Posted on Tuesday 15 January 2013 by Ulster Business

Werner Stengg

The last few years have left almost every sector of European economies badly scarred by recession.

However, amidst the gloom, there has been one bright spark: e-commerce.

Fast-evolving technologies have meant that we can shop wherever and whenever we like with delivery firms taking responsibility for getting purchases safely to our homes.

That flexibility and convenience is likely to see to the volumes of parcels generated by online retail increase by 15 per cent this festive season compared to the same period in 2011.

More than 4.5 million packages are expected to be processed every day by parcel carriers in the UK and Ireland for much of November and December.

Those eye-watering numbers have caused some carriers to cap the volumes they're prepared to ship while others have looked to new methods to fulfill deliveries without seeing capacity and business models stretched beyond their limits.

Even so, the European Commission is seeking to fuel further online shopping by launching a consultation on cross border parcel delivery which could prompt significant change in how the post and parcel sectors in particular will interact with e-commerce in the future.

As part of its broader 'digital agenda', the EC wants to increase the proportion of e-business done between its 27 member states. Earlier this year, a report which it had commissioned showed that even though the continent generated €200bn in e-sales, only one per cent was between European territories. Much of the remaining cash went to major retailers in the US like Amazon and Apple.

According to Werner Stengg, the EC's Head of Online and Postal Services (pictured above), the factors preventing growth include problems with the delivery options presented to shoppers.

"There simply has to be a better connection between the various parts of the e-commerce equation – the retailers, delivery firms and consumers – which allows cheaper and more transparent movement of purchases cross border. That is something which is missing in quite an extreme fashion at the moment.

"For instance, many national parcel operations are organised on a basis which predates e-commerce extending across national boundaries. As a consequence, postal operators in different countries have IT systems which don't or can't talk to one another. That, in turn, means something like track and trace is impossible."

The barriers, says Herr Stengg, do not end there: "Someone buying something shipped as a small packet or parcel weighing less than two kilograms often has to opt for a premium delivery service in order to find out where it is. When they have spent, say, €15 on their purchase, it's only logical that they won't want to spend another €15 on delivery. So, the consumer, the retailer and the delivery firms all miss out."

Herr Stengg's view is reinforced by the findings of a survey by parcel firm DPD. It discovered that 73% of consumers had abandoned online purchases when faced with restricted and expensive delivery options.

The issue is one with which John Tuohy, the CEO of Ireland's largest delivery firm, Nightline, is acutely familiar. Perhaps uniquely among Europe's leading parcel carriers, Nightline is confronted with the contrasting economic implications of delivering to homes only miles apart on either side of the Northern Irish border.

"When consumers in, say, Dublin buy online from a retailer in continental Europe, it may cost them €35 to have that package shipped straight to their door. Someone living in Belfast may only be charged €5.

"It means that there's a restriction of choice for the shopper and a potential loss of business for the retailers and the carriers with whom they ship their products."

Nightline has attempted to overcome the obstacle by taking advantage of its nine-strong depot network, the only delivery infrastructure spanning the entire island of Ireland. In the summer it launched Parcel Motel, a network of self-service, secure parcel lockers from which consumers can collect their purchases instead of waiting at home for delivery vans.

E-shoppers in the Republic can nominate to have their goods sent to Nightline's Belfast depot for shipment on to their local Parcel Motel. The process not only saves the consumer cash but has been so successful that Nightline has had to recruit extra staff for its Ulster premises.

Mr Tuohy believes that any EC measures which might help achieve its objective of freeing up e-commerce within the Community could well benefit Irish business and consumers. Already, estimates suggest that online retail will account for €5.7bn – seven per cent of all consumer spending in the Republic – by 2016.

Like Nightline's CEO, Herr Stengg is convinced that e-commerce, and the post and parcel firms which serve the industry, will be increasingly shaped around consumers. "I suppose the only problem I have buying on-line is one of convenience, such as the post office being closed when I want to collect something.

"Parcel lockers and relay points provide interesting options. We now have to consider which options are good ideas that we might want to take forward. We want to make sure that what comes out of it will be best practice that really works to the benefit of consumers, delivery firms and retailers."


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