The bafflingly high price of parcel delivery within the European Union is preventing online shoppers from getting the best deals, to the tune of nearly €12 billion ($13.4 billion) a year, according to the European Commission.
That’s why the commission is proposing a new directive today (May 25) that will try to solve that problem by mandating that delivery companies publish their rates on an EU website, to go live by April 30 next year, for assessment by national regulators annually. Call it better shopping through information transparency.
Nearly half of all European consumers already shop online. But they’re buying all that stuff from domestic online services: Only 15% of European shoppers buy internationally, according to the commission. A survey by the commission found that shoppers were put off by high delivery prices, some of which seemed absurdly high. As a result, the EU’s e-commerce sector lags behind global growth rates, and it’s concentrated in a handful of the biggest economies, namely the United Kingdom, Germany and France, the commission found.
The new directive will try to fix those problems with a light touch. It’s requiring courier firms, postal services, and other delivery companies to submit cross-border and domestic delivery prices in a standardized form to postal regulators in member states. Regulators will judge the affordability of these prices, and then pass the data to the commission. The information will then be published for public scrutiny on April 30 each year. “The Regulation will foster competition by introducing greater price transparency,” the commission wrote in a statement.
If the measures result in lower prices, cross-border e-commerce would increase by 4.3%, the commission claims, though it did not specify how much prices would need to decrease. This translates into an additional €2 billion in household consumption in the EU, it says.
The new rules could certainly help demystify the mysterious prices of parcel delivery within the EU. A study, by Saint Louis University in Brussels, last December found that cross-border prices were nearly five times higher than domestic prices, for the same parcel and quality of service. “There is no apparent link between the real cost and the prices of the delivery,” the Commission, which asked for the study, wrote at the time.
Here are some of the examples of inordinately high prices the commission found, for delivery of a 2 kg parcel:
Italy to Austria: €25
Austria to Italy: €14.09
Poland to Slovakia: €8.20
Slovakia to Poland: €18.50
The commission’s proposal is now in the form of a draft regulation, and it’ll have to be submitted to the European Parliament and European Council for consideration before it can be adopted. It’s just one part of a raft of proposals announced today that form part of the Digital Single Market initiative, a program led by commission vice president Andrus Ansip that’s aimed at removing friction from digital trade flows in the EU. This includes guidelines for Netflix and other online content providers.
The commission says it’s refraining from regulating delivery prices directly for now. But in 2019 it’ll publish a report on how well the latest proposal is doing, and it might take stronger action then. “Price regulation is only a means of last resort, where competition does not bring satisfactory results,” it writes.