19 February 2016

Mystery shopping debunks myths around e-commerce delivery prices

PostEurop welcomes a recent study by Copenhagen Economics, a leading economic consultancy, which found that there is growing confidence in the dynamic EU e-commerce market, with a positive spill over into the European delivery sector. The report shows that the price of parcel delivery is driven by a number of supply and demand factors, and the price online shoppers pay for cross-border parcel delivery does not reflect the prices charged by delivery operators.

European national postal operators deliver millions of parcels a day and play a key part in the delivery sector. They are actively contributing to the success of a well-functioning, developing e-commerce market by providing affordable, high quality delivery services across Europe. To feed into the debate on cross-border parcel delivery, as part of the European Commission’s “Digital Single Market Strategy for Europe“, PostEurop asked Copenhagen Economics to carry out an independent investigation into the current state of the European cross-border parcel delivery sector, focussing on the factors which determine the prices for parcel delivery.

Jean-Paul Forceville, Chairman of PostEurop, said: “It’s great to see the Copenhagen Economics report published today, ahead of the Commission’s measures on cross-border parcel delivery in the spring. Let’s not forget that delivery is only one part of an extremely competitive, dynamic e-commerce sector – and e-retailers play a leading role in setting the end price online shoppers pay for cross-border parcel delivery.”

A thriving e-commerce market

The report confirms that the European e-commerce market is thriving, with domestic and cross-border online shopping on the increase. Its complex development is influenced by many drivers which benefit the highly competitive delivery sector.

Figures published by Eurostat on cross-border online shopping underestimate its actual development. For example, e-shoppers tend to perceive a transaction as domestic if the website they order on is in their own language.  In another instance, goods ordered from a local website may actually be delivered from a warehouse in another country. In 2014, 40% of online shoppers making their latest online purchase assumed the purchase to be from a domestic seller while the goods are from another EU country .

An abundance of choice in delivery operators, delivery options and delivery routes

A strongly developing market such as e-commerce draws many actors towards parcel delivery activity. Today, e-retailers have an abundance of choice from a wide-range of delivery operators, while big players like Amazon are expanding into delivery logistics. E-retailers can pick and choose how their goods can be delivered to meet their needs, provided by a diverse delivery sector. This benefits consumers in turn.

De-bunking myths around delivery prices

E-retailers play an important role in the end-price online shoppers pay for cross-border parcel delivery. A mystery shopping exercise revealed that there is a low correlation between the prices charged by e-retailers to e-shoppers and the prices postal operators’ charge to e-retailers. E-retailers choose how to price the delivery service depending on e-shopper demands and the e-retailer’s general pricing strategy.  For example, “free delivery” is offered if the purchase exceeds a threshold.

In the delivery sector, as in other sectors, the price charged is market driven. It is a commercial decision influenced by demand and supply factors such as consumers’ willingness to pay, volumes flows or the relative bargaining power of e-retailers. Digging into economic and operational conditions helps better understand price differences between domestic and cross-border delivery services as well as between individual countries.

The Copenhagen Economics report demonstrates that the e-commerce delivery sector – and delivery process – is highly competitive.  It also challenges some myths and common misassumptions made about cross-border parcel delivery prices.

See full report or Download the Report (2MB) and also available on Copenhagen Economics’ website