The Danish list prices for sending small consignments are higher in Denmark than in the countries around us. At the same time competition on delivery of the consignments has intensified the recent years.
E-commerce is growing but there are indications that the Danish market for the distribution of goods bought online does not yet perform so well as in other countries.
In 2011, the Danish list prices for the domestic and cross-border distribution of parcels and letters of 1-2 kg were between 10 and 36 per cent higher than the average prices in nine comparable EU countries (Belgium, Denmark, Finland, France, Italy, the Netherlands, the United Kingdom, Sweden and Germany) when adjusted for VAT differences.
The goods most frequently bought online include CDs, DVDs, clothing, shoes, books and electronics. These goods typically weigh approx. 1-2 kg and correspond to the parcel size analysed in the report.
Today, several providers offer competing services in the Danish market. But in comparison with other countries Danish consumers have fewer distributors to choose from and fewer opportunities for choosing a delivery product when shopping on the internet.
The postal incumbent, Post Danmark, is subject to a universal service obligation implying certain minimum requirements as to the scope of the postal service, e.g., for parcels up to 20 kg. Therefore, Post Danmark is VAT exempt for these parcels. This may give Post Danmark immediate advantages in the fields in which Post Danmark is exposed to competition. On the other hand, the universal service obligation means that Post Danmark may have additional costs compared with an equally efficient, competing parcel distributor. In Denmark, the universal service obligation is relatively comprehensive compared with other countries. It can therefore be considered to investigate the possibilities for changing the framework for the parcel delivery area, including the VAT exemption that can constitute a competition constraint on the market.
E-tailers can contribute to creating a better framework for competition by encouraging consumers more to make active choices of delivery products based on transparent prices and other details, e.g., by refraining from ticking off boxes about delivery products in advance on their website. Finally consumers can become more aware that delivery is a product in itself in e-commerce.
For further information contact communications manager in the Danish Competition and Consumer Authority, Hanne Arentoft, phone +45 41 71 50 98.