Opportunities in Cross-Border ecommerce

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Harriet French
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1 Thomas Baldry Senior Vice President Global Mail Germany Opportunities in Cross-Border ecommerce 14th Königswinter Seminar on Postal Economics Königswinter, 26 th November 2013

2 esubstitution A bright Future? Mega-Trends impacting postal markets digital physical Mail Parcel ecommerce Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

3 Any Strategy? We are the postal service for Germany and Internationalisation Dialogue Diversification Physical letter Parcel e-commerce Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

4 Which Services? keep increasing our service range digital FUNCARD HANDYPORTO physical Mail Parcel Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

5 Any Options? Postal Operators face multiple challenges Challenges How to stay profitable in a declining market with increased competition and rising labour cost? Where and how to invest for a sustainable future? Strategic Options Defend Protect market position Focus on physical mail and direct marketing Transform Develop new services Grow Enhance product offer Focus on new customer segments Enter new markets Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

competition and rising labour cost? Where and how to invest for a sustainable future?

6 Drivers for Cross-border ecommerce (I) International B2C shipments provide tremendous potential EXAMPLE: France Availability: Only available abroad Price: At least 10% cheaper abroad 28% 72% 47% 53% 34% 38% Attractiveness: Only available abroad or at least 10% cheaper abroad 62% 38% Of 100 typical e-commerce products, 62 are only available or at least 10% cheaper if bought outside of France Source: DP DHL, B2C Parcel International Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

least 10% cheaper abroad 62% 38% Of 100 typical e-commerce products, 62 are only available or at least 10% cheaper if bought

7 Drivers for Cross-border ecommerce (II) Potential is huge but consumers still reluctant to order abroad Structural shift from offline to online Supply chain optimizations (e.g. regional/global warehousing) Better availability of products & cheaper price of products European Study 1) shows that in all but two EU countries, more than half of products should be purchased from abroad as products are only available abroad or at least 10% cheaper abroad 0% 50% 100% Belgium Portugal Only available abroad Greece or at least 10% Finland cheaper abroad Ireland Italy Spain Czech Republic Sweden Hungary France Poland Austria Products available Netherlands and cheaper Germany domestically United Kingdom Today, only 9% of online shoppers buy something abroad Source: Deutsche Post DHL B2C Parcel International; European Commission; 1) Study compared availability and price for 100 typical e-commerce products, e.g. clothes, shoes and accessories, electrical household appliances, electronic equipment, household goods, computer hardware and software, books, films and music Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

regional/global warehousing) Better availability of products & cheaper price of products European Study 1) shows that in all but two EU countries, more than half of products should be purchased from

8 Drivers for Cross-border ecommerce (III) E-commerce booming thanks to recent changes at etailers, consumers, and logistics providers eretailers: Improved offers Ease of use (navigation, presentation, order process) Professional appearance, online brands Broader product range and specialization New services (auctions, customized products, ) Pricing Methods BOOM! Logistics: Better performance More transparency on shipment status Faster, more reliable New delivery options (Packstation, ) New services: Returns Consumers: More confidence Faster internet Lower communication costs Online anyway Experienced in online shopping More trust in e-commerce Word of mouth Driven by technological and marketing developments Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

Logistics: Better performance More transparency on shipment status Faster, more reliable New delivery options (Packstation, ) New services: Returns Consumers: More confidence Faster internet Lower

9 etailers Face High Consumer Expectations (I) What Does the Consumer Expect? General expectations Specific requirements Shipping solutions Consumer I want the delivery of my expensive ipad as safe as possible High security (insurance & POD) etailer I want No shipping costs Convenient return possibility Faster delivery time More transparency and control Better ease of use Lots of delivery options Tomorrow is my wedding anniversary; I need the present as fast as possible The book should be delivered fast; but nevertheless, the delivery should be inexpensive I do not care if I receive the trousers in two or three days The costs for the DVD were only 5 Euro; therefore I want a cheap shipment of less than 2 Euro I want an appropriate return possibility in case the dress does not fit Time definite Appropriate delivery time Basic insurance (EUR ~500) Weight based pricing No insurance (exceptions possible) Label to be provided to consumer; drop-point Characteristics and services analog to deferred parcel Shipping is increasingly defined by recipients Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

Convenient return possibility Faster delivery time More transparency and control Better ease of use Lots of delivery options Tomorrow is my wedding anniversary; I need the present as fast as possible

10 etailers Face High Consumer Expectations (II) Serving in a Complex Market Environment Regulatory & Legal Requirements EU Greenbook Security / Cybercrime Data privacy Customs / VAT Consumer Requirements Marketing services Single sign-on FLC calculator Payment services Insurance and certification Anonymous shopping Customer service Operative Requirements Last mile delivery options Warehousing and fulfillment Cross-border shipping Customs / tax management Returns solutions Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

Insurance and certification Anonymous shopping Customer service Operative Requirements Last mile delivery options Warehousing and

11 A Competitive Landscape? etailers able to pass pressure on to logistics providers due to increasing competition in parcel delivery Local Post Consumer etailer Local players B2B & more Express-Integrators Consolidators Marketplaces Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

competition in parcel delivery Local Post Consumer etailer Local players B2B

Barriers for Cross-border ecommerce Several barriers hold back the potential of cross-border ecommerce 2 Legal framework 1 Order placement 4 Language 5 Payment Consumer 6

liability, return policies, Simplify tariffs and taxes to facilitate 3 imports from non-eu countries English and Google Translate will 4 get consumer quite far Plenty of payment

12 Barriers for Cross-border ecommerce Several barriers hold back the potential of cross-border ecommerce 2 Legal framework 1 Order placement 4 Language 5 Payment Consumer 6 Transportation & Return 3 Tariffs & taxes etailer Non-EU etailer 1 2 Make it mandatory for e-retailers to accept orders from any EU country Push transparency on consumer rights, liability, return policies, Simplify tariffs and taxes to facilitate 3 imports from non-eu countries English and Google Translate will 4 get consumer quite far Plenty of payment options for 5 payments within the EU available Competitive pan-european parcel- 6 and return-network progressing Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

13 B2C parcel customer needs In terms of product features, seven customer needs have the high priority 1 2 Competitive Selling Price Convenient Return Solution Key product features 3 Coherent Track & Trace 4 Appropriate Transit Times with high Reliability 5 Easy Shipping Preparation 6 Helpful and instant Customer Service 7 Transparent & sufficient insurance / liability Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

Appropriate Transit Times with high Reliability 5 Easy Shipping Preparation 6 Helpful and instant Customer

14 Need for Speed Example Alibaba Group Alibaba Group launched China Smart Logistics Network (CSN) on May 28 CSN aims to become backbone of country s USD 190bn e-commerce market Network will be able to deliver shipments to any city in China within 24 hours Backed by about USD 16.3bn in funding and slated for completion in 8 to 10 years CSN will provide third-party couriers, warehouses, shipping and other services, as well as analytics to help vendors improve shipment speed and reduce costs Big players in ecommerce do not wait for logistics/postal companies to provide solutions. They create their own solutions. Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

3bn in funding and slated for completion in 8 to 10 years CSN will provide third-party couriers, warehouses, shipping and other services, as well as analytics to help

15 So? All benefit from growing parcel business and rapid growth in ecommerce. But are networks ready? Cross-border ecommerce will multiply Parcel delivery increasingly determined by Consumers etailers demanding more service, but do not want to pay more Consumers will not always realise that they buy abroad Innovative solutions key differentiator for delivery competition Significant Investments! Hardware Software Marketing and People Thomas Baldry, Opportunities XB ecommerce Königswinter 26 th November

do not want to pay more Consumers will not always realise that they buy abroad Innovative solutions key differentiator for

16 THANK YOU!

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