“After finishing university, I, like many American graduates decided to do Europe,” explains my companion. “In the Czech Republic, I was even able to work a while in my field of study which, as training goes, gave me a sound basis, as well as certain practical experience.” In 1992, Christian Courbois travelled even further: to Russia, Leningrad to be more precise, a place he had heard much about when in Prague. A syear later, this city of almost 5 million had restored to it its original name of St. Petersburg. At first, as this young American familiarised himself with the beauty and history of Russia's northern capital, little did he realise that a consequence of this would be the development of business contacts. Christian was planning to travel to Siberia, the Far East. He revised his plans, influenced by his friends: foreigners who had also turned up in Petersburg. They, like him, were youngsters who had come to see how people were getting on behind the now collapsed “Iron Curtain”. Contrary to expectation, it wasn't so bad!
There was a tangible, unprecedented swell of enthusiasm: a lot of people in Russia wanted to become entrepreneurs. The air was pervaded by the word “business”.
Furthermore, there was a tangible, unprecedented swell of enthusiasm: a lot of people in Russia wanted to become entrepreneurs. The air was pervaded by the word “business”. And if even those Russians, for whom previously this had been a dirty word, wanted to test their mettle in the field of entrepreneurship, then a practical interest rose all the more amongst foreigners. It mattered little that even the most elementary laws governing business did not exist: the most important thing became the urge to start one's own business. “In 1993-1994, I, myself, didn't want to be a businessman,” Christian elucidates. “But, even so, I didn't stay on the sidelines: I gave advice, helped my friends to open a café, to try their hand in the tourist and hotel business, to acquire property: precisely the kind of investment which, with time, has proved to be the most profitable. Along the way, of course, I built up business experience, got to know the legal nuances (up until now business is something new in the Russian legislature), acquired my very first Russian language skills. Now I realise that the desire to engage in business was growing in me gradually.” Even so, how did the idea to bring postal services to the market and start Westpost come about? It was life itself which gently pushed him in this direction. At first it was Courbois' startling observations in the railway stations of Moscow and Petersburg: people were handing over letters to complete strangers or carriage attendants, which in other countries would normally be sent using basic courier services. (Incidentally, one can still encounter such a scene to this day). Christian could not understand this: “How could anyone entrust letters and even documents to total strangers without any kind of guarantee of delivery?” Then he heard over and over again from his businessman acquaintances about the undeveloped nature of this area of services. In other words, the demand in Russia for swift and reliable delivery of correspondence was patently obvious. And this is how Westpost came about.
Sergei Kozyrev, Marketing Analyst at AnalyticResearchGroup:
“In 2011 earnings for Russian express delivery services amounted to just under 40 billion rubles, increasing over the year by approximately 6 billion rubles. Over 2012 market growth could amount to 18%, and turnover 47 billion rubles. Russian operators differ from foreign ones in their longer delivery times which is linked to the RF's insufficiently developed transport infrastructure and the shortage of air transport. With sending of freight from abroad, delays occur due to customs clearance. The largest western carriers can also take upon themselves the management of complicated supply chains whereas, for the Russian player, to offer a similar service in terms of multi-functionality and universality is fairly difficult: many practice the transfer of mail items to each other. To launch a small courier company with a small motor fleet for delivery of correspondence within the limits of a city with a population of over one million requires 10-12,000 dollars. This amount includes company registration, hiring of staff, rent, equipment costs, as well as advertising costs. Further monthly investment amounts to around 5,000 dollars. Profitability of such companies can reach 15% with the period for recovery of outlay being from 9 months.”
Today, few can believe that the start-up capital came not from a bank loan, not from substantial savings, not from his father or friends, but rather...from about $2,000 from Courbois' bank card. “After about a month, I had already recouped my outlay, and after a year turnover was sufficiently large to consider it a successful start in business,” he remembers. “Although then, I was mainly engaged in re-mailing: I would send letters to Finland from where they would be sent to their intended destination. Then I began to develop courier services.” Such a substantial initial profit went a long way to pushing forward the business' development. So much so that, fairly quickly Westpost built up a set of corporate clients with which it works to this day: Ford, Caterpillar, Megafon, amongst others. In other words, Christian adjusted his plans yet again . Originally, he had simply wanted to earn enough money to extend his stay or to return home. But the ball had started rolling, and he decided to put off his departure for a while: and this business-stop-off in Russia has carried on now for almost twenty years...
How did the further development go? Courbois willingly relates the stages of this journey: “At first I worked exclusively with foreigners and only used re-mailing. Then I began to engage in postal services in the most in-demand direction: from Petersburg to Moscow. Competition in this field in terms of private enterprise didn't exist then, so I was quickly able to gather up a significant client-base. And then, like now, we count on corporate clients.” Different companies have a large document flow and they are interested in the prompt and reliable delivery of correspondence. Individuals also come to Westpost but, being located in the centre of Petersburg on Nevsky Prospekt, they want, most of all, to attract customers which are high-profile and long-term. “Now there is huge competition in this area of services,” says Courbois. “We felt this for real seven years ago. There is even, I would say, ugly competition where companies resort to blatant dumping, just to get into the market.”
It is very difficult to find people on the labour market who are sufficiently responsible and who are not afraid of responsibility.
The tendency towards amalgamation has also arisen: several suggest that instead of many small businesses, there should be only a few large ones. But such is the nature of the business, even small companies can find their niche. For example, there is often the demand for letters to be delivered to “unprofitable” places thousands of miles away. This does not interest large competitors. All the same, the demand for such services exists, among even fairly serious customers. Today, Westpost offers postal and all aspects of courier services: everything that is essential to companies and business people. There is the sending of simple international correspondence via Finland; local, intracity deliveries; courier express-delivery across Russia and abroad; direct mail and mass distribution of correspondence, as well as the delivery of mail and cargo between Moscow and St. Petersburg. There are Westpost offices in both of Russia's largest cities, and the full cycle of mail distribution is provided in the two metropolises and the adjacent Moscow and Leningrad regions. “In cases where mail is required to be sent to distant settlements, we turn to our partners,” explains Courbois. “It is important for the client that we control the movement of correspondence and guarantee its delivery in the shortest possible time. Items of mail can be tracked on the company website. Westpost knows who to turn to to find the best possible route.”
To be more precise, for example, delivery of a mail item (up to 250g in weight) from Petersburg to Moscow the next working day costs 400 rubles. Express-delivery – by 12 o'clock the next day – is 570. These are standard prices, but for subscribers (individuals and companies) they are lower. Within Westpost's activity there exists the concept of seasonality. This is Christmas and New Year, when there is the huge flow of greetings cards and gifts. In December, volume increases around two-fold. There is even such a term as mass delivery where they receive more than 50 items from one customer. Such an approach is mutually profitable and takes advantage of demand during peak periods: it is even cheaper than ordinary courier services. But the rest of the time, business life doesn't stand still, so the workers don't sit idle. By the way, the issue of staff is one of the most pressing problems. If Courbois started off practically on his own, now at Westpost, there are more than 30 staff. “Tracking down the skilled workers we need is not easy!” laments Christian. “It is very difficult to find people on the labour market who are sufficiently responsible and who are not afraid of responsibility. It is not unusual for people to refuse promotion if it calls for them to personally demand results from the work of others. Such a lack of career ambition still astounds me.”
Oleg Mashkovsky, Deputy Director of the Federal Postal Service for St. Petersburg and Leningrad region – Commercial branch of FSUE (Federal State Unitary Enterprise) Russian Post:
“There are a whole range of private organisations in our country with a Postal Operator's licence working successfully in this market. Amongst them foreign organisations. There is competition but generally we maintain partnership relations: there is a range of services in which regional divisions of FSUE Russian Post participate. In this respect our state enterprise is orientated in the first place towards servicing mass consumers i.e. the general population, whereas private firms in this market attract commercial organisations. To reiterate, their sphere of activities is the large metropolises, whereas we go to the most distant villages. As things stand, we complement each other, and competition in different areas facilitates our development.”
At the same time, other problems are more easily solved. Over the last 3-4 years, according to Courbois, the situation regarding inspections has changed for the better. Before, they occurred monthly and demanded an awful amount of time, getting in the way of business. And there was nothing with which to “pay off” the inspection boss: there simply wasn't any spare money. These days, inspections are scheduled and carried out a lot less frequently. Not to mention that now there are virtually no problems with criminals. “Although today, to start your own business with just $2,000 in your pocket is already impossible,” points out Courbois. “Everything has become too expensive: property, paying staff, loans etc. As before, there are far too many documents to fill out. There is a huge amount of paperwork just to hire a car. It turns out that one worker is needed purely for processing documents. This is not good at all for the entrepreneur starting out, or for Russia in general: it limits the potential for development of small businesses.” Knowing how long Christian has been working in Russia, foreign businessmen turn to him fairly frequently with the question: “Is it worth coming to this country to start your own business, to make investments?” I didn't refrain from asking him this question myself. What can he advise based on his experience of nearly twenty years?
It turns out that one worker is needed purely for processing documents. This is not good at all for the entrepreneur starting out, or for Russia in general.
“I always try to allay their fears,” Courbois replies straight away. “As before, the possibilities in Russia are huge. I can say with absolute certainty that in the service sector familiar to me, there is the significant potential for development. True, it's not possible to make a huge profit quickly here like 15-20 years ago: it is not surprising that Russian business is in no particular hurry to invest here. But there is a different approach in the West. If a foreigner investor is prepared to settle for a modest, reasonable profit, then he will succeed completely. Therefore my foreign colleagues feel completely at ease and are able to gradually develop their business. Besides, you should bear in mind that Russia is not just Moscow and Petersburg. There are many cities with a population of more than one million where there are wider possibilities for investment and more gaps in the market yet to be filled. And what I'm talking about isn't the risk that there was in the 1990's, but the implementation of completely viable business plans. The winner will be that person who comes to this market before anyone else.”