Fairer deliveries action plan: progress statement

Progress of Action Points

We will develop an interactive data hub to allow users to measure the fairness of delivery pricing to improve transparency and drive behaviour change

We will develop the Scottish Parcel Delivery Map to understand consumer experiences and target interventions

The first two actions in the Action Plan have become inextricably linked as work on them has progressed. On this basis, this section provides an update on both the online data hub and the interactive parcel delivery map, both of which are being hosted on the same www.fairdeliveries.scot platform.

In May 2019, the Scottish Government commissioned independent analysis to help address the lack of robust evidence of delivery pricing in Scotland^[5] and to conduct an econometric analysis as a first step towards benchmarking when and where delivery charges are fair and unfair in Scotland. This research document, ‘An econometric analysis of postal delivery pricing in Scotland’, can be found on the Scottish Government website.

Defining ‘fairness’ is fraught with difficulty. However, this research and analysis has used an econometric model to predict postal charges based on underlying geographic and parcel characteristics, allowing it to estimate the relative impact of each of these characteristics and the resulting postal charge.

This approach generated new findings that have strengthened the evidence base on postal delivery charges in remote and rural areas in Scotland. It presents results from analysis, using 24,364 pricing quotes from six major delivery companies and 6,771 pricing quotes from seven national online retailers across all 1,029 postcode sectors in Scotland. Shipping quotes were requested for small, medium and large parcel sizes as well as a range of bulky consumer products.

An econometric model was used to estimate average prices and delivery availability after controlling for geographic and package characteristics that may influence how companies set their delivery policies. A second econometric model then considered the probability of refusal of delivery, again after controlling for geographic and package characteristics.

This website is the first of its kind and will be instrumental in providing transparency to consumers, retailers and delivery companies, and will form part of the Scottish Government’s wider plan to ensure that action to drive change is focused on the right solutions to the right problems. It will also be updated on a monthly basis to ensure that users have the most up to date information.

We will celebrate best practice by retailers and parcel delivery companies

Best practice is demonstrated in a variety of ways and this section highlights ways in which retailers do put their customers first and what can be done to encourage other retailers to adopt best practice.

As part of the independent research carried out into exploring the impact of the Statement of Principles,^[6] a questionnaire was developed which included questions to determine best practice. Most businesses responded stating that they use Royal Mail^[7] wherever possible to avoid surcharging. Where businesses did find themselves facing extra costs, more than two-thirds said that they covered/absorbed this cost themselves.

eBay, the online marketplace, encourages its sellers to offer free delivery favouring these items in their search results. eBay has said that it shares frustrations about unfair delivery costs and that it is “always trying to push our sellers, in a nudging way rather than through strict enforcement”.^[8] In contrast to eBay, Amazon, another online marketplace, began permitting surcharging in 2019,^[9] a reverse of its previous policy laid out before the Scottish Affairs Committee (2018).^[10]

Menzies Parcels has developed a website^[11] that provides a unique service to customers in the Highlands and Islands of Scotland to avoid unfair parcel surcharging. This service also allows users to order purchases from retailers that traditionally do not deliver to their postcodes. Simply put, it allows users to create an online account and have their parcel sent to Menzies Parcels’ central belt address. Menzies Parcels will then deliver the parcel to the user’s local depot without the usual surcharges associated with rural and remote areas.

When things go wrong organisations such as the Advertising Standards Authority (ASA) can take enforcement action. However, ASA can only take such action when informed of misleading parcel delivery information.

Public pressure is also a strong motivation for companies to do the right thing. Richard Lochhead MSP for Moray has been campaigning for fair delivery charges for a number of years. Most recently, his campaign has resulted in Wayfair,^[12] the home furnishing store, altering its delivery policies to provide a free delivery service to the whole of the UK for orders over £40. Prior to this, customers could be charged up to £40 extra delivery costs depending on where they lived.

We will work with industry to explore how to increase the impact and reach of the Statement of Principles

The Statement of Principles was developed in 2013 by a working group to assist retailers in promoting best practice when dealing with sales over the internet. In 2018, there was a soft update to the Principles as information from the ASA was included. During this time there has not been much publicity over the Principles and online shopping has increased dramatically.

As part of the Action Plan, independent research was commissioned into the Statement of Principles. The Review of the Statement of Principles for Parcel Deliveries research is available on the Scottish Government website.

The research did highlight that overall there are still low levels of awareness of the Principles but amongst those who had heard of them, there was broad support for the rationale behind them and a keenness to see them promoted further.

Nine recommendations were made and the Scottish Government, Citizens Advice Scotland (CAS) and other key stakeholders will undertake further work based on these recommendations.

We will make it easier for consumers to know and exercise their rights

Having just celebrated its second anniversary, www.deliverylaw.uk^[13] was launched in June 2018 to provide a one-stop shop for advice and reporting on delivery surcharges, restrictions and free delivery. It is the main portal for anyone, whether consumer or business, to go to for information on rights and obligations in relation to parcel delivery. The Scottish Government encourages use of this website and has it highlighted on https://www.gov.scot/policies/consumers-and-competition/parcel-delivery-charges/ and https://www.mygov.scot/consumer-rights/. It is also highlighted on the fairdeliveries.scot website which hosts the Scottish Government’s online data hub and parcel delivery map.

The Scottish Government funds https://www.consumeradvice.scot/. This website provides a “one-stop shop” for practical and impartial advice on resolving consumer problems, including delivery issues. Information is shared with regulators where appropriate. This website is also linked to the DeliveryLaw website. We also work with resolution organisations, such as Resolver, to ensure that they are also aware of routes available to any of their clients complaining about parcel delivery charges.

As part of the process of working together to tackle unjustified or misleading delivery charges, Jamie Hepburn MSP, Minister for Business, Fair Work and Skills, issued a letter in May 2019 to all elected MSPs advising them that the Scottish Government was gathering an evidence base of those affected by unfair parcel delivery charges urging them to highlight this work to their constituents and asking them to fill in a short online survey.

We will improve the accuracy of postcode classification tools

Postcode misclassification is a challenging area and remains one of the hardest Action Points to resolve. One of the reasons for this is the reluctance from organisations to divulge information on the postcode software they use and also the potential requirement for co-operation with commercial interests. However, both the independent Statement of Principles and Econometric research refer to the postcode misclassification issue and as such the Scottish Government is committed to solving this issue. The Protecting Scotland’s Future: the Government’s Programme for Scotland 2019-2020 publication^[14] states that it will introduce a:

“new postcode tool to reduce the instances of unfair delivery charges
resulting from postcode misclassification.”

Transparency is the main reason why the Scottish Government wants to get to the route of postcode classification. It is recognised that there can be differences in pricing between rural and urban areas and as long as these costs are transparent and explained to customers these can be justified. However, on many occasions these costs aren’t transparent or explained.

Therefore it is necessary for further research on this front to gather a broader, deeper and more robust evidence base to allow us to better understand the cause of these discrepancies and have a greater body of evidence with which we can then use to subsequently engage with software companies and businesses.

As part of their forthcoming work plan, CAS has committed to carrying out research to establish whether misclassification of postcodes through ecommerce platforms is a cause of or contributing factor to certain unfair delivery charges in Scotland. Undertaking research to further understand this issue can then allow for further advocacy work to be undertaken with Government, regulators, retailers, and, potentially, the software companies themselves, to address this issue if it is found to be unfairly impacting on delivery charges in Scotland.

We will establish the Improving Consumer Outcomes Fund to explore new approaches to tackling long-standing consumer issues, including misleading and unfair delivery charges in rural and remote areas of Scotland

Consideration was given to how this Fund could address postal delivery inequalities in rural areas in relation to the work that was already ongoing in the Action Plan. The decision was made that industry driven solutions were unlikely to be sustainable, and able to get to the heart of the issues. It was agreed that resource could be more effectively invested in understanding the underlying causes of the postcode misclassification problem – research and stakeholder engagement are considered a more effective approach to tackling this example of systemic detriment. As such, postcode misclassification work is now being taken forward by CAS utilising their expertise in postal delivery charges. This work is being supported by the Scottish Government’s consumer advocacy grant for CAS’s work-planning activities.

We will shape UK Government action to further strengthen consumer protection to ensure fair and transparent delivery charges for Scottish consumers

We continue to be a partner in the UK Consumer Protection Partnership ensuring that Scottish specific needs are heard and acted upon.

We have established a Scottish working group with our key stakeholders to discuss respective workstreams and where we can work together and support each other. Instances of this include providing detailed information to independent researchers carrying out work on behalf of the Scottish Government.

We will continue to apply pressure on the UK Government as the power to regulate surcharging lies with Westminster. To date, both Governments’ Ministers have exchanged correspondence and phone calls. However, the UK Government is of the view that regulation is not necessary in this area.

The new Consumer Scotland body will have an overarching aim of looking at consumer detriment.