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29.12.2022

No. 497: New delivery services, effects on market structures and implications on competition policy

No. 497: New delivery services, effects on market structures and implications on competition policy

Authors: Antonia Niederprüm, Petra Junk

Summary

Retail sales in B2C e-commerce have quadrupled since 2010. The TOP 100 account for about two-thirds of total online sales. Retail sales via online marketplaces have increased at an above-average rate and, according to estimates by trade associations, account for around half of online retail sales in Germany. Amazon's proprietary trading makes it both the largest online shop and, measured by the GMV generated by third-party traders, the largest online marketplace in Germany. Hybrid online marketplaces in particular play a decisive role in the development of fulfilment solutions for online retailers, above all "Fulfilled by Amazon" (FBA). Amazon is the largest provider of fulfilment services for small and medium-sized online retailers selling on Amazon in Germany and other European markets such as Italy, Spain and the UK. Independent fulfilment service providers have so far played a subordinate role because, apart from the cost trade-off due to the lack of close ties with a marketplace and its reach, they do not offer any additional added value compared to large trading platforms with fulfilment services.

Developments in online retailing have also led to above-average volume growth in the parcel market, especially in the B2C segment, which, according to BIEK estimates, accounts for around 70 per cent of national parcel volumes. According to WIK estimates, Deutsche Post DHL has the largest volume share, followed by Hermes and Amazon Logistics. Deutsche Post DHL and Amazon Logistics are the financially strongest players in this segment, which also have competitive advantages over the other market participants due to their respective special situations.

The investigations by the Italian and German competition authorities have brought to light a great deal of additional information about the market conditions in the respective online retail markets. The Italian authority's investigation has also examined Amazon's abusive behaviour in detail and thus made it transparent for the interested public. In combination with the decision of the European competition authority on Amazon's self-commitment, it is to be expected that the potential for abuse will be reduced if it is effectively enforced and controlled.

For effective control and due to the very dynamic developments in the German online trade and the postal market, intensified market monitoring is required not only at the level of the entire parcel market, but also at the level of the segments (C2X, B2B and B2C). This also includes having a closer look at the upstream markets, especially fulfilment services (especially warehousing), in order to better understand the dynamics of market developments.

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