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The changeover to two wheels: On yer bike,
mate!
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Budapest Business Journal, March 26, 2007
By Patricia Fischer,
A large number of messenger and courier service companies have been
operating in Budapest; several companies that had worked with
automotive vehicles have recently launched bicycle courier services in
downtown Budapest. Although competition is fierce and several companies
work with depressed prices, market players say that, with reliable and
prompt service, their market position can be maintained.
"Like flowers in a meadow, courier companies have bloomed over the past
few years," said Róbert "Buppa" Mozsolits, owner of Elit
Expressz Kft (also known as City Cycle Banditos). "However, it is
rather difficult for a new company to start operation these days: As a
result of the government's austerity measures, most customer company
wants to reduce its costs, so getting new clients is almost the most
difficult task."
According to Gábor Kürti, managing director of
Hajtás Pajtás Kft, the appearance of further players on
the courier market, due to the low profit rate and the fact that this
activity requires very experienced employees, can only occur via
mergers or acquisitions.
"This market is a very confidential market, so the traditional
marketing tools will not really help the market entry of a new
company," said Kürti. "I expect several international messenger
service companies to look around in Hungary in order to purchase
existing firms; we have seen similar things in the region recently."
Csatári Csaba, owner of Pikk-Pack "A Futár" Kft, thinks
that there is room in the market for new companies.
"This is a segment where our services will always be needed, so I think
the set-up of new messenger and courier companies will continue. For
example, I know of three of my former employees who just currently
launched their own firm." The key for the success, say market players
unanimously, is reliability and quality.
"A customer first looks at the price," said Mozsolits. "But if a client
uses a certain courier company for some time and realizes that it is
reliable and fast, then the client will not care for the price that
much anymore." He also said that his clients never go to another
courier company only because that other company offers cheaper
services.
"I think all firms struggle for customers, but one can only keep them
with continuously quality service," claimed György Mosberger,
commercial director of De-Rent Pannon Parcel Service Kft. The company,
besides operating a courier service, has also worked as subcontractor
for UPS Hungary Kft for a decade.
"Being partners with one of the largest international express delivery
companies has taught us discipline and a tight work pace, from which we
also take advantage in our other activities," Mosberger explained. "We
handle more than 40,000 parcels a month, so we have to be very well
organized and prompt in order to maintain our market position."
According to Mosberger, the De-Rent has achieved steady growth in
revenue, number of packages and employees in the last few years.
"We need to provide complex services," said Kürti from
Hajtás Pajtás. "We cannot afford to cover only Budapest
with our bikers. Due to cooperation agreements with several
international parcel services, we have become an international company
ourselves." After pondering the idea for some time, Elit
Expressz, which had only bikes for seven years, started to operate a
minivan: "We asked our clients if they required delivery of larger
packages and, because it turned out that there is a demand for this
among our customers, we decided to buy the minivan."
Another problem courier companies face is official registration of
employees, a process made compulsory last summer. Those companies who
complied with the regulation were forced to increase prices or reduce
profit as a result.
"There are many companies that I know of which did not go with the law
and still has many not officially employed couriers," said Mozsolits.
"Of course, these companies can maintain lower prices, but I think this
is a dangerous game, because if they get checked, they will surely go
down."
According to Mozsolits, Elit had already begun to legalize employees
even before the law was created: "It wasn't easy, because if we built
our increased costs into our prices, our customers would probably have
had heart attacks," he said. "So now we earn less money with harder
work. But it seems that our couriers understood that it was necessary
and realized that having legal status has certain advantages, like
pension, paid vacation and sick leave."
Kürti said that the law caused some hard times for the company:
"We needed to reduce our business profit, cut back on our management
staff and reduce the salary of our couriers. We spend approximately
half of
our revenue on tax and contributions. In spite of the difficulties,
only 3%-4% of our customers fell off, but we succeeded in strengthening
our position again and getting back on the path to growth."
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