The European Union (EU) is a major e-commerce market, with almost 90% of its 446 million inhabitants online.
B2C e-commerce revenue in Europe is currently growing at 12.72% a year, and is projected to exceed EUR 700 billion in 2020.
Around a 1/4 of all consumer purchases are made from sellers based outside Europe.
The EU eCommerce VAT package, which comes into effect on 1 July 2021, revolutionizes Europe's e-commerce market.
The digital handling of import customs and VAT on all transactions becomes mandatory, and import VAT becomes due on each and every shipment sent to the EU.
This is a disruptive change, and will lead to the emergence of a whole range of new business models.
It brings to an end to the current dominance enjoyed by EU postal operators in importing ecommerce shipments, and their monopoly on paper-based customs clearance.
This development is further accelerated by
fundamental changes in postal pricing, such as dramatic increases in UPU rates.
Furthermore, shipping, customs
clearance and import VAT management are all becoming separate transactional
workflows. This creates new options for e-commerce marketplaces and online merchants,
and offers greater flexibility for optimizing commerce logistics and
last-mile-shipping within the EU.
And as if all that weren’t enough, new EU standards are also emerging, involving more local obligations to digitally register and notify authorities (e.g. waste management).
On 1 January 2021, the Universal Postal Union (UPU) will introduce the mandatory electronic advanced data (EAD) notification for every individual cross-border commercial mail item destined for delivery within the networks of designated postal operators worldwide.
In addition, current developments at UPU level, in particular rising UPU tariffs, make the previous, often preferred model of the “classic postal channel”– sender hands mail to a non-EU postal operator which forwards it to an EU postal operator for customs clearance and delivery – increasingly unattractive.
Users of this traditional channel will need to look for new and efficient customs clearance and VAT solutions.
These solutions are independent
of the mail item delivery itself so that, following customs clearance, the
sender is free to choose the optimal delivery channel for these items within
the EU (e.g. remain within UPU channel, direct entry to the postal channel in the
EU, commercial delivery solutions).
These omnichannel and
multicarrier solutions may increase complexity and the demand for local know-how, but they
also provide interesting options for reducing cost, boosting quality and
increasing control and flexibility along the delivery chain, starting well
before the collection of postal items and ending well after last mile delivery.
All of this will have a significant impact on cross-border commerce and imports into the EU.
The greatest impact in the e-commerce market will be felt by shippers importing consignments of goods into the EU – not only those based in the major Asian marketplaces, and eShops, but also shippers in markets such as Switzerland, USA, Canada and Russia.
Logistics service providers outside the EU, both designated postal operators and commercial companies, face the same set of challenges.
They will need to implement digitalized cross-border logistics solutions for imports into the EU, provide their customers with relevant and flexible digital solutions, and comply with the new rules and regulations – all whilst retaining their competitive edge.
The COVID-19 crisis is only accelerating this development.
Already, there are clear indicators that when cross-border transport
capabilities are reestablished, buyers will revert from their current local
focus to options in which the primary consideration is cost.
In 2021 we expect to see growth rates for inbound volumes to the EU of a scale hitherto unknown – assuming that e-commerce market stakeholders can successfully adapt to the new environment and create the digital capabilities required to exploit these new business opportunities.
 Europe 2020 Ecommerce Region Report, published by Ecommerce Europe & EuroCommerce  On 5 December 2017 the Council adopted the VAT e commerce package consisting of: Council Directive (EU) 2017/2455, Council Regulation (EU) 2017/2454, and Council Implementing Regulation (EU) 2017/2459