Digitization has created opportunities that were unimaginable 20 years ago. E-commerce is one of these. Nowadays, consumers can purchase goods from sellers located virtually anywhere in the world. Similarly, e-commerce enables businesses to enter new markets, overcoming geographic barriers that previously made long-distance, let alone cross-border, sales challenging.
E-commerce is only possible, though, if the goods traded online can be delivered from the merchants to the final consumers. In this way, delivery networks around the globe are vital enablers of e-commerce.
The importance of delivery networks as enablers of e-commerce is most prominent for countries’ peripheral areas, which often face cohesion and infrastructural challenges. In Europe, peripheral regions make up as much as 90% of the territory. However, they are sparsely populated and often present lower disposable income per capita. Consequently, both consumers and businesses in peripheral areas have fewer opportunities in terms of access to goods, services and customers compared with their counterparts in urban areas.
Through e-commerce, people living in peripheral areas can access shops situated anywhere. Similarly, businesses based in peripheral areas can reach a larger pool of customers outside their local regions, domestically or even globally. By facilitating online trade, delivery networks thus act as equalizers, helping to bring remote regions to a higher level of development.
Delivery during a pandemic
During the Covid-19 pandemic and lockdowns, the ability to buy goods online and get them delivered in a safe way has meant that people can stay inside and reduce the spread of the virus, while keeping the economy going. This situation has also contributed to bringing additional groups of consumers, such as older generations, online. The Covid-19 lockdowns have therefore highlighted the importance of delivery networks as enablers of e-commerce during an emergency.
The e-commerce boom resulting from the Covid-19 pandemic has impacted postal and delivery operators in various ways. Based on a survey of national posts in Europe, we found that parcel volumes handled by these operators in April 2020 were about 30% higher on average than in the same month in 2019. And that was just April, when the first effects were starting to be felt broadly across Europe. Since then, the effects of changing habits have reportedly been lasting.
Delivery operators are innovating and adapting extremely quickly to the new reality, developing new modes of delivery, such as contactless, and rolling out new services, such as grocery delivery. Adapting to new modes of delivery and implementing safety measures have, however, also resulted in higher operational costs for these operators. The unexpected increase in delivery volumes and increased absence of staff – at least at the beginning of the pandemic – may also have led to difficulties in maintaining a high quality of service.
The importance of postal and delivery networks as enablers of e-commerce during the Covid-19 pandemic, and the increased importance of e-commerce in our societies, naturally trigger several questions among policymakers. For example, what is the wider social value of maintaining an infrastructure capable of delivering essential items to every address in the country? How should the sustainability of less economically profitable parts of the infrastructure be ensured? Is there a case for increasing the efficiency and environmental sustainability of last-mile delivery by eliminating the number of parallel delivery networks without having a negative impact on competition and consumer welfare?
Empirical research and economic analysis will play a key role in answering these questions and allowing policymakers across the globe to make informed decisions.