Cheaper cross-border parcel delivery to boost e-commerce in the EU Published on: 22/12/2015
You’re shopping online. You’ve found the perfect gift. You're at the checkout, and then… Delivery charges are how much? Forget it! Does that sound familiar?
Almost 4 billion parcels are ordered online and delivered every year in the EU. But the potential for e-commerce is much greater – while 44% of consumers buy online in their own country, far fewer (15%) order online from another country. Why? One of the biggest obstacles is the high costs of cross-border delivery. EU consumers could save over €11 billion each year if they chose from the full range of goods and services available when shopping online. Cheaper and more transparent pricing could also encourage more retailers to sell online.
Price transparency needed
The Commission announced in the Digital Single Market strategy that it will work on improving regulatory oversight in the parcel sector and look into the issue of price transparency, including the prices of small shipments. To be clear, the Commission doesn't plan any price regulation of the parcel sector. However, the big differences between prices for cross-border parcel delivery between various EU countries just don’t make sense and they discourage retailers and consumers from selling and buying across the EU. A lot of the time, the differences do not reflect the underlying cost of the parcel delivery, for example wages or geographical distance.
Vice-President Andrus Ansip, in charge of the Digital Single Market, said: "Today, it often costs much more to send home something that you have bought from a website in another EU country than to have it delivered nationally, even when the distance is the same or shorter. The high prices and inefficiency of cross-border parcel delivery deter people from selling to, or buying from other EU countries. This means that e-commerce is not being used to its full potential. We now need to make sure that it can develop across all of the European Union, putting this important part of the DSM strategy into effect as quickly as possible."
Commissioner Elżbieta Bieńkowska responsible for Internal market, Industry, Entrepreneurship and SMEs said: "Our objective is to make shipments of cross-border parcels seamless and more affordable for both individuals and SMEs – not by regulating prices or imposing caps but by increasing transparency and competition."
Why are prices of cross-border delivery so high?
A new econometric study on letter and parcel prices done by the Saint-Louis University confirms the perception. The study shows that cross-border parcel prices are almost 5 times higher than their domestic equivalent in all products. Contrary to what people might think, the higher cost has little to do with the cost of parcel delivery in the destination country as there is no apparent link between the real cost and the prices of the delivery.
The price of a standard 2kg parcel with no extra features, such as 'track & trace' or particular speed, could be very high in one direction and reasonable in another one. Let's take Austria and Italy as an example. These countries are neighbours, both well-advanced economies with a lot of bilateral trade. Yet the price of a small shipment sent from one country to the other differs enormously and is not justified on the grounds of domestic prices.
- Domestic price in AT: €4.44
- Domestic price in IT: €9.00
- Price from AT to IT: €14
- Price from IT to AT: €25
You can also find huge differences when sending a parcel from two countries with similar characteristics to the same destination. For example, Belgium and the Netherlands are two neighbouring countries with a price for domestic parcel delivery just below €7. However, sending a 2kg package from Belgium to Spain would cost you €26.10 whereas the same package sent from the Netherlands to Spain would cost only €13. And you would pay much more if you wanted to send the package back from Spain (€ 32.74), even though the price for domestic delivery in Spain is only €8.58.
- Domestic price in BE: €6.50
- Domestic price in NL: €6.95
- Domestic price in ES: €8.58
- Price from BE to ES: €26.10
- Price from NL to ES: €13.00
- Price from ES to BE and NL: €32.74
What do consumers and retailers want?
High prices of cross-border parcel delivery are a real problem. They are one of the biggest obstacles for consumers and retailers who would like to buy and sell online across the EU. In the public consultation on parcel delivery, a lower price for cross border delivery was identified as a main improvement that would make businesses and consumers buy and sell more online.
The consultation showed that many consumers who had considered buying online but then abandoned the idea, did so because of the high delivery price. Lower prices for cross-border delivery were very likely to make them buy online.
Similarly, retailers reported that price and the 'track & trace' feature were the most important for them when choosing the parcel delivery provider. Most of them believe that lower prices for cross-border delivery would make them sell online or increase their online sales to other countries.
The results of the public consultation confirm the findings of a Eurobarometer survey on e-commerce published in May 2015.
It is clear that high costs, lack of transparency and inconvenience of cross-border delivery of parcels ordered online are still limiting e-commerce, growth and jobs in the sector. The Commission aims to improve the situation and focus on improving the regulatory oversight and ensuring transparency when it comes to the process of parcel delivery in the EU.
The Commission intends to propose targeted measures addressing these shortcomings in the spring of 2016.
- Digital Single Market package
- Parcel delivery in the EU
- Public consultation on parcel delivery
- Summary of responses to the consultation on parcel delivery
- Econometric study on letter and parcel prices by the Saint-Louis University
- Factsheet on parcel delivery
- Examples of different prices for parcel delivery
- Eurobarometer survey on e-commerce