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The Future of Ecommerce

The future of ecommerce depends on standardization

European Commission: the future of ecommerce lies in an open market

Under a mandate from the European Commission (and thus funded by all European tax payers), the European Committee for Standardisation (CEN) is drawing up standards to create a functional postal market in Europe in accordance with the Postal Framework Directive.

Consequently, at its plenary meeting in Budapest in the autumn of 2014, CEN officially decided to design European postal standards in accordance with the spirit and aims of the Postal Framework Directive – making them open and accessible to all.

A key intention was to avoid basing European standards on the technical standards and systems exclusively available to national postal services as members of the Universal Postal Union (UPU).

Instead, European postal standards should be based on, and compatible with, the open retail standards for end-to-end supply chain management systems already used by b2c e-commerce retailers for the global trade in goods and services.

National postal services are trying to secure their market position

However, national postal services appear to be following an alternative strategy, designed at extending their dominance into b2c e-commerce delivery markets.

By shaping the existing postal standards currently available only to the incumbents they hope to limit cross-border, nationwide delivery of packages and parcels to a single organisation in each member state – the national postal service itself.

Private companies in the courier, express and parcel delivery sectors – the competitors in a ‘liberalised’ postal market – are being deliberately and actively excluded from using these standards.

UPU’s global postal standardization leads, CEN follows

We also see similar developments being driven forward at global level by the Universal Postal Union (UPU), a special UN organisation financed by its 192 member countries to maintain an integrated, global postal delivery network.

Here competitors to the national postal services have neither a voice nor a vote.

Nor do external delivery companies (whether local, national, regional or even global) have access to the UPU’s technical standards for supporting global delivery.

They are excluded from their use, and forced to establish and finance their own competing systems (FedEx, UPS, Hermes, etc.).

IPC as the lynchpin

Furthermore, the national postal services have established their own cartel – the International Post Corporation (IPC) – to shape the future of ecommerce by establishing a delivery network in which national and cross-border deliveries are bound to each country’s national postal service.

The IPC plans to exclusively manage the data passing between the leading postal services. All third parties without the status of a national postal service are excluded.

Furthermore, the national postal services are establishing a new system of reciprocal service accounting with termination fees regulated in a system of bilateral and multilateral contracts between the postal operators.

Although postal services are legally obliged to submit these contracts to the UPU for approval, this is effectively (as several insiders have said, and for good reason) dead law.

Consequently, service accounting (price fixing) between the national postal operators involved remains their own affair.

A fair and neutral market in everyone's interest? 

The European Commission intended that the principles of free and fair cross-border competition be guaranteed by means of standards drawn up by all the market participants, at least within the EU.

However, the approach being taken by national postal services will result in the majority of online b2c e-commerce retailers being forced to integrate the systems of the dominant postal services into their own supply chain management systems, if they have any intention of participating in cross-border ecommerce.

Competitive delivery services have neither access to, nor any influence on, the design of these systems which will shape the future of ecommerce.

Why not just integrate the open systems of ecommerce retailers?

When it comes to the future of ecommerce, B2c e-commerce retailers themselves would prefer to simply extend existing supply chain management systems to include last mile delivery.

And with the data for last mile delivery (and presentation as standardised barcodes or passive antennae – RFID) open to all delivery services.

The data would be neither administered by a cartel of individual market players, nor would third parties be denied access to this data in an attempt to keep out competitors.

CEN intends to combine retail and postal systems

Thus CEN’s goal is to combine both national postal and retail systems. This would ensure transparent and universal competition within the EU, avoid market-dominant organisations securing unfair advantages, fixing prices, and excluding competitors.

Consequently, labels on all cross-border ecommerce parcel and packages should include:

1. Proprietary data (barcode, RFID) based on the exclusive standards available only to the national postal services (UPU Standard S10), or consolidators (such as UPS, FedEX, etc.) next to
2. Open system data, from not-for-profit organisation GS1 which guarantees the technical standards in the global retail system.

This was agreed in principle at the CEN plenary meeting in autumn 2014.

Yet the postal services are attempting to shape CEN standardisation and push through their own preferred strategy, as outlined above.

Consequently, non-designated delivery services providers, their associations, organisations dedicated to facilitating cross-border ecommerce in Europe, and GS1, all need to work actively to create the conditions for a fair and balanced European cross-border market.

CEN can only provide the necessary platform: technical and service-oriented standardisation needs the active participation of all ecommerce delivery stakeholders in Europe.

Raise your voice, or be ignored

Now it is up to all delivery organisations and e-tailers involved in European cross-border ecommerce to stand up for their own interests and actively take part in CEN standardisation to determine the future of ecommerce.

They must demand fair and equal competition for all market players, in fulfilment, delivery, customs processing, and the integration of financial services.

Both in the interests of their own future ecommerce business and for that of every EU citizen who benefits from free and fair competition – the consumer.

Walter Trezek is the Chairman of the Consultative Committee (CC) of the Universal Postal Union (UPU).