Distrance selling in an enlarged European market
Coming in from the other world
Distance Selling in an enlarged European Market
Coming in from the other world. Of 10 countries that joined EU i from may 2004 were eight from Eastern Europe. Eastern countries were able at last to put their individual, troubled histories behind them to enter in to the “free market” of western Europe. The pomp and circumstance of the welcome ceremonies had been proceseed by many years of hard work and prepartation by the accession countries to achieve the targets.This is still ongoing process. The distance selling sector, which is one of the most important partners of postal sector in the accession countries has been no exception. They have been working hard to ensure they were in the line with the directives of EU. One organization that has been instrumental in helping accesion countries prepare is EMOTA (European distance selling association). This organization has adviced, supported and assisted distance selling companies working towards accesssion since 1999. The trends and issues in Eastern and Central Europe within the distance selling sector as they are today are much different as it was before. The effect of EU legislation on this trade sector and the development of the crossboarder distance selling market market, as well as the challenges and obstacles, distance selling companies must to face, is a brand new situation. As the distribution is one of the most important issues of distance selling sector this situation is significant also for the postal sector. The revenues from this service are about 5 % of total revenues of Postal enviroments.
About distance selling Years ago, mail order sector was a purely mail driven business: catalogues were sent and orders came in by mail and parcels were delivered by mail. Over the last decade we have seen many changes due to the further penetration of the telephone first and the Internet in more recent years. This sector today encompasses therefore all forms of on-line communications and commercial proposals through e-mail, websites, interactive television, mobile communication or any other interactive means of communication. The products and services offered, range from textiles, clothing, books, CDs and electrical appliances, to gardening articles, wines, financial and travel services. As the definition of “distance selling” gets wider under the influence of online activities, the range of goods and services expands: airline and railway tickets, theatre tickets, supermarkets like Carrefour and Tesco. We see today a wide range of companies offering these goods, combining traditional companies which have extended their online activities, online retailers and the TV home shopping is starting to be also an important part of distance selling sector in eastern and central european countries.. Postal services remain important for distance selling sector given the more than 25 billion items were send, ranging from catalogues and mailings to parcels. Telephone ordering counts for around 35 to 40 % in average. M-commerce (mobile phone commerce) is emerging within the sector. Distance selling sector is represented at European level by the European Distance Selling Trade Association (EMOTA). EMOTA includes 19 national associations, 15 of which are coming from countries member of the EU, as it stands today: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Great Britain, Hungary, Ireland, Italy, The Netherlands, Greece, Slovak Republic, Spain and Sweden, together with Norway, Russia and Switzerland. More countries are likely to join up in the coming years as Central and Eastern Europe develops.
It is possible to define the sector today in two words, multi-channel and multi-market. Multi-channel means that companies communicate and interact with consumers through a range of “channels” or “means of communication”, such as catalogues, mailings and other printed documents, telephone, call centres, the Internet, mobile phone etc. A consumer today might call to receive a catalogue, looks for more information on the website of the company and orders over the Internet or the phone. He receives the parcel at the place of his/her choice delivered by the Post or a postal competitor and has a variety of payment methods at his/her disposal. What all these media have in common is the element of distance and the fact that company and consumer do not meet face-to-face, although many of our companies have set up shops. The word multi-market refers to the opportunities and challenges that an enlarged Europe offers to our companies. Many of our companies are present in different national markets aiming to offer a competitive range of goods and services and an even better and more direct service to customers.The importnace of crossboarder distance selling is increasing.Today it is approximately about 4 %
Importance of on-line On-line is increasingly important in the sector, in some accession countries it is rapidly becoming the dominating channel. ( Czech republic 36 %, Hungary 15 %, Slovak republic 12 %). Online helps the distance selling sector and especially new sectors such as food items, airline and railway tickets or financial services to grow. In recent years, sales over the Internet have increased rapidly, multiplying by three in some new EU countries since 2000. In the history, mail order companies were able to use the entering of new technologies including , telephone, fax, mobile. The position of mail order trade today in East and Central Europe is find a way how to promote and improve distance selling as the main sales channel using the E- commerce revolution, to fullfil the idea : „Business as the speed of the thought“ The total turnover of the 19 countries represented today by EMOTA is estimated €67,7 billion in 2004. Online sales reached in 2004 an average level of around 25%, ranging from 7 to about 50% of total distance sales, depending on the maturity of the (fast growing) Internet market in the various countries.
Distance selling trade in new EU members countries With an average growth rate of 3 – 7 %, most Eastern European countries have a higher economic growth rate than Western , European countries have: e.g.: Austria 1,6 %, Germany 1,1 % When we look at the level of per capita sales in european States we see that these vary significantly from around €255 in Germany to around €10 or less in some of the Eastern European countries and Russia. (Russia only 2,5€ !) Because of the EU-enlargement and the opening of the eastern markets, Eastern Europe has a high potential with 350 mill. customers in 20 countries. In most of Eastern European countries the distance-selling sector is still underdeveloped for reasons such as consumer attitudes, legal environment, taxation and income levels, the differences relate to the level of performance of postal services and the availability of retail outlets, as well as varying levels of consumer interest and the degree of restrictive legislation. Nevertheless, because of the rapidly developing availability of access to Internet and the relatively good performance of postal services in eastern countries, we expect sales to pick up in the next few years. Many distance selling companies are active in the 10 new Member States and Hungary, Czech Republic and Slovakia are members of European association. Companies are expanding to other countries such as the Baltic States, Slovenia, Bulgaria, Croatia, Romania . Before the removal of border controls, carriers had been unable to predict how long it would take to move goods to and from the region. This not only made their operations inefficient but also led to distance selling companies based in Central and Eastern Europe higher levels of inventory into their supply chains. It is expected that there will be significant fall in inventory costs as freight movements become more visible, faster and more reliable. Expansion involved the removal of customs controls at internal borders, has subsequently resulted in a reduction of delays, there are now practically no hold-ups for traffic between Czeh republic, Slovak republic, Poland, Hungary and the rest of the Europe.
Cooperation with Post In Legal Issues is important to keep the mailbox open. Postal operators ought to stand side by side with distance selling companies. The prices in extension countries are more acceptable than those in western countries. The quality of postal services is comparable with the western european countries. There are special quality measurement systems end-end introduced. Many of accession Countries have bilateral postal consingment contracts with non european countries like Russian Federation, Ukraine. Barriers in central and eastern Europe
In principle the distance selling sector is nowaday supported by new means of communication such as the Internet, should enable goods and services to be freely delivered and provided cross-border. East and central eauropean countries are highly interested to be involved in this process. Recent Commission study shows, direct cross-border sales to consumers today, 12 years after the official realisation of the Single Market, still represent no more than around 4% of total distance sales. The increase of Crossboarder distance selling sales is a new challenge for West to be more involved in central and east european countries. Although distance selling companies are highly interested to expand their activities and explore new markets, many barriers still continue to exist within the East and Central Distance selling European market. One of the most important challenges of distance sellers today is not to overcome barriers such as language and consumer mentality, but to cope with the existing patchwork of legislation and different interpretation of EU Directives as well as the additional legal requirements sometimes imposed by Member States at the moment of implementation. There is a need to work internationally with local implementation in order to be as close to the consumer as possible, it is essential that no new barriers are added to the existing ones of language and consumer mentality. When talking about EU legislation, meaning is, that legal requirements should be set on a level balancing the interests of both businesses and consumers. Such harmonisation should not allow to introduce more restrictive provisions and should leave sufficient room for companies to develop their own commercial approach in order to provide the consumer with a real competitive choice. Self- or co-regulation in the form of codes of conduct should be promoted to enable the trade sector to deal with the specific problems and customer relations at hand. The differences between national implementing laws deriving from the use of minimum harmonization in Consumer Protection Directives is one of the problems of existing EU legislation. Today is the right time to coordinate these initiatives and solutions on a European level including the new EU member countries. Distance selling today is characterized by a dynamic impetus inspired by the integration of traditional and modern technologies. The potential of e-commerce to jumpstart distance selling sales, both in-country and cross-border is huge. Some of distance selling companies west european countries are already trying to overcome the existing obstacles and to access new national markets in east and central europe. But others are still hesitating, because of the barriers. Although there are many risks, the prospects outweigh them. The slow-down of growth in Western countries requires, that west european mailorder companies grow even further and faster in the CEE markets ! I still believe that the future of distance selling sector lies in central and eastern Europe….Any business likely to cross borders, especially small and medium-size enterprises, legal certainty, transparency and simplicity with regard to the applicable rules are important issues. This is essential not only for new EU members in order to have the confidence to continue to expand consumer services and for the development of distance selling in cooperation with postal operator. As a final remark I would like to stress that the expected expansion of distance selling , trade especially on - line shopping in eastern and central Europe is a huge challenge also for the Postal Sector in these countries.
Juraj Sebo Chairman Slovak association of mail order trade Mob. : 00421905833598 E mail.: sebo.juraj@zoznam.sk www.azo.sk
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