One of the features of Europe’s breakneck eCommerce growth of recent years has been the volume of low-value goods arriving from countries outside the EU, in particular China. In 2023 alone, over two billion parcels entered the EU under the low-value consignment relief – a rule that exempted packages worth less than €150 from customs duties. But that could be about to change. The implications for eCommerce retailers could be significant.
In a move designed to bolster customs enforcement and help European businesses, the European Commission has proposed a €2 handling fee for low-value goods entering the EU from third countries. While the reform still requires approval from the European Parliament and EU member states, it’s already sending ripples through the eCommerce world.
The new fees are part of a broader shake-up of customs procedures. The EU’s stated aim is to crack down on fraud and improve traceability. While the motivation is sound, the outcome for eCommerce businesses is clear: costs are going up.
A balancing act
For eCommerce retailers that rely, even partially, on goods sourced from outside the EU, these charges could soon start to eat into already-slim margins. Many will face a delicate balancing act: do they pass on the charges to customers, or offset them by cutting costs elsewhere?
Retailers will be reluctant to pass these extra charges directly on to customers if they can avoid it. In a highly competitive eCommerce market, where consumers have come to expect fast, free delivery, even a marginal increase in price can be enough to send hard-won shoppers elsewhere.
That means businesses need to look hard at other areas of their operations where efficiency can be improved and costs reduced.
Untapped savings in the last mile
At nShift, we believe one area ripe for optimisation is last-mile delivery – the final leg of the delivery journey that brings parcels to customers’ doors. It can be an expensive and complex process, accounting for up to 53 per cent of a business’s total shipping costs (Statista).
Done right, last-mile deliveries are major drivers of customer satisfaction and loyalty. They can also yield substantial cost savings. Yet many businesses seem happy to regard the expenses they incur in the last mile as a sunk cost.
Not so. Well-shaped delivery strategies can make deliveries pay.
By integrating with multiple carriers, delivery management platforms give retailers access to a broad range of delivery options. Instead of being locked into a single provider, retailers can connect to and compare carriers in real time, automatically choosing the most cost-effective services for each shipment.
Cutting costs and boosting CX with delivery management
A flexible delivery management system can do more than just identify the cheapest carrier. It can also help retailers offer the kinds of delivery experiences customers expect – such as next-day, nominated-day or out-of-home delivery – without inflating costs.
Retailers can apply business rules and logic to automatically select the best delivery option based on criteria such as location, product type, and customer preference. Customers may even be persuaded to pay a premium for different types of delivery offer, for example zero-emissions carriers, or same-day deliveries. This level of control and choice could well offset the €2 handling fee – and more.
Furthermore, these platforms enable improved delivery tracking and customer support. This in turn helps reduce the number of failed deliveries and inbound customer calls (also called WISMO, or “where is my order” calls). Both are major causes of inefficiency and cost.
A strategic imperative
For eCommerce businesses shipping low-cost goods sourced from outside the EU, the handling fee proposal is a clear signal. Cost pressures are increasing, and operational agility will become a key differentiator.
Rather than absorb new costs or erode their margins, forward-looking retailers are re-imagining their delivery capability as a growth enabler. By using the right software to gain flexibility and control over their last-mile deliveries, businesses can not only offset additional fees but also deliver better customer experiences.
The new charges, unwelcome as they will be to many, in fact bring opportunities for retailers to think differently about deliveries. Those that act now to optimise their last-mile operations will be better positioned to thrive in a more complex and cost-conscious eCommerce landscape.
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