Statement of principles for parcel deliveries: review

3. A Collaborative Approach

3.1 Introduction

There appears to be widespread acknowledgement within existing research that more needs to be done around the issue of the level and, importantly on the transparency, consistency, and fairness of parcel delivery charges to consumers living in rural and remote areas.

There continues to be a lot of campaigning on the issue - not least because it would appear that some retailers do not apply surcharges, while others apply reasonable or minimal surcharges, while still others apply huge surcharges. Our understanding is that there is no marketplace consensus on what constitutes a "fair" surcharge.

"We talked to five of the largest (parcel delivery operators) and much of this has now been published. We found that four out of five of those operators, Royal Mail being the exception, do charge surcharges in some parts of the Highlands and Islands. The amount that retailers pay is extremely variable, because the larger retailers do negotiate very hard with the parcel operators to strike contracts for bulk delivery of goods. The amount that consumers then pay is also very variable……some retailers absorbing all the cost, all the surcharge, and others charging more than the operator is charging them for delivery. It is a very mixed picture".

"…very much down to the contracts that the operators have with the particular retailers and of course it is then the retailers that ultimately determine what price the consumer pays for deliveries. There is not consistency, as it were, either in where the surcharge applies, but also on how and whether it is passed on to consumers in those areas".

Consumer Group Director at Ofcom. Scottish Affairs Committee
Oral evidence: Delivery charges in Scotland, HC 752
Tuesday 27 February 2018.

It is clear that there needs to be a mix of solutions that aim to bring about change and to improve the situation. Over the years, the evidence base has highlighted a range of recommendations or considerations. Among other things, this has included:

• greater transparency and accuracy of delivery cost information;
• improvement of delivery speeds;
• alternative delivery solutions (e.g. networks of pick-up and drop-off locations, consolidating deliveries in central points);
• enforcement of current regulation in this area;
• effective code of practice/common standards/quality system by which all retailers and couriers should abide by; and
• regulation of parcel deliveries^[22] (it is currently a reserved issue).

It is further recognised that a collaborative and cooperative approach is required to achieve this change - consumers, retailers, parcel delivery operators, and the public sector - to help identify and accelerate action, including the development of new and innovative approaches to solving the known challenges in delivering parcels to remote and rural areas in Scotland.

A recent commitment has been made by the Scottish Government to continue working on the issue:

"…continue our work to tackle unfair delivery charges. The harm caused by these are felt most by our rural, island and remote communities and we will take action by launching the Scottish Parcel Delivery Map. We will introduce a new postcode tool to reduce the instances of unfair delivery charges resulting from postcode misclassification".

Source: The Scottish Government, Protecting Scotland's Future,
The Government's Programme for Scotland 2019-2020.

3.2 Awareness Raising

A substantial amount of activity has been undertaken to date in an effort to understand the causes of the issue, explore potential solutions, bring together different stakeholders, and - where necessary - take action in an effort to tackle unlawful practice.

To date, various organisations and individuals have played a leading role in this work alongside the Scottish Government. This includes CAS, the Consumer Protection Partnership (CPP), Highland Council, the Advertising Standards Authority (ASA), several MSPs and MPs, and some online retailers and parcel delivery companies.

Given that postal and parcel delivery is not a devolved matter, the Scottish Government continues to use its influencing role to work (at a UK level) collaboratively with online retailers and parcel delivery operators to shine a light on the issue and to drive change. Some key actions by the Scottish Government and other key partners have included:

• parcel delivery summits, ministerial roundtable discussions, and business debates;
• the Fair Delivery Charges campaign led by Moray MSP Richard Lochhead;
• establishment of a short-life working group involving all key parties to help develop the Statement of Principles;
• launch of the Statement of Principles - aimed at online retailers but not parcel delivery companies; and
• publication of the Fairer Deliveries For All: An Action Plan - with Action 4 committing the Scottish Government to work with industry to increase the reach and impact of the Statement of Principles:
  • raise awareness of the Principles among retailers;
  • develop the Principles into a simple pledge for retailers to sign up; and
  • explore how the Principles can be more usefully applied to parcel couriers.

At the same time, wider good practice developments have also taken place - examples include:

• the development of Highland Parcels - a new service provided by Menzies Parcels to help address the issue of surcharging and to provide a more cost effective and convenient service to consumers https://www.highlandparcels.com/;
• a new website hosted by the Highland Council's Trading Standards team - http://www.deliverylaw.uk/ - which provides information for consumers, businesses and practitioners on their rights and obligations in relation to parcel delivery; and
• https://consumeradvice.scot/ funded by the Scottish Government providing practical and impartial advice on resolving consumer problems, including delivery issues. Information is shared with regulators where appropriate.

3.3 The Statement of Principles

The Statement of Principles was launched in 2013 by the Scottish Government. The five Principles were designed to assist retailers in their policies on the delivery of goods purchased over the internet by individual consumers, through setting out best practice principles as to how they can ensure their delivery services meet the needs of their customers. The Principles are as follows:

• Principle 1: Online retailers should ensure that their delivery pricing policies do not discriminate against consumers on the basis of their location. Geographic surcharges should be applied only when these costs are justified by objective criteria, such as actual and unavoidable costs incurred because of the distance. The level of any necessary geographic surcharges applied should reflect the true additional cost of delivery.
• Principle 2: Online retailers should ensure that their delivery coverage policies do not discriminate against consumers on the basis of their location. Online retailers should use their best endeavours to provide the widest possible delivery coverage, refusing delivery only when this can be justified by objective criteria. Possible objective criteria may be that the dimension and/or weight of the item falls outwith the scope of the universal service obligation.
• Principle 3: At the earliest possible stage in the online buying process, online retailers should ensure that consumers can easily access clear, timely and transparent delivery policy information, including information on any possible necessary geographic surcharges or delivery restrictions that might apply, and the reasons for such variations.
• Principle 4: Online retailers, working with their carriers, should endeavour to offer delivery options that are innovative and responsive to the changing market and needs of their consumers. Online retailers should provide consumers with transparent information about delivery options before they complete their order.
• Principle 5: Online retailers should seek to provide consumers with other relevant delivery information that they hold at the time the order is completed and/or dispatched.

A slightly modified version of these Principles were adopted by the UK Government in 2014.^[23]

The Statement of Principles is not a code of practice, form of regulation or endorsed Kitemark. Rather, adoption by retailers is on a voluntary basis. This makes it difficult to easily assess levels of adoption. There is, however, some existing evidence on the level of awareness of the Principles, as outlined below.

"We found low levels of awareness among businesses surveyed. Only four businesses responding to the survey of FSB members stated that they were aware of the SoP, and three of these stated that they voluntarily complied with it.

Clearly if the SoP is to improve customer experience of parcel deliveries more needs to be done to increase awareness and acceptance among online retailers. We recommend that the UK Government does more to obtain buy-in from delivery operator and retailers, with a plan of action to promote the scheme".

Source: CAS, The Postcode Penalty:
The Distance Travelled, Progress on Parcel Deliveries in Scotland 2012-2015.

This is perhaps not a surprising finding given that: the CAS research was undertaken relatively soon after the Statement of Principles was launched in Scotland - it does take time for awareness levels to spread and grow; and with the exception of press coverage when the Statement of Principles was launched by the Scottish Government and again when it was published in revised form by the UK Government, along with promotion on partners' websites (e.g. CAS) - there has been limited awareness raising campaigns undertaken with online retailers. This is not to say, however, that activity around the issue of parcel delivery surcharging has lessened.

This specific research has sought to gauge levels of awareness of the Statement of Principles. This is considered further in the next two chapters.