What areas are postal operators working on in order to further develop cross-border e-commerce and parcel delivery in Europe?

European postal operators are united under the umbrella of PostEurop. We operate in 28 EU countries, handle 4 billion parcels across Europe and employ 2 million people. We fully support the European Commission’s goal in achieving the Digital Single Market and increasing the growth of e-commerce across Europe.

To this end, we work every day to:

  • Further improve interoperability across the European market and with other big global markets by adhering to international standards for labels and scanners, investing in infrastructure like more efficient sorting centres, establishing common procedures among ourselves and with our international partners for handling complaints and conflict resolutions;
  • Provide innovative solutions for both online retailers and their customers, such as investing in web platforms for sales conversion for e-retailers and coming up with faster, shorter distance fulfilment through smart logistical solutions in warehouses and transport planning with the use of Big Data.

Many have compared the parcel delivery sector to the telecoms sector. What are the similarities and what are the differences?

The only similarity between parcel delivery and telecommunications, is that infrastructure investments are high in both industries, but this is where the comparison ends.

Parcel delivery sector is starkly different from the telecoms sector:

  • In parcel delivery, our jobs cannot be delocalised. We want to continue creating jobs and sustain existing ones at a time when many sectors are cutting down – not expanding – their workforce.
  • Operational costs for handling and transporting parcels remain significant, even if larger volumes create the opportunities for synergy. Overall, margins are low and competition is fierce in our open market. There is definitely no “rent” effect in our business.
  • Compared to telecoms, our costs are also more volatile. The Regulatory authorities BEREC and ERGP note that “the differences in costs for postal services are significantly greater than for telecommunications services due to the higher impact of geography, population density, labour, delivery and transit costs on postal services as compared with international roaming.”
  • Unlike with budget airlines or mobile telephony, we do not dictate the final price end-consumers pay for delivery. E-retailers do.
  • Price regulation in the form of imposed lower prices will not create a better deal for consumers. It would be hard for a regulated price to comprise a fair assessment of our operating costs, some of which can be highly volatile. This is different in mobile telephony, for example, where costs are flatter.
  • Also, investments in new technologies need to be paid off and postal operators are committed to high employment standards. Capping prices at arbitrarily low levels runs the risk of encouraging parcel delivery operators to safeguard margins, and the volumes of parcels handled, simply by increasing their offer of “premium” services. Consumers would be offered additional services at higher prices, and standard deliveries may become comparatively less attractive.

Are the delivery costs provided by retailers on their sites the same as the ones postal operator actually charge?

Not always. Delivery tariffs on web shops do not always reflect the actual (lower) prices that the online retailer pays to the parcel delivery operator, for ease of calculation or other marketing reasons. In order to tackle this misconception of high delivery costs, retailers sometimes offer free shipping by absorbing the delivery costs into the product price.

Do online retailers have sufficient information on the delivery services potentially available to them? Do they have sufficient choice in and availability of delivery solutions of the quality consumers wish for?

National postal operators co-operate closely with online retailers, both multinationals and SMEs, and online retailers have a wide variety of delivery solutions to choose from. Each EU country has on average 3.44 operators: with the exception of Cyprus and Malta, all other countries have at least 2 operators. 9 out of 12 parcel delivery operators in the UK deliver cross-border.

National postal operators also actively help retailers to sell online by devising innovative solutions: PostNL, Deutsche Post and PostNord are three examples of operators who have developed software solutions e-retailers can integrate into their web shops in order to ensure easy access by shoppers to the relevant delivery information.

Recognising how delivery standards affect the business of online retailers, National postal operators have put in place a series of solutions to achieve a higher level of customer satisfaction:

  • Value-added services that allow e-shoppers to predict the arrival of their parcel by the minute or to re-arrange the delivery of their parcel for another date or to another address;
  • Alternative delivery points such as parcel lockers or the nearest convenient store;
  • Track and trace (web-based or app-based) and electronic notifications (by email or SMS).

Is it useful to compare the prices of cross-border B2C parcel delivery between EU countries?

Not at all. Especially when cross-border e-commerce delivery prices depend not only on distance but other crucial factors.

First of all, prices shown in price comparison tables are for consumer-to-consumer (C2C) deliveries, not for e-commerce (B2B or B2C). For e-commerce, delivery prices offered to e-retailers are lower so as to help foster the growth of online businesses in Europe.

Secondly, B2C cross-border delivery prices between countries A and B are not comparable to countries A and C. Prices need to be flexible enough to react to market conditions, for the sustainability of our services. Prices also depend on the volume and regularity of the dispatches, amount of trade flow between the two countries, wage differences, delivery, transit and fuel costs, population density, geographical terrains and even weather conditions.

Thirdly, the reduced prices offered to different retailers sending to the same destination are also different, because the weight, volume, temperature conditions, packaging conditions of their products as well as their business models can be very different.
Such flexibility of the B2C cross-border delivery pricing is therefore necessary for the growth of e-commerce in Europe, as we strive to service all our retailer customers across the whole industrial spectrum.

Why is there a price difference for consumers to send a parcel from A to B and from B to A?

There are a number of reasons for this, including:

Volume difference between mature and younger delivery markets. Mature delivery markets like the UK and Germany have a higher volume of parcels to help lower transport costs, which may not be the case in a younger delivery market.

Imbalanced trade flow also affects delivery costs. For example, there are more goods going from France to Denmark, than the other way round, thus the delivery cost is lower from France than from Denmark.

Some national postal operators co-operate with private operators in another country for cost, efficiency or quality reasons while the reverse may not exist.

Last but not least, different wage levels in different EU countries often account for the differences in the last-mile delivery between domestic and cross-border.

Is it true that delivery costs are the biggest obstacle to the growth of cross-border e-commerce in Europe?

According to the European Commission, EU e-commerce is growing at just ¾ of the global rate. But the growth of intra-EU cross-border e-commerce cannot be achieved by lower delivery costs alone.

Already, to help online retailers offer the best delivery options to the end consumer, national postal operators have put in place a series of solutions and rates targeted at online retailers, so B2C parcel delivery is made cheaper for e-commerce. This has helped retailers to pass the lower tariffs on to the end-consumers.

However, the biggest obstacles to retailers offering cross-border e-commerce are:

  • Lack of e-skills,
  • Lack of capacity to serve customers in a different language,
  • Regulatory issues like different VAT systems and
  • Different consumer rights requirements.

On top of that, e-commerce trade patterns usually follow geographical and linguistic affinities. Countries that share a language or close ties with another EU country have higher levels of cross-border (intra-EU) e-commerce. For example, Belgian consumers shop mostly from France followed by the Netherlands while Czech consumers buy mostly from Germany followed by Poland. If we look at e-commerce along these linguistic and geographical terms, the levels of growth are encouraging.

How do postal operators help SMEs and consumers, especially those in remote/rural areas, reap the benefits of e-commerce?

Contrary to popular belief, there are more SMEs offering e-commerce in Europe than larger enterprises.

The growing demand by SMEs for parcel delivery solutions has resulted in more delivery services geared towards small and medium sized e-retailers, the development of industry-specific solutions (e.g. specific services for e-retailers belonging to the fashion industry), and an expansion along the e-commerce value chain (delivery operators offering website solutions, pick-and-pack, warehousing etc). Examples are Belgium bpost’s “Shipping Master tool” and UK Royal Mail’s “Simple Ways to Grow” e-commerce services for SMEs.

Furthermore, SMEs often have the possibility to buy sets of labels with significant discounts (Deutsche Post, for example, offers discounted sets of labels for both parcels and packets) and online franking allows for discounted shipping rates.

To ensure those living in rural or remote areas do not lose out on the possibilities of e-commerce, national postal operators ensure delivery to both urban and rural areas, under their obligation to provide universal service to all consumers.

National postal operators also work according to the different preferences that rural e-shoppers have from their urban counterparts, while maintaining a good level of customer service and affordability. For example, rural e-shoppers place more importance on the possibility to deliver to a neighbour’s house,, and they put less emphasis on fast delivery compared to e-shoppers in urban areas.

What are postal operators doing to ensure cross-border parcel deliveries run smoothly?

Postal operators also strive to ensure a high degree of interoperability among national counterparts. This includes the mutual recognition of labels, the use of RFID tags, online track and trace, and notifications by email or SMS. Notably, European postal operators undertook the e-Commerce Interconnect Programme – together with their international counterparts – to create the best conditions for postal operators to meet demands from consumers and businesses and to fully benefit from the booming cross border e-Commerce market.

Under this programme, all participating posts are to provide consumers and online retailers with:

  • A choice of end-to-end transit times and features available in all destinations so that both consumers and retailers can be assured of a harmonised set of services in both country of origin and the country destination.
  • A full track-and-trace platform from posting to delivery using barcodes or RFID technology and providing full end-to-end visibility to consumers and e-retailers of sold and returned goods
  • A cross-border e-commerce return solution, enabling consumers to return an unwanted good free of charge to the country of delivery
  • Consistent cross-border delivery options offering consumers the same delivery and collection solutions for cross-border as for domestic e-commerce
  • Harmonised processes that ensures faster delivery
  • A reliable service
  • A more rapid resolution of handling customers queries through connecting call centres from up to 180 posts worldwide

Why are there more domestic than cross-border e-commerce transactions?

It is true that the average EU e-shopper spends 939 euros per year on domestic e-commerce but 693 euros per year on cross-border ecommerce.

But bear in mind that the difference between domestic and cross-border e-commerce is not always clear:

  • Domestic website and domestic delivery: Both website and warehouse are located in the same country
  • Domestic website but cross-border delivery: The warehouse is located in another country
  • Foreign website but domestic delivery: The warehouse is located in the shopper’s country
  • Foreign website and cross-border delivery: Both website and warehouse are located in another country

Furthermore, e-commerce trade patterns follow to a large extent geographical and linguistic affinities. Countries that share a language or close ties with another EU country have higher levels of cross-border (intra-EU) e-commerce. For example, Belgian consumers shop mostly from France followed by the Netherlands while Czech consumers buy mostly from Germany followed by Poland.

In view of the above criteria, cross-border intra-EU e-commerce is in fact vibrant and growing.

Why do consumers choose postal operators?

A large percentage of B2C parcels are delivered by standard delivery (postal operators)1. Most online retailers offer the standard delivery option, in addition to an express one.

One reason is the low cost offered by postal operators: in a survey conducted by Deutsche Post/DHL among consumers in Austria, Germany and Switzerland, between 27 and 29 percent of online shoppers select the national postal operator as their preferred operator. In another survey conducted by Copenhagen Economics in 2015, over 90% of consumers cited low delivery costs as one of the main reasons for buying from the same web shop again.

Another reason is the fact that consumers are familiar with postal operators. Consumers also recognise and place trust in the delivery services offered by their postal operators.

What is the current landscape in the cross-border parcel delivery market for consumers and retailers?

The European cross-border parcel delivery market is experiencing unparalleled growth, due to the rise of e-commerce. As the barriers to new entrants are lower than before, the higher number of operators means that both retailers and consumers have a wider selection to choose from. In 2013, both retailers and consumers across Europe had on average 3.44 operators to choose from when sending cross-border.1 When shopping online, most online retailers generally offer at least 2 choices of delivery and delivery speed to end-consumers.