Flood of parcels and waste

Chaos in Europe due to Chinese online giants

Temu & Co. lure customers with extremely low prices, which they can easily offer as they pay less taxes and duties than their European competitors.

(Bild: AP)

Chinese online giants such as Temu, Aliexpress and Shein are popular shopping destinations for European customers. They will send an estimated four billion parcels to the EU in 2024. Domestic providers such as the Otto Austria Group are doing well, but complain about unfair competition.

Shopping via a mobile app or on the computer is popular and quick. One click while watching TV, on the subway or during a smoke break and the desired item is in the shopping cart of the online provider. Payment is made by credit or debit card and the desired item is soon on its way to the customer's home.

Temu & Co. lure customers with extremely low prices, which they can easily offer as they pay less taxes and duties than their European competitors.

(Bild: AP)

Otto Austria Group complains of "systematic fraud"
"We don't shy away from competition, but the framework conditions are unfair. What these providers are doing is systematic fraud," says Otto Austria Group CEO Harald Gutschi, once again venting about the Chinese competition. According to the EU, 65 percent of parcels coming from China are incorrectly declared. In other words, they either contain goods that are worth more than declared to the authorities. Or the order is illegally split into so many individual shipments that each delivery remains below the duty-free limit.

(Bild: stock.adobe.com)

Although the EU authorities are now aware of the problem, they are not promising any changes until 2028. Until then, the flood of parcels will continue to increase. For 2022, there are figures that speak of two billion parcels entering the EU. Estimates for this year already put the figure at four billion - and the trend is still rising. To ensure that the freight reaches customers, an estimated 200 transport planes are expected to land in the EU every day in 2024! Temu arrives in Hungary, for example, which pleases our neighbors, as they earn a lot from handling it.

While individual states gain revenue, the community loses a lot of money through the creative package policy. Trade expert Gutschi does the math: Assuming ten euros in customs duties and VAT per parcel and two billion deliveries (2021), that would be 20 billion euros. This year it could already be 40 billion! The authorities should leave the parcels lying around in the event of repeated false declarations so that foreign suppliers who do not play fair suffer the consequences.

"Multiple crises have hit retail hard"
In addition to foreign competition, inflation, wars etc. are also causing problems for the online giants. "The multiple crises have hit retail harder than they have for decades. There is a lack of money on the stock exchange," says Gutschi. The Otto Austria Group's total turnover fell by 3.8 percent to 349 million euros. Customers spend an average of 234 euros per order. In view of the market circumstances, the company can be satisfied to a certain extent. However, this does not apply to the furniture and decoration segment, which performed particularly poorly. This was massively depressed by the sharp decline in the volume of new residential construction and the decision not to make major investments. This is particularly painful as the Otto Austria Group is the largest online provider of furniture in this country with a market share of 15 percent. Gutschi, on the other hand, is satisfied with technology orders.

The Otto Group is encouraged by the fact that returns are continuously decreasing, as this saves money. The current figure is 34 percent - and the trend continues to fall.

Otto Austria Group CEO Harald Gutschi: Returns are continuing to fall.

(Bild: Christian Jungwirth)

The Otto Austria Group used to be called Unito, as it was formed from the merger of Universal, Quelle and Otto, among others. This is now a thing of the past. The background to this is the difficult search for employees. "Otto has a very good name on the job market," reports Gutschi. The new name should attract more applicants.