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Market economics: Delivering the EC’s digital e-commerce vision


Steve Ferguson-Aug13It perhaps came as little surprise that Britain’s place in Europe was one of the recurrent themes of the general election campaign. However, writes Stephen Ferguson, Business Development Director, Global Freight Solutions (GFS), in the last hours before the polls opened, many domestic businesses in the retail and delivery sectors were poring over a new European Commission policy which set out the benefits of even closer ties to Brussels.
A clutch of the organisation’s most senior officials, including EC President, Jean-Claude Juncker, unveiled plans to create a Digital Single Market which, they said, aimed at “transforming European society and ensuring that it can face the future with confidence”.

As well as establishing a truly capable, Continent-wide technological infrastructure, one element caught the attention and it was a dimension with particular importance for the UK.

At the heart of the Commission’s attempts to generate an additional €415 billion in income across its 28 member states is e-commerce. Not only Europe’s fastest-growing retail market, it has been said to contain a mass of complications for consumers, vendors and carriers trying to reconcile online orders with a wealth of different laws, languages, taxes and issues of transparency.

The EC’s Public Interest Services Unit has over the last few years devoted considerable effort exploring difficulties including the reluctance of shoppers to buy online from companies outside their own national boundaries and the high costs of shipping items across border.

It’s worth noting, of course, that delivery is not only an issue with international parcels. Over the course of the five years that GFS has compiled its annual White Paper, putting developments during the UK’s pre-Christmas peak season in a year-‘round context, reliability, flexibility, cost and convenience of delivery have repeatedly featured as reasons for the high proportion of shopping cart abandonment.

DSM2The EC’s biggest move towards a resolution of those matters to date has been a ‘road map’, released in December 2013, that made clear the need for retailers and delivery firms to provide customers and smaller e-commerce enterprises with the kind of conditions which might enable them to buy and sell – and return – goods without incident.

The 18-month period allowed for them to respond to demands for faster and more trackable deliveries expires next month. Now, the EC has set its sights on achieving progress on regulation and pricing.

Just as when the contents of the ‘road map’ first became known, the Commission is reserving the right to adopt “additional measures” if it believes the industry’s reaction to be inadequate.

So, why should operators in the UK sit up and take notice? After all, as one MEP commenting on the latest initiative quickly pointed out, “grand plans have stalled in the past” and not just outside our shores.

A campaign by the last British Consumer Affairs Minister, Jo Swinson, to tackle perceived problems with e-commerce deliveries and provide consumers with what she described as “a fair deal” amounted to the publication of a ‘statement of principles’ last year, setting out best practice for retailers and delivery firms. Whether it will outlive the collapse of the Conservative-Liberal Democrat coalition and Ms Swinson’s being unseated in last week’s vote remains to be seen.

Regardless of Britain’s historic disdain for Eurocratic endeavours, those more objective individuals involved in the e-commerce business will acknowledge that the Commission has a couple of valid fundamental points. Why should growth be hampered by red tape in what is a free trade zone and why are cross-border prices five times domestic costs, as the latest EC paper claims?

When Europe is so keen to demonstrate that it can compete with the United States – a territory of similar size but without most of the impediments that the EC is seeking to address – why should there be such apparent issues with providing shoppers and shippers with the wide range of delivery options they require?

It would be very easy to dismiss the price point as down to ‘market forces’. People, so that argument goes, will pay the going rate to receive things via the methods which are efficient for suppliers because they need the goods.

Nevertheless, countless pieces of research have shown that giving consumers only a limited selection of delivery options restricts sales and threatens to act as a brake on sector growth.

As I and my colleagues at GFS are only too well aware, there is a real and rapidly-evolving appetite among those buying and selling online for more and more convenient choice.

The UK may well be the most mature e-commerce marketplace in Europe, already accounting for just over one-third of the Continent’s entire take from online sales but there is still room for improvement.

Consumers – wherever they are – want information, control and simplicity. They don’t like not knowing where their purchases are and when they will arrive. They want to be able to determine delivery times of a package bought on the internet in the same manner that they can do with their groceries.

They also don’t want to be confronted by a bewildering array of delivery styles when they are about to complete their order. As has been proven on numerous occasions, their response if they don’t like what they see is to ditch the purchase and go somewhere else.

I have been told by a succession of clients – big and small – that the appeal of the GFS Checkout product which we launched last year lies in its being straightforward enough for retailers and their customers to understand while not being basic. Its transparency and dynamic breadth of traditional and alternative methods has already met with the approval of at least one EC official who said it was the precisely the kind of development which Brussels wants to see more of.

Progress can be made if participants view the Digital Single Market agenda as an opportunity and not an obstacle, as the EC melding a system which works and not meddling for the sake of it.

The situation is broadly similar to that advanced by parties of different colours during the Election campaign. Britain and its undoubted retail and supply chain expertise can grow in isolation or contribute fully to an integrated European e-delivery infrastructure that can really deliver results.

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