Crossing borders: The value proposition for ecommerce

David Spottiswood reports back with thoughts from last week’s “From Digital to Postal World” conference in Brussels, organised by Cullen International Last week saw delivery operators, online retailers and consumer groups gathering in Brussels to discuss the opportunities and challenges of cross-border delivery for the business of e-commerce.

It was clear from the outset at the Cullen International conference “From digital to postal world” that a range of difficulties in the total supply chain can pose risks to European consumers shopping for goods online via a website based outside their home country.

Speakers highlighted the pressing need for full cost transparency for consumers and visibility in the delivery networks, while there was a general consensus that the ecommerce sector needs more than the traditional service solutions on offer today, looking for innovation, adding value to the merchant and consumer community.

The European Commission is currently preparing a green paper on the cross-border e-commerce situation, with expectations that it will be released in November offering some ideas for improving the situation.

Speakers during the event, including the keynote Werner Stengg, head of the unit responsible for online services in the Internal Market directorate of the EU Commission, highlighted regulatory and compliance issues that could lead to improvements in the market.

But, it was apparent at the event that the whole approach of postal operators and express companies must change if they are to succeed in capturing significant market share in ecommerce and avoid margin erosion.

Improving the delivery chain

Many of the experts presenting at the conference brought clear ideas on improving certain aspects of the delivery chain when it comes to e-commerce.

The concept of the automated parcel terminal was an important part of the puzzle, and in particular the approach of Poland’s InPost, in bringing together partners in the provision of its network of parcel terminals, appeared a strong solution. Carriers at the conference recognised that there is not going to be one player in Europe’s cross-border market, it’s going to have to be a solution of integrated players, opening up networks to different players.

It was interesting to note that while the parcel terminal concept is catching on to the idea that online shopping is a 24-7 business, there was little talk at the conference about customer service for ecommerce delivery following suit. Postal companies are still very focused on their traditional nine-to-five, Monday-through-Friday approach to supporting consumers with phone-based support, and that is something that the successful operators in the market will need to change.

Technology is key to the whole business of e-commerce, and here too there were ideas presented at the Brussels event offering great promise for an improved customer experience. Geopost’s work on mobile technology, for example, stressed the importance of developments like SMS delivery alerts and using mobile applications to meet consumer delivery requirements, alongside owned closed networks and localization.

Returns

But there were also still obvious gaps in the thought process among operators discussing the situation. While the issue of returns was rightly highlighted during the event as an important part of the whole chain in building customer service and consumer confidence, much of the discussion revolved around physical delivery challenges, with little focus given to the issue of data supporting those physical returns.

Postal companies are still talking about how to get consumers to pay for additional services and products, how services can be protected against margin erosion and the whole pressure that comes from a “free shipping” culture online.

The discussion has been too much about how incremental changes can be made to adapt e-commerce to the postal system, or alter pieces of the postal framework to better encourage consumers to engage via their online shopping. There is not the recognition that wholesale change is needed, a new approach to ecommerce within the delivery market, capturing and driving all areas of the transaction process.

Judging from last week’s conference and from past discussions with industry players, everybody understands it’s a new landscape, and that the current approach is a fractured one. Consumers want transparency, simplicity and value for money, and if you leave a customer’s package under a hedge somewhere, chances are they are not going to shop again at that website. The understanding of the consumer journey and experience is key in repeat usage and therefore greater volume.

Everybody appears to realise that they are going to have to do things differently if they’re going to drive volume, but few are yet putting such action into practice.

Ownership

Among some speakers last week, it emerged that one of the reasons that postal companies are very behind in the whole e-commerce business is that they are unclear where the activity should sit within their own structure.

Is ecommerce part of their parcels division? Their technology division? Their letters division? Their express division?

With e-commerce things have to move and things have to change, but if no one takes ownership of this area within a postal company, nothing will happen. The payment industry is now actually driving change in consumer behavior regarding the Internet – and yet very few postal companies understand the flows and the inter dependencies.

The presentations at the conference showed the clear importance of technology when it comes to this segment, yet in an industry in which technological development moves at such a blinding pace, there are some postal companies that have to sit back and wait two years merely for an idea to get approval.

Adding value

This issue of using technology to add value to the ecommerce transaction is at the heart of what does need to happen for postal and express companies to get to grips with ecommerce.

The question really for postal companies is how do they develop services, products and an integrated merchant technology that allows them to command a better price? Gone are the days when consumers or merchants are just going to pay a postal service to take a package and deliver it. If you can go to a merchant with an integrated solution that covers all of the transactional aspects, you’re much more likely to come away with a higher price, because you are adding value to the transaction.

Some postal companies clearly understand this importance of adding value to the ecommerce transaction, many apparently do not. The problems of cross-border ecommerce delivery are merely in the last mile – the new world is about where the delivery fits into the whole value chain.

Postal companies need to look at what are the services and added value that can be provided for the entire supply chain if they are to command higher revenues and grow the market.

David Spottiswood has spent more than 25 years in the logistics industry within TNT and DHL, leaving the role as Head of Global Operations for DHL to co-found a leading global e-commerce business, which operates in over 75 countries and provides the e-commerce platform for many global corporations.

He is currently advising industry on e-commerce, and contributing to a major research project from Triangle Management Services on cross-border ecommerce.