growth of e-commerce is the most important trend that will continue to substantially influence our business in the future,” Kärmas explained.
Estonia’s e-commerce turnover in 2015 was 170 million euros. According to Kärmas, Estonia mainly stands out with its high number of users and the low weight of e-commerce in our GDP and retail business. “The most active European e-shoppers live in the UK where online purchases constitute an estimated 15% of the retail business turnover. The 2015 e-commerce turnover of Estonia only constituted 2.6% of the retail business,” Kärmas stated.
Kärmas recognised that the global e-commerce business is extremely large-scale. As an example, he mentioned the Singles’ Day shopping day of the world’s largest e-commerce enterprise Alibaba that takes place on November 11. During this day last year, around 467 million parcels were ordered globally. “140,000 orders were placed per second and the sales turnover of this one day was 13.1 billion euros,” Kärmas described and added that the Chinese e-commerce giant is expecting a 40–50% growth in volume for this year’s November 11.
However, Kärmas assured they are prepared for both Christmas and the Alibaba shopping day. “We have taken into account the substantial growth in volume and recruited additional workforce to make sure all parcels reach their destination fast and conveniently,” Kärmas assured.
The Chief Executive Officer of Post 11 Gunnar Aru stated that the rapid growth of Post11 is equal to that of the international e-commerce. “When comparing the first eight months of 2015 and 2016, the number of shipments has increased around five times,” Aru explained. The beginning of the year also saw the customs terminal and the customs warehouse of the enterprise being enlarged from 500m2 to 2,600m2, yet, according to Aru, even these premises will soon be too small.
The enterprise’s daily activities mainly include handling Chinese shipments to Europe and Eastern Europe that are sorted on Peterburi Road within 48 hours based on target countries and products. For this purpose, Post11 has 35 employees who all work at the Peterburi Road logistics platform. In addition to Estonia, Post11 also operates in the UK and is currently launching its operation in Germany. Post11 currently delivers goods to 81 target countries globally, with the biggest volumes being sent to Russia, Ukraine, Baltic countries, Sweden and Belarus.
According to Aru, three Chinese freighters currently land at Tallinn Airport each week. In November when the high season starts, the freighters will land daily or even twice a day. “One freighter brings around 20 tonnes of goods to Estonia. Here we re-registered these as postal items,” Aru explained. According to Aru, several dozen million shipments have already been handled this year.
Aru stated that the delivery time from smaller foreign online stores will become substantially shorter in the future. According to him, goods will arrive to customers at the latest within a few days regardless whether they were sent from a Chinese, US or an European online store. “This largely comes down to various interim warehouses and distribution centres that ensure the goods are closer to the customer upon ordering. We have already started with putting such a customs warehouse into action in Tallinn where we keep in stock more popular goods. Once ordered, the goods are shipped directly from Tallinn and the Tallinn stock reserve is regularly updated with the help of Chinese freighters,” Aru explained.
By now Omniva has cooperated with S.F. Express for over two years and the establishment of a joint enterprise was a logical step forward from their previous cooperation. Omniva’s aim with the joint enterprise is to strengthen its position in international e-commerce business and S.F. Express aims to gain access to the European market by expanding its distribution centres and air service routes.
S.F. Express is the largest Chinese private capital courier service enterprise. It operates in China, US, South Korea, Singapore, Malaysia, Japan, Vietnam, Thailand, and Australia. The S.F. Express group also includes SF Airlines that provides transportation services with 39 freighters.