eCommerce is a booming sector. Digitalisation and the ability to buy and sell products and services online has generated many opportunities. Consumers benefit from greater choice, even where they live in peripheral regions. In addition, companies big or small can reach a wider customer base.
However, exceedingly high cross-border delivery costs and the lack of trust in parcel delivery services are hindering the potential for cross-border eCommerce within the single market.
Consequently, only 15 per cent of consumers buy online from another EU country while only eight per cent of companies sell cross-border.
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As consumers, eRetailers and small businesses mostly rely on universal service providers to send and receive parcels, choice is limited. The postal sector was liberalised almost 20 years ago, yet in some member states, the typical features of a monopoly market remain.
Before liberalisation, consumers had no choice but to send a letter or package through national postal services. There was no movement in the market, because there was no market in the accepted sense. The sector lacked quality service and innovation. Hence, price structures were rigid.
From 1998, the postal market became increasingly liberalised. Initially, parcels were the first postal item that became highly competitive in national markets. In 2007 - almost a decade later - alternative delivery providers came into play and were able to offer higher-quality services, such as track and trace or same day delivery.
Another decade has passed and nowadays prices for cross-border parcel delivery between country are on average three to five times higher than domestic prices. How can it be that sending a parcel from Brussels to Cologne costs €16, while it only costs €4 to send a package from Munich to Berlin? This cannot be explained by wage cost structures or transport costs in the member states.
Therefore, key provisions of the new regulation, such as reporting obligations for all market players on their prices and delivery options, and the empowerment of national authorities to identify and tackle unreasonably high cross-border prices of national incumbents will help address the arbitrary pricing and the remnants of the monopolistic market.
However, in order to reduce burdensome provisions for SMEs, the obligation to report does not apply to companies with less than 50 employees and headquarters in only one EU country.
The European Commission will set up a website where consumers and businesses can compare parcel delivery tariffs across Europe. This also serves to name and shame large companies charging exorbitant rates for deliveries.
This will result in lower prices and greater choice for consumers and small businesses, particularly for individual users in peripheral areas, as well as for small traders. These new provisions will ensure a level playing field and high-level parcel delivery services within the universal services obligation.
This will be crucial to sustain the explosive growth of the parcel delivery market in a fair and balanced way. It was pressing for the EU to address this issue and to contribute to equal competition.
Transparency of information and market surveillance and shaming should help make cross-border parcel shipping more affordable. We also ask online sellers to provide delivery options when selling products and to provide customers with information, which is in line with the requirements of the consumer rights directive. This sound and balanced approach will tackle excessive costs and the lack of comparable services for cross-border delivery of items bought and sold online.
Furthermore, it will be possible to improve competition between parcel delivery markets within the European Union. This will lead to even more competition in offering high-quality services and innovative solutions. It will raise competition in providing solutions for ‘the last mile’.
New business models that address customer demand for ever-faster delivery, as well as new technologies such as drones and autonomous and zero-emission ground vehicles will be crucial for the last mile. Large eCommerce players, as well as various start-ups, have identified last-mile services as a key differentiator.
With this in mind, all players involved will be working hard to offer the best customer experience possible, especially by improving delivery times. With the digital market booming, parcel deliveries in Europe already account for more than four billion parcels every year.
With this new regulation, businesses in the parcel delivery sector will have to diversify their services to meet customer demands and to meet the expectations of online consumers and small businesses, particularly in remote and sparsely populated areas.