Hello. Good afternoon, good morning from Bonn to wherever you are to our IR virtual tutorial, as announced today on DHL Express and profitable e-commerce. I'm Martin Ziegenbalg, heading the IR effort. You see us today in a format that we had chosen already a couple of weeks ago for a different tutorial. We would have loved to broadcast today out of a fancy little studio in our innovation center. However, recent travel restrictions have made it necessary that we go back to this type of setup, where we have John Pearson joining us from his London home office and our colleagues, Michiel Greeven and Leendert van Delft out of the Netherlands. A very warm welcome, nevertheless, from my side.
As you can see on page two of the slide deck that you have in your webcast, we have had a couple of, I think, very well-received drill-downs in this virtual format today on Express profitable e-commerce growth. This was planned to be the substitute for physical site visits. I think going forward, with or without COVID being around, this is a format I really would like to continue for topical deep dives like the one we have today. What I would like you to take away from this after the next, I don't know, 60, 70 minutes or something, is a very clear key message. One, e-commerce and B2C type of shipments are an ideal fit to the TDI network that Express is operating globally. The very popular question on is this good or bad news to the margin?
I think we have a very clear answer to that. As you can see, ever since we've seen B2C volumes growing, this hasn't done any harm to our margin situation. The third factor is how do we approach this from the sales, from the customer point of view? How do we play this vertical? We're going to spend most of the time today on that one. For the regular followers, you should be familiar with the Q&A type of setup, where you go right below the window that you're looking at right now. You will have a field where you can punch in your questions, and those will then be forwarded to me, and we'll deal with them later on the Q&A session. Okay.
On the topic, maybe before I hand over to John, just on slide number five, a very brief categorization on what are we talking about. Within the group, we have various business models in the global world of logistics and transport. Today, we are talking about the very top-end product, the fastest available around, and therefore also one of the priciest. This is not today about how we're dealing with the domestic parcel business or how we deal with the international air freight, and clearly focused on time definite as in as fast as possible to your doorstep. With that type of intro, John, I'd like to hand over to you.
Thank you, Martin. Hi there, everyone, and hope you're all keeping well and safe. Yeah, a pleasure always to talk about e-commerce, and I'm just going to cover off three slides that perhaps set us up well before I pass over to Leendert and Michiel, the guys that have done all the work with the commercial teams globally, because this is really a global initiative. It's no longer just U.S., U.K., and Germany and a few other countries. It is right across our network. Firstly, the FOCUS strategy, four pillars, three letters and a passport. We like to keep that simple. That's very much the beat of the drum we all work to across the Express Division. You'll see in the middle of the slide there, seed, I guess, four things that I've brought out of the FOCUS strategy.
They were in it before, they're more accentuated now and more central to the next two to three years. Super visionary, e-commerce, efficiency, and digitalization, which form part of our overall FOCUS strategy. E-commerce is right at the heart of everything we're doing. If we move on to the next slide, perhaps talk more generally to it. It illustrates the % of retail that has moved online. When I say talk a little bit more generally to it, I think we hear this anecdote and we hear this phrase that we've seen three years of e-commerce growth in three months, and I think that's sort of what we have seen. In February, March, we saw a rapid acceleration of all of our e-commerce aspects right through the division, right through the group, but certainly through the Express division.
Whilst this slide talks to domestic and international situations, it doesn't matter because the illustration is that we've seen so much acceleration because of the lack of ability to attend trade fairs, the lack of ability to get onto planes and sell your products overseas, and the ability in the last few months, not even to get out of your home. I think that's the catalyst and the sort of nitrous oxide we're dealing with on this topic at the minute. The last slide I'd like to talk about there, for those of you who've been following us a long while, 2016, Charlie Dobbie and I spoke about e-commerce and how it fitted in with our TDI network.
At that point, the percentage of TDI shipments in our network was 10% or 15%, depending on when we caught you and when we talked to you, and that's now somewhere between 45% and 48% of our shipments are from e-commerce. You can imagine that varies a lot by country. As you can see that the margin has moved onwards and upwards during that time. I think we're in a position now where we can almost put a lid on this topic in the sense that the first mile has very high origin shipment density. We may be picking up 500 or 5,000 shipments at any one point. The shipments whiz around our automated, our increasingly automated sort systems that are built for 0- 30 kilos, and e-commerce is at the low end of that. Obviously, they fit in the corner of a shelf vehicle.
They fit in the corner of a ULD. The last mile, which was always the point of discussion now with the On-Demand Delivery and more receiver options for where they would like to take delivery, leave with neighbor, leave in safe place, pick up at Packstation. Obviously during, sadly, in one sense, obviously during the last four or five months, leave with door has become the accepted form of delivery. The point there is that the last mile is more efficient than ever before. Really now you can start to imagine in your minds how premium cross-border international TDI is very accretive to our network, our margin, fits in with our TDI capabilities, and we continue to, as the guys will talk about, add value to what we're able to do for our merchants, which thereby allows us to keep our price point up.
As I say, thank you for taking interest in this topic, and I'll now pass over to Leendert.
Yes. Thanks a lot, John. It wasn't even mentioned on the previous slides, so now on slide page number nine. The previous slide was mentioned indeed how we manage e-commerce as a vertical. Before we go into the topic of how we add value to the customers and how we help our customers to grow, resulting in profitable premium e-commerce shipments, let's first have a look at how that vertical actually looks like. On page nine, you can see how we manage B2C e-commerce as a vertical. If we look in terms of size and growth, we can see how it's not only the fastest growing vertical, but it's also right now the biggest vertical. Right here on this page, the yellow bars represent the revenue size, and the red dots represent the growth, which you can see there on the right-hand axis.
One point I would like to make is this is not about forgetting about B2B, and we do a lot of various things, how we manage all those other industries and how we manage B2B as well. In this session, we will go into how we manage B2C as a vertical. Going on to page number 10, we see customers in various segments and all different type of products. It's definitely not only the, let's say, high-value and fashion goods, but we see it in all different product categories, et cetera. We see it in luxury and fashion, of course. Yes, we see it in consumer electronics, sporting goods, but also local brands and products which we help to bring them to a global stage.
We are supporting marketplaces and platform sellers and of course, also those niche customers who come up with an innovative product of a new and trending product, which can go very quickly from zero to hero. An important question, of course, to answer is why are all these customers choosing to work with us? I think it's a couple of points. One is we truly help to develop our customers, and we will explain in a minute how we are doing that, and really help them to bring their brands to a global stage. Second point is all related to our fast and reliable product, because consumer demand today is fast delivery. The days that consumers were willing to wait a week, two weeks, five days for a product, those days are far behind us and everybody wants their goods now as quickly as possible.
It's also related to the tools we are offering. John mentioned ODD already, On-Demand Delivery, which is something I will explain in a minute in a bit more detail. If we then go to page number 11, if you indeed look at the various industries and the various product categories. Here on this page, you can also see how it's not only about fashion and retail, but how we see e-commerce volumes in all different product categories. You can see here also how we are having e-commerce volumes in the consumable sector. An example, the products you eat, et cetera, but also the technology sector, service industry, finance industry, and also Life Sciences and Healthcare. What you see here on this page as well is the impact of COVID-19 on the whole e-commerce industry.
What you can see here is for the different product categories, whether it's retail, whether it's fashion, whether it's consumables, you can see how the share of e-commerce in that overall sector for us increased during COVID-19. On the left-hand side, you can see the full year 2019 figures, and on the right-hand side, you will see our year-to-date 2020 figures, hence the impact of post-COVID-19. What you see in brackets is the growth year to date based on revenue. Here you can also see one point which I'd like to point out is if you look at the Life Sciences and Healthcare industry. Before e-commerce was not really growing, the e-commerce element of Life Sciences and Healthcare.
Right now, with direct-to-patient volume really growing, you can now see on the right-hand side how that volume is also really growing in that sector, and there's definitely more growth expected in categories like that. If we go to page number 12, yes, you can think about the common products. On the previous slide, you could see some of the common products already, but it's also those products which are less known to the masses, which are currently going through our network. Here you can see some examples. This is definitely supporting to diversify our customer base. Here on the page, you can see some actual examples of customers of DHL Express, where the customers are having that express delivery needs and where they want to receive their goods as fast as possible.
Whether that is glittery gummy bears from Korea, Viking clothing from Norway, or a very smart legging which is invented in Israel, which the ladies amongst us can use to automatically measure the size of their ideal fitting jeans. There's really a wide variety of products where customers are really requesting that express delivery option, and again, where we are supporting the customers to do so. Going to page number 13. This is what John also already touched upon his intro, and this is a slide for those who have joined back in 2015. This was a slide which we showed back then as well already. This is showing how indeed e-commerce is a perfect fit, and how e-commerce shipment categories fit within our existing TDI network, and also how our e-commerce B2C strategy remains simple.
Here you can see several characteristics when it comes to shipment per day, when it comes to weight per shipment, et cetera. Those who might remember, and John mentioned it in the beginning, the last mile element. In the past, that little arrow was actually yellow or orange and slightly bending down, but right now we definitely have this as a green, and that comes due to various investments we have done into our last mile and optimizing our residential deliveries via On-Demand Delivery, but also an example, increasing our drop-off locations to make that last mile as efficient as possible. Again, what was mentioned, we keep treating B2C e-commerce at a vertical.
What's also good to mention that we are applying exactly the same yield principles as we have done always. That is why we continuously keep emphasizing internally as well to our salespeople that it's about profitable premium e-commerce. Zooming into that last mile and the reason why that arrow is now actually turning green or is green already, that has to do with a couple of things, and one of those is On-Demand Delivery. On page 14, you can see some of the, let's say, comments about On-Demand Delivery. One point I would like to point out here is, I start at the bottom. Let's say 68% of millennials, they are choosing a retailer purely based on the delivery options offered. That is something what we're offering our customers through On-Demand Delivery.
When we speak about On-Demand Delivery, we always like to talk into a win-win-win situation. First, very briefly on On-Demand Delivery, for those less familiar with the platform, it's a platform via which we offer consumers the choice or receivers the choice to take full control of their delivery. They can choose, and that's regardless of where the shipment is in our network. Upon the moment of pickup, they can take control and they can decide how, when, and where they want the shipment to be delivered, and they can do that through a very easy platform. The reason why we call it a win-win-win situation is, first of all, it's very easy for our customers because they can offer a global platform to all their receivers and offer that piece of flexibility to their customers, and also communicate it as such.
The second win is for the receivers of the goods, because as mentioned, for them, it's about getting the flexibility, getting the delivery options, and always choosing a delivery options on their own terms. What is also a good effect is for our customers, because for our customers, what we're also seeing is via On-Demand Delivery, we continuously keep the receiver of the goods up to date about where the shipment is in our network, when is the expected delivery date, when is the expected delivery time, et cetera. It's also having a benefit for our customers when it comes to, an example, receiving customer service queries, receiving inbound calls, et cetera. The last win, and definitely not least important, is also for us, because via On-Demand Delivery, we can improve and we have improved our first time delivery attempt.
With this, we make sure that the first time delivery attempt is as successful as possible. Going on to page number 15. On page number 15, you can see some of the statistics around On-Demand Delivery. First of all, it's a global platform, and it's also a market leading platform because there's no other solution out there in the market which is covering this many markets. It's currently active in 165 countries globally. You can see the volume here going through the platform on page number 15. 68% of the delivery requests made nowadays are Signature Release, and that is related also to the COVID-19 pandemic because one of the delivery options which is offered is that Signature Release delivery option via which a receiver can sign online already in order also to support a non-contact delivery.
We've seen a significant increase of that chosen delivery option during or when the COVID pandemic took off as well, but with the biggest effect of happy customers and happy receivers. Going back to what we mentioned about optimizing residential delivery. Here you have the statistics. Here you can see how between 93% and 95% of first-time delivery rate is now successful, and that's a 20% increase versus the baseline in 2015. You can imagine also the impact on our network, the impact on our successful delivered shipments, and all as an effect of On-Demand Delivery. We keep investing in On-Demand Delivery as well, and we keep investing in our delivery solutions, which you can see on page number 16. On page number 16, you can see some of the recent ODD developments.
On the left-hand side, you can see something which is currently in pilot in multiple countries as we speak, which is something called Follow My Courier, via which we do not only keep the receiver of the goods continuously up to date via messaging and giving them the options to adjust the delivery via that, but also showing visibility on where the courier exactly is in his route and how many stops he is away from that specific consignee. Now, we have received many positive comments, both from the receivers but also from our couriers, who were saying that the moment that this was offered to a receiver, that the receiver started to follow the courier on the map.
You could see how many stops he was away, and the moment the courier turned his van into the right street, the receiver was already walking outside with a smile because he knew that, hey, my courier is here just around the corner, and I can receive my goods. Again, which not only results in happy customers, but also, again, speeds up the time to execute that actual delivery and make that last mile delivery as successful as possible. We also keep investing in our service point network.
Here you can see the growth as of 2016, where in 2016, we had approximately 37,000 service points globally, where right now we are covering the world with 86,000 service points, which can be chosen via On-Demand Delivery if a receiver prefers to not wait at home for that shipment, but prefers to pick it up at a nearby service location, and to make, again, that delivery experience as smooth and as easy as possible. Going on to page 17. I think one of the most valuable points in our e-commerce strategy, and also one of the most impactful in our success rate, is actually how we are supporting our customers to grow their business. What I previously explained was mainly about network characteristics and elements we're offering to the receiver.
One of the most valuable things is how we are really facilitating growth for our customers. Let's have a look how we're actually doing that and also the program, Power Up Your Potential, which we have rolled out globally in order to, yeah, speak in that way to customers all around the world and to have that way of consulting our customers globally. On page 18, a bit of a timeline. Here you see the acronym PUYP, which we will be seeing coming back a couple of more times in this presentation. It stands for Power Up Your Potential, which was the name we've chosen when we rolled out a network-wide approach to talk and sell profitable premium e-commerce.
It all dates back to, let's say, 2013 between 2016, when we saw various initiatives happening in countries, where countries were successful in consulting customers on how to be successful in e-commerce. It was also during that phase that actually in the U.K., something, a very simple concept was born, which was called the Website Health Check, which was at that point, a very simple six-point checklist, how we could consult our customers, how to optimize their website, and how to optimize their customer experience. During that phase, we learned a lot, we spoke a lot internally to understand, okay, what works well, what doesn't work well. Back in 2017, that is where we officially launched Power Up Your Potential one. Again, a network-wide approach. John mentioned in the beginning, it's a global program.
I'm still impressed, by the way, how quickly it was picked up globally, and we rolled out, I think, around 100 countries within a matter of months. It was an extended training program for all of our sales reps all around the world in order to learn and understand the role of e-commerce, to learn and understand about the opportunity for us as a company, but also for our customers when it comes to cross-border e-commerce. We were explaining elements and example, how cross-border e-commerce is growing twice as hard as domestic e-commerce, and all the benefits which we as a company can bring to the table to consult our customers.
It was in that program that we formally introduced the Website Health Check as a global methodology to consult customers, and where we also introduced Similarweb as a methodology to analyze the opportunity and also to emphasize the importance of adding an express delivery option. Also during that phase, it's when we launched The 21st Century Spice Trade, which some of you might have seen, and we're more than happy to share copies as well because the study is still relevant today. Which was a study we have done to, yeah, to investigate the cross-border e-commerce landscape and to analyze what makes a retailer successful in that area. If we go to page number 19, this is related to the research which we have done ourselves, but also third-party research we have used, because what we saw is we spotted various e-commerce trends.
At the same time, we saw how not all merchants out there were actually using those facts and using those insights as their advantage in order to create a competitive edge over their competitions. What we saw is how shipping and delivery options really place, and it's still true today, how it plays a crucial success in a retailer or in an e-commerce brand's success. If we look at some of the stats which are mentioned here on page number 19, an example, 91% of online shoppers, they are looking for the available delivery options before reaching the checkout. Every time we mention that stat, we always see people nodding like, "Yeah, actually, that's true." Me as well, if I'm shopping online myself, what I want to know is when will the goods be delivered, how will it be delivered, and when will I receive them?
That's the first question I have in my mind. What we saw, and we still see today, how a lot of retailers are not using that information as an advantage to create that competitive edge. They can create that competitive edge, because here again, the stat was mentioned earlier, that 68% of the millennials, they are actually choosing one retailer over another purely by the delivery options offered. Again, a lot of retailers who are hiding that information in the footer of their website, which is the all bottom part of a website, or an example, only showing those details upon checkout, while the consumer has that question in the head the moment they end up on the homepage of a retailer and where they want to spend their money.
In order to support our customers with that, we came up with something, or we launched this Website Health Check methodology, and that is something which you can see on page 20. The Website Health Check is something how we are facilitating growth for our customers, and it's a 10-point checklist where we analyze how well a website of a merchant is speaking to the cross-border consumer, and how well they are using shipping and delivery options in a clear way in order to create that competitive advantage. Some points on this checklist are about localization, because if you're shopping on a cross-border site, it's all about creating that localized experience, whether that is having a website in multiple languages, applying currency conversion, offering localized payment options. It's also about clarity on shipping and delivery options and clarity to the cross-border consumer.
Because if you end on a website for the very first time, you have the question, does this customer or does this company ship to my home country, and can I spend my money here. That is why I want to highlight one element of this Website Health Check, which is actually the second one on the left-hand side, which is, do you state your shipping options on your homepage, and do you mention that you sell internationally? What we mean with that is something which you can see on page number 21. This is all about creating clarity the moment the consumer ends up on the website. This is something what merchants can easily fix by having this very simple banner at the top of their homepage, which is saying, "Yes, we ship internationally.
Yes, we offer an express delivery," and an example, "We offer free shipping for orders over $150 ," over a specific amount. We have seen multiple examples how customers did not have that information before clearly communicated on their homepage. They only had it in their footer, in the checkout, as mentioned. The moment they implemented a simple element like this, they really saw an increase in their conversion rates. We have multiple examples where customers called us back after we explained these elements to them and after they put this simple banner in place, that they called us back and saying, "Hey, well, actually, I do see an impact on my conversion rates, and more customers are clicking on products, going to the checkout and buying the goods on my website." This is one very simple example.
What is also good to know is while we are looking at all of our customers we are managing in our portfolio, we also see that those successful fast-growing customers, they tick almost all of the boxes, if not all the boxes of the Website Health Check. It's also a clear correlation between that Website Health Check and the growth of a customer, which is also something we can explain and discuss with our customers. If we go to page number 22, part of our Power Up Your Potential narrative is also offering multiple delivery options. We are not advocating that a customer should offer only an express delivery option, but it's about giving the consumer the choice of delivery options.
What you can see here on this page is an analysis we’ve done together with our partner, Similarweb, which I will come to on the next page. We have analyzed what is the impact of the number of delivery options offered on an e-commerce site in their conversion rates. What this mean is, okay, if a customer is offering one delivery option, an example, a postal solution. You can only choose a postal shipment, which will take between five and 10 days deliveries. What we saw is the average conversion rate, and this is where we analyzed 80 different websites. The average conversion rate here was 1.9%.
For those websites who are offering multiple delivery options, and the ideal number seems to be between three and four, which can be example, yes, to offer a postal delivery option, yes to offer an express delivery option, yes to offer a Signature Release option and an example the option to pick up the goods at a nearby service point. If in those multiple delivery options, we saw on average a conversion rate between 4.8% and 5%. This means that merchants and e-commerce retailers, they can actually almost double their conversion rate by going from one delivery option to multiple delivery options.
You can think that those percentages are small from 1%-4% or from 2%-5%, but you can imagine that the overall impact this will have on the revenue of a merchant, because this will mean that 2% or 3% more of all the visitors of their website will actually end up buying on their page. This is really something, again, how we can help our customers and facilitate growth. If we go to page number 23, and I mentioned the name already, Similarweb. In Power Up Your Potential, one element what we launched was the Website Health Check, about the value of adding an express option, about localizing your website, about being as open as possible for the cross-border consumer, and about using shipping and delivery options as an advantage.
We also found a way via Similarweb to consult our customers about the potential growth they could achieve by going cross-border. Very briefly, what Similarweb is doing. Via Similarweb, we can have insights about any website in the world and have insights on the website traffic and the website traffic behavior on that website. We can type in any URL, we can type in any website of a customer or of a potential customer and see an example, what is the total number of traffic on that website? How many visitors does that website have? Also, where is traffic coming from? This is something which we found as extremely valuable in our conversations with customers, because in a lot of cases, we came across examples where a customer was saying, "Oh, well, actually, I only sell domestically, and my business is growing very well.
No, I'm not interested in cross-border e-commerce. Of course, we had various facts and statistics to show to our customers how the opportunity is cross-border, and as mentioned before, how cross-border e-commerce is still growing with twice the rate as compared to domestic e-commerce. Via this, we could also calculate the potential uptake in sales. This is a real case example, a company called Douchebags. No, I did not make up the name. It's an actually company based out of Norway called Douchebags. They make very fancy backpacks. I had the honor to personally meet with this company.
While we were speaking with them and while we were talking with them, we were talking about the Website Health Check. I told the guys, "Okay, let's look at your website data." I went to Similarweb, typed in their website, and I could see there how a significant amount of their traffic, around 12%, was coming from the U.S. The guys were not yet selling to the U.S. because they were focused mainly on the Nordics and mainly on Europe. They were very pleased with that. Business was growing, et cetera. I said, "Okay, let's calculate some numbers." I said, "Imagine you have 1 million website visits per month on your website.
Means that, let's take 11% of website traffic from the U.S. represents 110,000 visits from the U.S. We then take a low conversion rate to sales, 2%, the guys of Douchebags at that time actually said, "No, our conversion rate is 3.1%." I said, "No, let's be careful. Let's take 2%." That means that 110,000 website visits represents 2,200 potential sales transactions to the U.S. I then asked the guys, "What is your average basket value?" Which was $100 at that time. Okay, multiply that 2,200 sales transactions times 100, that's $220,000 per month in sales only to the U.S. We multiply that times 12 to come to an annual amount, that's $2.6 million increase. At that point, I asked the gentleman, I said, "Okay, are you interested to increase your sales with $2.6 million?
As we've shown, I've shown you multiple ways how we think we can optimize your website as well to even increase your conversion rates. At that time, the guys picked up their phone, and they immediately requested a meeting with DHL Express in Nor way, and their literal words was that they never had such an insightful meeting with a supplier, and they wanted to meet with DHL as quickly as possible because they wanted to hear more and they want to transact more. A couple of days later, a couple of weeks later, they actually switched to DHL, started shipping with us, and resulted in a very happy customer.
With that, I would actually like to hand over to Michiel, who will explain what the impact of all this was on our customers, what else we did for our sales teams and customers as well in the next phases, and also what future opportunities are looking like.
Thank you very much, Leendert. If you could please go to slide number 24. This is actually, Leendert was talking about the Website Health Check and Similarweb, and we developed that in a program called Power Up Your Potential. Between developing it and actually using it from a sales rep point of view, that's step number two. This is a picture that I took personally when I was participating at a workshop with a customer called Sonos. They are making the audio systems you can see in the back. When I was there and I saw on the left-hand side our DHL sales rep talking with the customer, I thought, "Okay, this is exactly what we meant. This is how we had envisaged this program to be." Because if you look at our sales rep, you see the passion in his eyes.
You see that he's talking about something new and exciting. I think you can see also on this photo that he's making clearly an impact. On the right-hand side, you see the customer. For us, this was also like an ideal situation because normally when sales reps of DHL Express visits their customers, then quite often they speak to the logistics manager. The logistics manager is also in this picture. More importantly, also the marketing manager of Sonos Europe is in this picture, and he's looking really interesting and interested in what is being talked about. We are providing real insights, and our sales rep is acting as a trusted advisor and is really helping our customer to develop. You think, Sonos is not a small company. It's like a medium-sized company, and they have really good knowledge.
For us, it was quite often eye-opening to see that we could always give them some insight, some stuff that they did not know about, and that could actually lead to business growth of our customers, which is a great situation to be in. If you can go to the next, please, which is slide number 25. So we said after the successful launch of Power Up Your Potential part one, we said, "Okay, now we need to do two things." First one is to enhance the sales program with the latest insights, because we could see that, many sales reps, they were really hungry for information, and they wanted to learn more.
Also we were learning more and, this e-commerce market is developing constantly, so it was really important to keep pace with what is going on, to translate that again into new trainings and insights, and feed our sales reps with that. The second point that we looked at was B2B e-commerce. In our view, that's really the next big thing. This includes actually the B2B marketplaces. We did research, with a consultancy firm in London, AMR, on the B2B marketplaces, but we also created a white paper with the Cranfield University. Two conclusions there. B2B, yes, it is growing quite dramatically, and it would reach $1.2 trillion in 2021, and maybe that number is actually even higher today.
The second point is that, if as a traditional B2B company, you want to get into the sustainable growth for the long run, you really need to think and act more as a B2C company, and especially around the customer experience. Moving to page number 26. This is this first part, the next part of Power Up Your Potential, Power Up Your Potential 2, new insights, new information. We developed sales training, new sales training. Another thing that we did, which was proven to be very practical and successful, was that we started to establish our internal e-commerce councils. We did that regionally. Every country delivered like an e-commerce champion. Within the countries, every region delivered a e-commerce champion.
From that, we really started to spread the word and educate our people on these two simple tools, like the Website Health Check and Similarweb. We developed a little black book of e-commerce. We taught our people how to talk and speak to e-commerce merchants, talk their language. That's very, very important. Obviously, we were sharing lots of case studies, successful things that happened within the network where we can learn from each other. Obviously, we continue to do the research. Moving on to page 27. Here you see an example of a market insight pack that we distributed over our sales force. It was really important that we taught our people that markets are different. You really need to understand what is happening with the de minimis values in certain countries. What are the delivery preferences of customers generally in those countries?
What are the most popular categories within a market? With that information, you really could give a benefit to our customers to share this information and to be better prepared when they go into a certain market. Moving on to slide 28. Of course, it is a journey, and in a journey you learn. There's nothing basic about the basics, we say. There were three main lessons that we learned. First of all, when you roll out such a nice, exciting, fancy program, which is also very successful, you automatically might think, okay, so yeah, everyone will pick this up because you can really generate new volumes and profitable volumes in your portfolio. We also noticed that, we would say 50%, 60% of the people, they really got it immediately. It's not that all people get it immediately.
You need to take them by the hand, and you make them feel comfortable. We are sharing our lessons, and we were sharing experiences, and we were taking the less comfortable people with us, to see how it works with customers. Gradually you can change the people into e-commerce specialists, and they start to enjoy this new way of selling. A second point was that salespeople by nature are hungry for volume. We said, "Guys, it's not only about the volume. It's actually about taking on the profitable premium e-commerce volume." Quickly, when you start engaging with customers would ask, "Do you have more economy service, cheaper, easier?" We said, "Our focus is really the express side, the international express, and not so much the economy, let's say for Holland to Germany, for example." This is what you call focus.
This was an very important lesson that we learned. A third point that we learned was that we noticed that our customers are within a maturity curve. They start, and then they start quickly, and it's all like a discovery, and they open up new markets, and we help them and assist them to go and enter into these markets. It goes very quickly. It goes very quickly up to a point that people or companies start to get mature. They're sometimes looking for an IPO. The dynamics are actually changing because then it might be that the focus shifts to more short-term profitability, a lot of focus on costs, a lot of focus on prices, and maybe less interest for a top-notch service.
We came into these discussions, obviously we were guiding also our customers into that journey, it could also end up to a situation where we would say, "Okay. Yeah, so this part will become like an economy service with longer lead times, but we are in Express." You might think, "Okay, does that mean that at the end of the maturity curve, we were losing our customers to competition?" The answer is actually no. I show you that on the next slide, which is slide 29. This is a graph that was published in an article of a leading fashionista lady, Lauren Sherman of The Business of Fashion, in which she actually talked about the online market of luxury and fashion that started, we could say in London around 2000 with Net-a-Porter.
You can see that the spend in the online luxury and fashion market was increasing, and is still increasing quite significantly. It's still growing. It's interesting to see that where you see the ticks to the names of the companies, that we are still around with the ones that actually started this business, but we are also quite often the main provider of the ones actually emerging in this business. That is really interesting to see. Were there some changes? Yeah, I think there were some changes, but the only thing that really remained is our core. We always focused on the premium express international delivery, and that is where we still play and continue to play a very important role as the main service provider. Moving on to B2B e-commerce, because that is actually the next big thing, as I mentioned.
We are really on that, and it's interesting to see when you start to investigate what's actually happening in that business. This is an example on page 31, an example of a traditional B2B player, and you could say, "Is this e-commerce?" At least this is something that is published on this website, and the far it gets is actually just a Contact Us button on the right-hand side of your page. That's it. You push the button, and you will be contacted by a sales rep of that company. Is that B2B e-commerce? No, it's actually not. I think many customers are a little bit struggling on how their future distribution model will look like. Will it be a part traditionally with distributors and wholesalers, and will it be partially B2B e-commerce?
We think that there you can, as a company, reach an equilibrium in a traditional part and some part of B2B e-commerce. That is a fundamental question, and every customer or company needs to answer that. That they need to answer it, that is absolutely clear. On the slide number 32, you see actually an example of a B2B e-commerce player that is taking it very seriously. The great thing that you see here is that it looks almost like a B2C e-commerce website. This is what we are seeing now. This is an example of one of our Italian customers, Mister Worker. The interesting thing is that many of the millennials now are getting into core positions with our customers, and they are running the procurement.
They want, actually, this online experience more and more, and they want a very good experience, not the one that you saw before, like you will be contacted by a sales rep. That is a development that is ongoing, and that is very important. This is where we are going and are already educating our B2B customers on what is happening in the market, sharing experiences, but also sharing the learnings that we got through the Power Up Your Potential on B2C. Very interesting journey to go. I think a lot of you, during the COVID period, were watching more than the usual all kinds of Netflix series, and you were always curious to understand what's next. Yeah, we are in the same boat now. We are working on this B2B e-commerce. We have a lot of ideas.
We are working on education material for sales reps. This is the next phase of our journey. We are working on new episodes. We're working on technical developments, as Leendert explained, in ODD and Follow My Parcel, Follow My Courier. We are learning every day in this fast-moving e-commerce world. We really are convinced that we can support our customers in their journeys to grow their international business and at the same time to become more efficient. This is what is following. We are working on it. In the meantime, I think it's important as a sales leader to say that we are instructing our sales rep on, for us, the most important ingredients for long-term success, and you will see that on slide 35. It is about focusing on the express volume, on the international express volume that we want.
It's on profitable and premium e-commerce only. It's not only the focus on volume. Volume doesn't really matter. It really matters that you have the right volume with a profitable core. We really want to add value to our customers. As we have given certain examples on the Douchebags or on the Sonos, it's great that you can really make a difference and you can add value to the business of our customers. We will continue in that consulting approach. Selling at the right price, I think that was probably very clear from this presentation. It's really about selling at the right price. This is something that you need to coach your sales reps, that that is the most important thing that really matters. Always having a long-term view.
As a sales rep, think about when you are preparing an offer, does that offer still hold when they are growing exponentially? Are you then also still happy with the terms and conditions? I think in DHL Express, we have a really solid foundation for pricing and the controlling mechanisms. That's, I think, very solid. Last but not least, continue to develop on e-commerce innovations. In the end, we need to improve the customer experience, and we really need to make sure that our customers are happy and continue to be happy. With that, Martin, we have concluded our journey on the e-commerce within DHL Express.
Well, definitely, you led us very nicely through the slides and helped us a lot to understand on how you are working this vertical, how it all started, where we are right now. Obviously, we want to look at where this is going to be in a couple of years' time. Let's go into Q&A. We received a number of questions already, so thank you very much for that. I will start with those that we already have on hand. However, I don't want to discourage you from further placing questions. Maybe to start with some more of a definition question, because obviously, particularly our U.S. peers are also talking about e-commerce to some extent, and there we hear about a shift from deferred to priority and how to deal with all that.
John, I remember Ken saying, "If it's deferred, it's not express." Do you have any view to share on how we see that in terms of travel time? Are we focusing only really on the as fast as possible shipment, right?
Yeah, I think in the early stages, I'll try and be concise. In the early stages, we definitely kicked off with as fast as possible, and then I think as some organizations and merchants had their margins squeezed a little bit, the obvious thing was to say, "Can I pay a bit less even if I get it a bit slower?" I think we went through that cycle and then we've come back to a fast as possible service. A fast as possible TDI service because we're moving the things that can carry the cost of transportation.
I think it's fair to say, though, that there are merchants that require that deferred, and there's a lot of sharing and discussion going on with my colleague, Ken Allen's commercial team, to make sure that the EuroConnect product delivers those things in a sort of three to five-day transit time. It's horses for courses. I think after five or six years in this, we've landed with the right products and the right merchants who have the sort of need for speed, if you excuse the pun. Other ones are finding their natural service provider, some of which in different countries around the world is frankly the post office. That's why we didn't want to compete price-wise with another service provider. I think we could all coexist quite happily on the customer's laptop and front page of their screen.
Okay. Thank you, John, for that. Well, actually, that was something that was asked by Cristian Nedelcu from UBS and others as well. Let's continue with a question that we already had discussed a couple of times. Andy Chu from Deutsche Bank, among others, is asking this. You mentioned that in volume terms, the B2C share is now somewhere in the mid to high 40s. How do you see the balance between B2C and B2B, or should I say e-commerce versus non-e-commerce driven volumes? How do you see that balance going forward? Is there something like a sweet spot ideal balance?
I think it's a good question. The one we need a crystal ball for. I think a little bit we might normalize around 48%-52% for the coming year. We know because passenger aircraft will be largely on the ground rather than up in the air, and we know this pandemic situation as much progress is being made on vaccines and things. We know this has got a little bit to run. Rather than the beginning of the end, it's the sort of start of another wave of opportunity on e-commerce. As I've said, B2B has started to come back over the last three or four months as quite some form of positive growth now. I think maybe we found a number that we're going to sit on for a while, and I think things will normalize again in e-commerce.
It won't necessarily grow as fast as the last three months forever. I think we might have found some happy sort of compromise at the minute.
Okay. That would then probably also mean, and again, Andy from Deutsche asked, so post-COVID, you think we are simply then working from a higher absolute level of shipments and growth rates from there on should be more similar to what we experienced pre-COVID, or is that something that can proceed at an accelerated?
No, I think the growth rates will moderate. I think what I would say is that the windfall gains, as I've used this phrase, the things that have fallen into our lap a little bit will be quite enduring. I say that in the sense that merchants have had to put an express offering on their site by necessity as some organizations, postal organizations that were relying on commercial airspace, commercial airlines and belly space, put literally express offerings on their site. I don't see those offerings coming off their site. I think there's an enduring nature of some business that has come our way, but I would expect some moderation in terms of the overall growth rate in sort of post nine or post 12 months.
Right now, we're 100% focused on delivering a great peak for our customers because everything at the minute says that peak defined as normally November 1 till the end of the year. Right now, we're saying peak has come early and we're already in it, and peak will be the hockey stick, so to speak, will be more acute even than last year.
All right. Well, let's continue with a couple of more questions, trying to figure out what the size and the dynamic in the overall market is. Carolina from Morgan Stanley asked, for example, do we have a feel on where we stand in terms of market share when it comes to e-commerce TDI-like products? Other way around, and that's also something that we heard Muneeba from Bank of America asking. Where do we see our international peers competing in this field, and do we have any feel for something like a market share situation?
Yeah. I think the two comments I would make is that the 38% global market share we have in TDI, I would expect us to be quite considerably north of that on international cross-border e-commerce share, and we've had some estimates that put us 10 or 12 percentage points above that. I think rather than that's because we've done such a good job, that's not my point at all. I think the thing is we were first in, best dressed. We got into this topic in 2016. We talked with investors. There's a great deal of authenticity to that comment. We've been pushing this now for five years. I always said to the commercial teams, "Read a little bit, understand a little bit," and we've all got to become mini experts in this.
I think that's been the drive for perhaps a higher percentage market share than we have on our total business. I think our competitors have been very focused on doing a similar thing, but perhaps with more of a U.S. lens to it. When you are already in all countries with all channels in all industries, we're in a pretty good position just to flick a switch on e-commerce and really take the opportunity, not just in U.K. and Germany, but in Czech and [PG and everywhere else where people are making products from their home and putting them on their website and sending them internationally. I think it's an answer of focus and getting in right at the front end of this.
In other words, with the pizza growing so fast, your top priority is not your slice of the pizza. The slice you can digest.
Michiel's got four or five brothers, so he knows what it's like sitting around a dinner table. It's picking the right slice, honestly. I think this e-commerce opportunity is growing so fast in so many different ways. It's continuing to focus on the bit that we want. Both Michiel and Leendert had said, "This is not all about volume. This is about picking the bit that we want and delivering the normal service quality for that bit.
Perfect. That leads us maybe to the next cluster of questions that are more on the product itself, and particularly also on the pricing and our view on that. First of all, maybe Michiel, something that you are having on your records. Do you track what amount of our e-com volume is from shippers who, for the first time, or who are basically very new. You said it's going to be a very lively customer composition. What percentage of volume do we see with new customers compared to already more established customers? Do you have a feel there?
No, I think it's difficult to pinpoint to a percentage. It is good to see that in most countries we see merchants popping up and growing very fast, and they could run into a space of six months as one of the biggest customers in the country, but sometimes they also go down quickly. I think the share of new surges in a year, maybe around 10% or something from the total B2C. It's a bit difficult to pinpoint, but that would be my gut feeling.
Well, talking about onboarding new customers, is there something like a special pricing scheme or an entry pricing level? We heard already you want to be careful in what-
Yeah
pricing level you start with, right?
We created very clear, let's say, pricing models for customers when they start. As I said, it's very important to start also with the right price. When customers are really growing and then you still have the right price. It's very clear the pricing teams and the sales teams are very much aligned on what is the right level for the specific customers.
Great. Another question more from the ops point of view, I don't know whether you, John or Michiel, when it comes to actually producing the last mile service, are B2B and B2C sort of mingled in all countries on all routes or are there some special microclusters set up for B2C?
It's all blended in with our normal cycles, which is what gives us the efficiencies, obviously. There are some specific for some of our largest customers that will be one that services the fashion district in the Fifth Avenue or something. B2B and B2C are blended in, and as the drop density and as the density of B2C continues to increase, it fits in perfectly with what's on and in every courier route, if you will. There's less and less distinction between what is a factory, what is an office, and what is a home anyway as time goes by, especially at the current times.
Maybe to add, John, in some countries you also have specific evening routes specifically dedicated on e-commerce when the density is actually met and when it makes sense. Then you can really reach a high level of first delivery degree. That is added to that in the blend.
Yeah
of the day.
No, that's a good point. When people were at home in the evening, it's less of an issue now. In the early days, those evening deliveries were very important. All these answers we're giving just at the minute deal with that bottom arrow on the chart, moving it from a red downwards arrow to a sort of green, a firmly green last mile efficiency.
Okay. One further question more to the geographic split. Are there any cluster geographies when it comes to where the consumers sit? Where do we see the most volume going into in terms of countries? Is there a special focus on European e-vendors or is this, and Michiel talked about 160+ countries where we have that approach. How is the e-vendor location sort of distributed?
I think it's pretty global now. We started off in the sort of U.K. and Germany and the U.S. rapidly, and I'm talking as long ago as 2017 and 2018. There really is something in it for everyone. Someone with a good product. In fact, one of the slides Leendert showed the sort of the far and wide nature of all the things that have been, all the innovative products that are being built and how they come from literally anywhere. In terms of lane destination and density, right now the U.S., Canada, Mexico, and Australia are by far and away our largest destinations. That talks to network planning. It talks to the efficiency of ground ops and making sure that whilst our overall growth of e-commerce might be one thing, the spread of that growth and the top end of that growth is obviously a lot higher.
We need to consider in all our network planning the ability to move material to those four hotspots, and there's four or five more and be able to deliver last mile excellence, especially during peak.
All right. Good. Coming to a name that used to be more prominent in our discussions in the past, but still, Amazon. How do you see Amazon playing in this specific field? Is it something where you see similar developments like in the domestic markets where Amazon is starting to develop its own capabilities?
I think my answer on Amazon, and either of the guys can jump in, obviously, we're a key TDI provider for them. They're first and foremost a great customer and a great partner. They've built up and established their networks in domestic environments and in Germany and the U.S. and a number of others. Again, it's a little bit back to the size of the pie and the overall growth that everyone's experiencing. We're in a position now where we'll take lanes that are ripe for us and are at the right price point, and they look elsewhere for, in some occasions, maybe their own ability to deliver, in other cases, other providers. I think we work quite well with them in that sense, and don't see anything really changing there.
Okay. In terms of market potential, Michiel, you touched on B2B being the next big pond you're starting to sail in with this. Do we have any projections that you may want to share on, generally speaking, the e-commerce penetration into the big B2B market? Do we feel how that's gonna develop over the next number of years? Is that something, you probably said, it is already accelerated now under COVID?
Yeah, I can answer that question. This is Leendert speaking.
Yeah.
If we look at the total market size of B2B e-commerce, and if we look back at 2019, it was already estimated as a market with a value of $ 1.3 trillion. That's the overall market size, and already bigger than the B2C e-commerce market. That's just to share some numbers. Of course, the estimation of that is that how that share will only increase over time in overall B2B sales. My apologies. That's also on the back of COVID-19 because people now, they want to transact online. As Michiel mentioned, the traditional way of doing sales in some cases completely came to a halt where before it was a lot of trade fairs and events, sending salespeople overseas to do the deals, et cetera. That is nowadays not happening at all anymore.
Customers and B2B purchasers, they want to transact, which is why they turn to an online B2B channel. While it is already a big market, and while it is already a very fast-growing market, estimations are that that market will only grow bigger. Of course, we then will also get our fair share of that pie as well.
The really interesting thing on B2B online, and Leendert is exactly right, is to how additive this becomes for companies' sales and top lines, and whether they're able to move revenue lines quicker. The obvious question is, well, are they simply selling something online that they would have before sold by a dealer network? I think that's going to be the case in some products, but definitely, and we're learning this already, this is complementary to existing level of sales in that they're selling to new customers that otherwise wouldn't be sent the big brochure of all the parts, wouldn't have a monthly trading level that would typically get them a field sales visit or get them on the customer list.
When they're able to see the Shop Now button just like anyone else is, and purchase online and purchase much smaller order values, I think what we're hearing from some industries, especially electronic components and things like that, is that it's complementary or additional to existing sales levels. I think there's an opportunity in why B2B will ultimately be bigger than B2C.
Right.
A lot more runway ahead of us.
I think it's also good to mention here is that, we have gained a lot of experience in our B2C journey, and basically, you could apply the same mechanisms and dynamics in the B2B e-commerce. It's also about Website Health Check, Similarweb educating and supporting our customers to grow faster.
Okay. Very useful. We got a couple of few more questions still to be covered, and we don't want to overstretch your attention span out there. Maybe just a quick one. John, Brexit, how do we stand there? Have we equipped ourselves with the right resources to deal with the various scenarios that are likely, particularly thinking of customs clearance expertise, et cetera?
It was surveyed and Baden-Powell said, "Be prepared." I think that's everything. We've had quite some time to get prepared. There's been some twists and turns along the way in terms of what the preparation is, significantly the interoperability of aircraft tails and customs people. I think we're in a very good position now. We're talking to our customers as much as possible about whatever we can, whatever level of detail and specificity we can. We're very prepared, and thankfully, we've got the asset base, and we're able to get ourselves in a position whereby whatever happens on January 1, we'll be ready for.
Excellent. To Michiel and Leendert, if I look at the customer industry mix in e-commerce, you shared that with us on page nine of the presentation. What do you see as being the strongest candidate for above average growth? Do you think it's going to be a constant change in what customer industry is going to have a good time at a particular point in time?
I think one of the industries which definitely now has potential, which is mentioned in the presentation as well, is Life Sciences and Healthcare, with the direct-to-patient opportunity, with people not being able to visit the pharmacy or go to a hospital, at least not as easy as it was in the past. I think that is one where there's definitely potential. Other than that, I think the opportunity is not as big. Sorry. The opportunities other than that, it's similar size of opportunity for all the different sectors and for all the different products and industries, et cetera.
All right.
It's not that one specifically stands out besides the Life Sciences and Healthcare.
Yeah. We also got a few questions referring to our other white paper that we put out recently on vaccines, and there's a variety of solutions to that. I understand you are prepared to deal with that in your field where appropriate. Excellent. Now, obviously, there's one question that we also get naturally in the other fields where we see a strong tailwind from e-commerce growth. John, that's to you. If we assume that this was a faster than expected growth to the current level, what does this mean to your investment plans going forward? Any immediate changes to the investment mix, ground versus aviation, or you think you're capable of dealing with the current situation without a dramatic change to overall CapEx levels?
Yeah. Good question. The answer would be no particular shift in our [EUR 1 billion] meat and potatoes, as I call it, annual investment. All of our hubs, bar none just about, have been either completely retrofitted or replaced or sort of built again from scratch. Brussels Hub is a great example of moving across the other side of the airport and having a brand-new hub there. Certainly nothing, no big change in hub. I think what it does place is an acute need on additional routes and additional PUD capability in any one country. We're adding literally hundreds of routes at the minute in the U.S. as a destination. In terms of overall service center, gateway hub or aviation, I wouldn't say any shift in how that [EUR 1 billion] of our CapEx every year is proportionately distributed.
All right. Perfect. Excellent. Yeah. Very good question. Mark at Barclays was the sender, so thanks for that. I think that pretty much brings us to the end of the list of questions that we have. Again, thank you very much out there for the very good contribution. I think in terms of topics and areas, we pretty much covered all the aspects that we thought would be worth covering when it comes to this particular part of your business. With that, we want to keep it in the promised time frame.
I thank you very much, John, Michiel, and Leendert for doing that deep dive with us and the theme is going to be with us for longer and as a tailwind. With that, I'm looking forward to continue to exchange with you guys out there. The scheduled events for the next couple of weeks and months. I'm looking forward to that. In the meantime, I would say have a great rest of the day.