We like to have inspiring discussions about cross-border e-commerce over a nice cup of coffee. This time, we met with European Commissioner Harrie Temmink to talk about the obstacles facing cross-border selling and buying in the EU, delivery and policy initiatives.
Harrie Temmink is currently the Acting Head of the Public Interest Services unit, DG Internal Market, Industry, Entrepreneurship and SMEs and the European Commission. The unit is responsible for postal and parcel affairs, gambling services; and other services of general economic interest such as energy, water, health and education. Harrie has a Dutch Law degree as well as a Spanish Language and Literature degree from the University of Utrecht (the Netherlands).
What about coffee?
Like many of his fellow Dutchmen, Harrie is an enthusiastic coffee drinker. Before lunchtime he has usually already had a cup, if not more! At work, he prefers Nespresso Lungos. At the weekends, he tries to limit himself to one cup a day (but not a Nespresso!), at breakfast. When he goes out for lunch or dinner, he likes to have an espresso after his meal.
Why is delivery such a crucial element of successful cross-border e-commerce and therefore also of the digital single market?
Delivery is a key factor in the overall development of e-commerce, in particular of its cross-border development. There are many challenges for postal operators and e-retailers which can have major effects on the customers. Studies show that delivery-related problems heavily influence whether e-shoppers finalise their purchases. Consumers too often don’t know what delivery options may be available to them, when their order will arrive, and how they can return it if they so wish.
Many retailers, SMEs and larger ones, still seem to struggle with cross-border logistics. What do you think the reasons are?
The delivery market is a diverse and complex one, with different operators offering many different services and prices depending on many features such as weight, size and format, as well as destination and number of items. This makes it difficult for e-retailers and e-shoppers to access comparable information about delivery, resulting in sub-optimal choices. In addition, one in five e-retailers say they are only aware of one delivery operator, but the average number of alternatives is, in fact, three to four operators.
The European parcel market can generally be characterised as a tight oligopoly – although more competition can be identified in specific markets. One of the consequences of this is that the list prices for cross-border delivery from the traditional postal operators are on average three to five times higher for parcels than their domestic equivalents. These differences cannot be explained by labour costs or other costs in the destination country. This is particularly an issue for low volume senders of cross-border parcels such as SMEs and individuals who have less bargaining power to negotiate tariffs directly with the parcel delivery operators. There also regulatory and administrative requirements such as customs regulation and complicated VAT procedures. The lack of inter-operability between delivery companies in two different countries is another major factor that complicates cross-border logistics.
Wouldn’t you say the forces of a growing market will regulate these problems over time, wouldn’t that be better than policy makers interfering?
In principle, I agree. In 2012 the European Commission organised a broad consultation of e-retailers, postal operators, users, national authorities etc. Indeed, the responses showed us that the interested parties expressed, in essence, a preference for industry-driven measures. Therefore, the European Commission’s roadmap for completing the Single Market for Parcel Delivery of December 2013 largely contained actions of a self-regulatory nature. We stimulated the creation of pan-European trustmarks for the e-commerce sector, which were later established by companies such as EMOTA and ECommerce Europe, containing criteria for the quality of parcel delivery services.
However, there is an additional role for policy makers when market forces alone cannot repair the imperfections in the market. This is why we have come forward with a proposal for a regulation on cross-border parcel delivery services to improve price transparency for cross-border EU deliveries and to enhance competition. In a broader context, legislation may be necessary in order to guarantee decent employment conditions and basic consumer rights.
How will the new platform “Deliver in Europe” help to solve their problems?
The objective of the “Deliver in Europe” platform is to improve the transparency of information on existing parcel delivery solutions, particularly for cross-border delivery. The platform is set up as a “one-stop” information point for e-retailers on existing eLogistics solutions, presenting and comparing all the different solutions available. The information platform should give SMEs effective tools to improve their bargaining power. The EU is co-funding this (private) project which will hopefully become operational by the end of 2016.
Do you think there is enough interaction between EU policy makers and the industry and consumers? What actions are taken to improve the information flow and interaction between these three?
The door is always open at the European Commission! We try to reach out as much as possible to e-retailers, parcel operators, consumer representatives… During the last few years, for instance, we hosted several major workshops to bring interested parties together. The Postal User Forum was intended to sound out the customers of the parcel delivery services. We are also active in the European Social Dialogue Committee and we have frequent meetings with the national regulators, in particular in the context of the European Regulators Group for Postal Services (ERGP). Finally, no new initiatives are considered without a proper public consultation which feeds the so-called “impact assessments”.