E commerce and postal services


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E commerce and postal services

  1. 1. E-COMMERCE AND POSTAL SERVICES Slavko Djumic1 E-mail: slavko.djumic@rapus.rs Lidija Gligoric2 E-mail: lidija.gligoric@rapus.rs “Abstract:” Historically, the postal network was built and expanded in order to provide postal servicesas indispensable needs of citizens in the area of communication in the past decades, the entire national territory,at affordable prices, according to the prescribed standards of quality and equal conditions for all citizens,without discrimination. The above is a postal services defined as services of public interest. Despite a number ofindicators and results of specialized studies clearly indicate that the decline of importance of postal services forthe life of every citizen in last ten years, and their rapid and irreversible substitution of electronic forms ofcommunication, in Serbia, but is not only a characteristic of our country, insists on the concept which obligesthe state to the public through the postal operator trough its legally established monopoly, provide postalservices in the traditional way. Practically, the legal framework assumes that a network that includes over 1500 objects and coveringalmost all the inhabited places in the country, and yet fully linked transport and IT, serves only for the provisionof postal services. Starting from these indicators that the reduction in the importance of these services, as well asspecific requirements that the state recently put before the public postal operator in order to realize their othercommitments(work in the field of e- government, free registration of shares, the procedure of restitution, etc.),the authors propose to define the postal network as a public good, which would thus, in accordance with itsinfrastructural facilities, used for the implementation of various business and other activities of public andgeneral interest, including, of course, the postal service. The paper puts special emphasis on the potential of thepostal network, defined as a public good, through which can be compensated for the lack of trade, including thepurchase and sales network in Serbia, which is a problem that was underlined as a key strategy in the currenttrade development in the Republic of Serbia. At the same time, as a practical framework through which the most effective way of postal facilities canbe hired to develop a network of retail activities, the proposed electronic commerce. The paper further discussesthe institutional arrangements that may apply to models that are connecting to a successful e-commerce, retailactivities and the postal network. How the lack of "social capital" represents a strong barrier to the developmentof e-business in Serbia, are considered as measures of state intervention in this area, where required byregulation, suggested "access to the postal network" as a public good under the same conditions for all, as amechanism that prevents the eventual establishment of a monopoly of the public postal operators in theconsidered model. It goes on to present some comparative results and level of development of electroniccommerce in different countries indicate that regardless of the economic development, innovation potential isperhaps even more important factor for the development of such business activities. It is concluded that e-commerce in developing countries is sometimes a question of comfort, incountries with underdeveloped retail, a strong and modern postal network, e/commerce, with some institutionalsupport, can be a significant support for economic development in general, with particular effect on stimulatingbusiness activities of small and medium enterprises, with potentially, balancing regional development.KEY WORDS: DELIVERY OF GOODS, E-COMMERCE, SERVICES OF PUBLIC INTEREST, THE LAWON POSTAL SERVICES1 Republic Agency for Postal Services, Republic of Serbia2 Republic Agency for Postal Services, Republic of Serbia* The views expressed in this paper are those of the authors and do not necessarily reflect the opinion ofRepublic Agency for Postal Services
  2. 2. 1. INTRODUCTION Endeavors on promoting and supporting the development of electronic trade in Serbia share asimilar fate like the stories about focusing on small and medium enterprises, sustainable developmentof the economy, investing in young, educated people, and similar concepts which are a mandatory partof every strategic act of government, political program, or public performance of most sociallyengaged individuals. Although they are an essential part of the vocabulary of all referential factors,any practical example of the realization of some of these activities is welcomed with undisguisedsurprise, typical of something exotic, usually at the very end of the main news programs. Therefore, the main purpose of this paper is an attempt to consider some practical, formal andlegal, regulatory and organizational mechanisms that could even in the short term, in our view, be acandidate for e-commerce model that ranks e-commerce at the very least among the usual,systematically protected and guaranteed models of trade ... and not just because of itself as such, butalso as a generator of the implementation of those concepts listed at the beginning of this paper. The Trade Strategy of the Republic of Serbia has singled out the following as the keyquestion: ‘Does this mean only designing a framework for the development of electronic commerce inthe country, or we are trying to create special conditions for the dynamic development of electroniccommerce as an important factor of economic development in the future?’3. Like the authors of theStrategy, we also see the answer to this question in the creation of special conditions for a moredynamic development of electronic commerce. Yet, we believe the creation of e-commercedevelopment framework to be a necessary condition of the transition to the latter, certainly moredifficult and ambitious task. It is exactly why we are glad to say that in many ways, this first conditionwas largely fulfilled through various activities of public authorities in the last few years, with thereality-based expectations that it will be ultimately finalized in the imminent future. Thus, at thismoment the following have been adopted: The Law on Electronic Commerce, The ElectronicDocument Law, The Law on Electronic Signature ... all these virtually complete the legal frameworknecessary for the performance of different modalities of e-business, and what is most important, for avalid conclusion of contracts electronically. So, if we assume that the phase of ordering products, i.e. concluding a contract in electronicform is covered by the appropriate standards, and that certain current deficiencies in electronicpayments will soon become a history, it seems that we need to address the remaining problem ofinfrastructure, and that is the product delivery phase as an unavoidable element of the realization ofthe process of electronic selling to final consumers (this problem does not exist when it comes toproducts that can be digitized). Namely, The Law on Postal Services, as a general law that regulatesthe phase of delivery of postal items, considers this type of delivery only as a specific type of service,so that it contains no provisions that would treat the specifics of delivery of postal items in a properway, which it has when it is a part of a wider service process. Neither does The Consumer ProtectionLaw manage to provide sufficient legal material for a serious legal regulation of products delivery as apart of electronic commerce. Consequently, the issue of trust both in the phase of electronic productordering and payment in terms of security of procedures, data protection and the like, and in deliveryin terms of whether the product will arrive undamaged and in the guaranteed period, including theproblems with return trade flows which arise in connection with the previous, will form the basis forsignificant progress in this field for a long time. 2. E-COMMERCE, POSTAL NETWORK AND PUBLIC INTEREST2.1. European Union and Encouraging the Development of E-commerce Interestingly, the neglect of the delivery phase is typical also of the countries that are muchfurther advanced in the development of electronic commerce (after all, the EU Directive on e-3 Strategija razvoja trgovine Republike Srbije (“Službeni glasnik RS”, broj 15/09); The Trade Strategy of theRepublic of Serbia (Official Gazette of the Republic of Serbia No. 15/09)
  3. 3. commerce specifically states that regulation of the delivery of goods is not its subject matter) 4. It istheir experience that can be a good indicator that, despite the completely built up information-communication structure and legal framework in this area, the problems that arise at the stage ofdelivery of the product can significantly devalue the process of electronic sales. Therefore the European Commission has recently issued a statement putting forward an actionplan on fostering the development of electronic commerce with the aim of doubling the share ofelectronic commerce in retail transactions by 2015.5 It is interesting that the same document gives thefact that the share of electronic commerce in retail activities in the European market is 3.4% (we havealso found different, obviously doubtful data that shows a significantly higher share of electroniccommerce in Europe). As problems to be solved, the European Commission highlights a number ofthose usual ones related to e-commerce, but what is important for us is the fact that the quality ofservice in the delivery segment particularly stands out. The European Commission insists on a cleardefinition of responsibility for damaged, stolen or lost parcels, as well as on the efficiency andaccessibility of parcel delivery services in rural and remote areas. At the same time, the statementdraws attention to the fact that SMEs are at a disadvantage compared to large companies, whatprevents them from taking advantage of a competitive market. Additionally, and in favor of theimportance given to these issues, the European Commission announced a special conference to beorganized in 2013 particularly dedicated to the development of e-commerce. There is a study carried out especially for the needs of the European Commission, whichshows that the costs of sending packages are at least twice the actual figure, whereby this fact isdirectly stated as the cause of preventing the growth and development of electronic commerce 6. Again,the same study underlines that even with as high a price for sending packages, small and mediumenterprises are forced to pay significantly higher costs than large companies (here as an example thedominant position of the Amazon is referred to). In this sense, the regulatory pricing of parcel deliveryservices that would be more harmonized with the actual costs, is recommended as a priority. Otherresearch suggests that the costs of delivery participate up to 30% in the price of a product sold via e-commerce, with the almost incredible fact that the majority of U.S. online retailers lose money witheach transaction7.2.2. The Discourse on the Monopoly on the Provision of Traditional Postal Services Just a few years ago this issue would probably have formed the backbone of this paper, andthe unsustainability of monopoly in the postal service sector would have been written about with muchmore passion and emotional charge8. Yet, should we be in the position to present this same paper infive or ten years’ time, this part will either be excluded, or it will be turned into a shorter footnote of ahistorical character. And not because we believe that key stakeholders will understand theanachronistic and harmful nature of the current monopoly that persists when it comes to the largestsegment of traditional postal services, but primarily because most of the traditional postal services willsimply cease to exist.4 Maja Stanivuković, Direktiva o elektronskoj trgovini ( Directive on E- Commerce), Evropsko zakonodavstvo,br. 6/2003, str. 26.5 http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/10&format=HTML&aged=0&language=en&guiLanguage=en [Accessed 12/01/12]6 http://postandparcel.info/44846/news/regulation/cross-border-parcel-prices-too-high-says-eu-commission-study/[Accessed 30/01/12]7 Bojan Stanivuković, Pošta kao integralni provajder elektronske trgovine (Post as E-Commerce IntegralProvider), PosTel 2007, Beograd, str 15-168 Milton and Rosa Friedman say’... Any action to remove the state monopoly on the first class postal service isvehemently opposed to by trade unions of postal workers. They clearly understand that the opening of postalservices to private enterprises can mean a loss of their jobs. They believe it is worth trying to prevent such anoutcome ... (a) an agile private industry would appear which would include thousands of businesses employingtens of thousands of workers. Even a small number of people who believe such an industry to be lucrative knowthat there is a possibility ... ‘ - Milton i Roza Fridman, Sloboda izbora - lični stav, Global Book, Novi Sad, 1996,str. 315 (Milton & Rose Friedman, Free to Choose, Daw Jones & Co, Free Harvest/HBJ edition 1990.)
  4. 4. The public postal operator is the postal services provider obliged to provide universal postal services and the exclusive right to perform the reserved services (Article 3, paragraph 1, item 21 of the Law on Postal Services of the Republic of Serbia) The universal postal service is a service of public interest and represents a set of postal services that are performed continuously on the territory of the Republic of Serbia, within the specified quality, at affordable prices and equal conditions for all users without discrimination (Article 12 of the Law on Postal Services Republic of Serbia) Affordable price? Availability? Equal terms for all users? Event the too confident psychologists and sociologists would run away from the attempt todefine these concepts. Yet, in ‘the postal world’ these terms are viewed as axiomatic and unquestionable. ‘Equalterms for all’ usually means that the price of the universal postal service in domestic traffic should beequal regardless of the distance of destination that the package is being sent to and whatever the natureof the sender’s legal entity. Research conducted by the Republic Agency for Postal Services showedthat more than half of Serbian citizens do not know that the price is independent of the distance towhich the shipment is sent, i.e. they do not think it should be so.9 It is obvious that a large number ofSerbian citizens, and we would say reasonably, estimate that equating different things (in this case thecost of shipment, no matter where it is sent to in the domestic traffic) also means creating inequality.This price ‘equality’ has a number of practical implications, where its stimulating effect on theappearance of illegal postal operators and other entities is specially emphasized. At the local level, andcontrary to the Law, they provide certain postal services in the field of universal service realizing thusextra profit, and leaving the long distance inter-regional level, and with that the extra loss as well, tothe public postal operator (at this level the beneficiaries of such pricing policies are nationalcompanies that send hundreds of thousands of shipments to different parts of Serbia, often getting adiscount on quantity - practically this means that a letter sent by a citizen three blocks away will bemore expensive than the same letter sent by some big company from one to another part of Serbia.From the pure commercial logic point of view this may sound quite natural, but for services of generalinterest this is highly unusual: let us just consider any other network industry, where business users arenothing close to privileged, but usually pay much higher prices for the same type of service). Therefore, the ‘benefits’ of the universal postal service in Serbia, in general, are mostly usedby illegal postal operators and large national companies, and all that at the expense of the public postaloperator - which is not legally protected when it comes to its exclusive rights, as well as the expense ofcitizens - who pay proportionally higher price than the one they would pay were it not for this ‘gray’market, and finally at the expense of the Republic of Serbia - which may find itself in a position that,as a founder, it has to cover the possible loss of the public postal operator incurred in this way. ‘There is no need for the provision of universal postal service for business customers’ 10. Infact, not only there is no need, but also there is no economic, legal, or logical basis for doing such athing. The universal service usually includes sending a letter up to 2 kg, parcels up to 10 kg and so on... it is difficult to imagine that there is a special service, for example, sending millions of parcels atonce as a part of universal service. It is equally difficult not to conclude that postal services are usedexclusively by citizens as individuals and perhaps small business entities. The others, big ones,apparently do not use special postal services, but postal network, as a public good. This segregation ofusers of universal postal service as a service of general interest, which would be purely physical, and9 Researching the Level of Need Fulfilment of Universal Postal Services Users‘ (with IPSOS Strategicmarketing) http://www.rapus.rs/o-nama/projekti10 Milan Vukotić, Evolucija univerzalne poštanske usluge (Evolution of the Universal Postal Service), PosTel2005, Beograd
  5. 5. possibly smaller entities, and the users of the postal network as a public good, that would be allsenders of mass shipments, would facilitate solving some of the problems that we are facing now: - the state, i.e. the public postal operator would have a clearly defined and significantly lowerburden of providing universal postal service, primarily focused on the citizens and their basic needs,which corresponds to its historic, logical and legal definition of a service of general interest; - senders of mass shipments would satisfy their needs at significantly liberalized market; asusers of the postal network as a public good, at the same time they would be imposed certain‘obligations’, being users of goods into which generations have been investing – for example, in thissense, the conclusion of a contract with an illegal postal operator could entail responsibility for thebehavior of these legal entities; - defining the postal network as a public good would enable and commit to the possibility ofaccess to that network under the right conditions - depending on the ambition and business policies,the senders of mass shipments could achieve significant savings, based on ‘the avoided phases’ of theprocess of receiving, processing or transportation. But unlike commercial discounts, these are morejust savings – namely, for the less use of the postal network as a public good, a lower price is onlylogical, and not vice versa (of course all this would remove the need of these business entities to usethe ‘services’ of illegal postage operators); or as they say in the Third Postal Directive: ‘Whenestablishing the price one has to take into account the avoided costs by comparing them with thestandard service covering the whole range of features offered for the purpose of receiving, sorting,transport and distribution of individual postal items’; - last, but not least, the public postal operator would have the possibility of functioning oncertainly the most important and most profitable segment of the postal market, as an equal entity to allpotential competitors, and certainly achieve better business results than it has until now – when, due tothe apparent monopoly which is violated at every step, there is no room for any business reactionbased on the business logic other than waiting for the legal protection by the ‘fast’ state authorities - infact, in countries which have gone furthest in the process of liberalization (Germany, Denmark,Sweden, The Netherlands, Estonia, The Czech Republic...) there is no public operator with less than90% of the market share of the addressed shipments11; at the same time, experience from theliberalized markets indicates that users are willing to pay up to 20% higher price for services of thepublic postal operator in relation to equivalent services of competitors12. When speaking about Serbia, we share the opinion of the Economist magazine analysts whosay ‘if the European postal system wants to become stronger in the future, its operators are not in theposition to hide behind the lethargic liberalization. Otherwise, it will simply be lost, like so manyletters and packages’13.2.3. ‘Postal Network’ as a Public Good There is no doubt that the postal network, in its modern sense, has been expanded anddeveloped, primarily, and in most cases only, for the sake of performing traditional postal services. Atthe same time, this would not be the first time that certain social institutions, i.e. activities haveoutlived their original purpose and continued to exist with the aim of meeting some quite new needs1411 Jelica Petrović Vujačić, Snežana Kaplanović, Konkurencija na evropskom tržištu poštanskih usluga –podsticaji i prepreke (Competition on the European Postal Services Market – Incentives and Barriers), PosTel2009, Beograd12 Dejan Marković, Mladenka Blagojević, Đorđe Popović, Konkurentske strategije na liberalizovanompoštanskom tržištu sa aspekta lokalnih i mass usluga (Competitive Strategies in Liberalized Postal Market inView of Local and Mass Services), PosTel 2009, Beograd13 Dominacija pošte,The Economist-11.maj 2000. godine, indicated by N.Gregory Mankiw, Mark P. Taylor,Ekonomija, Data status, Beograd, 2008. (N.Gregory Mankiw, Mark P. Taylor, Economics, Cengage Learning2006.)14 The first airlines were not established to transport passengers, but only mail. Thus, since 1914 The Pan-American Airways carried mail between Key West and Havana. The term air mail has been in use since 1917,and a plane stamps since 1918. What kind of enterprise that was is explained by the fact that out of the first fortypilots hired for the transportation of mail, thirty-one died in a plane crash. The famous Charles Lindbergh, who
  6. 6. - outstanding information-communication advances that have marked the recent years is only one,although probably the most important factor in these changes. That is exactly what has already happened to some extent to the postal network, whereby webelieve that the immediately upcoming period will mark the final transformation of its originalpurpose. In addition to providing financial transaction services, we see that postal network isincreasingly used for activities such as the registration of shares, implementation of the restitutionprocess, issuing various public documents as a part of the e-government project, and the like. At this point we have to draw attention to an example of irrelevant thesis – in fact, there is acommon belief that with its activities the postal service is doing a ‘favor’ to the state, with a typicalpraising of such a broadly based social function, while it is always insisted on the fact that theseactivities shall not disrupt continuous and uninterrupted provision of postal services. Such an attituderelies on the assumption that the traditional postal services are (still) the services of irreplaceableimportance for the daily lives of citizens, i.e. that, according to our Law, they are the services ofgeneral interest, from which it could be concluded that the existing postal network is used primarily tomeet the needs of citizens for these services. However, as it has been shown above, defining of postal services as services of irreplaceableimportance for everyday life of citizens has no foundation even in the attitudes of the citizensthemselves towards them, and the frequency of postal services usage as opposed to other forms ofcommunication, is a practical confirmation of such attitudes of citizens. In fact, the traditional postalservices hardly used to be of particular relevance to the lives of citizens - more or less they werealways more important to the state and its institutions, starting from the Karadjordje’s time, whenfailing to deliver the letter of national importance meant ‘fifty blows with a stick’ or today, whentraditional postal services market is dominated by the accounts of national and local infrastructural andutility systems, bank warnings or tax administration decisions. It is exactly the above mentioned state and business entities - public administration, nationaland local infrastructural and utility systems, and financial institutions, that participate in a pronouncedway in the total number of completed traditional postal services, and who are at the same time leadersin the implementation of e-business into their activities, meaning that they are extremely ‘uncertain’users of postal services in the future. What remains behind all this is a modern postal network with over 1500 objects, allinformation-communication and transportation related, covering practically all inhabited places inSerbia. This is the postal network which, as it appears, remains without traditional postal services as aratio of its existence. However, this should by no means be the reason for the blind insistence on the monopoly overpostal services as a means to preserve this network, since such a thing already proved to be ineffective,or even worse, on the insistence on the deconstruction of the existing network, by what we wouldignore all its possible potentials15. For instance, information-communication component of the postalwas also engaged in this business, is said to have destroyed three aircrafts in a year. However, in the thirties ofthe last century, airlines started primarily focusing on passenger transport. - Брајсон Бил, Made in America,Лагуна, Београд, 2010, стр. 466-468 (Bill Bryson, Made in America, 1994.)15 English Royal Mail has recently sent a request to the regulatory body to leave undeliverable packages with theneighbors, to abolish the right of complaint for business users who do not use tracking service, with the generalshortening of the complaint period from 12 months to 90, i.e. 60 days, and what else .. . all that in the year whenthe Royal Mail managed to secure European Commission approval for a subsidy of 180 million pounds forfurther survival of rural post offices (by the way, we assume that otherwise Royal Mail would continue withfurther spectacular increase in the number of over 6,000 postal facilities closed in the last decade). AmericanUSPS plans to reduce the number of processing centers from 500 to 185, with a potential extension of thedelivery of postal items over several days, while closing at the same time 3652 postal facilities. The DirectorGeneral of the U.S. mail commented on these suggestions by giving the following statement: ‘The habits of ourusers have clearly showed that our customers no longer need the physical presence of the postal facility toperform most of their work related to postal services’ - Ina Steiner, Would You Miss Your Post Office If ItClosed, http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2011/9/1315681076.htm l [Accessed 08/10/11]
  7. 7. network was primarily built for performing cash operations, only to have its application in the field ofpostal services, e-government, and the like. The point is that such a resource, such as the modern postal network, should by no meansshare the destiny of the traditional postal service – through the decades of its development it hasvirtually become public property and the one through which the state provides an opportunity for itsinstitutions, companies and citizens to realize different activities and meet diverse needs, including, ofcourse, the ones for postal services. And if it were not for the confusing term of ‘postal network’instead of which one could use for example the terms like: ‘information-communication andtransportation public network’ or ‘logistics network’, or whatever we like, many things would beeasier to understand and put into place. Thus, for example in Serbia, but also generally in all comparable European countries, aparticularly active issue is the one on determining the methodology for calculating costs of providinguniversal postal service (in Serbia this is a legal obligation of the competent regulatory body). Weunderline the phrase the universal postal service, and not as it would only be logical, calculating costsof the functioning of the postal network (and the information-communication network), which are onlymore or less fixed and easily identifiable. After that, we would probably come to the price of certainpostal services much more easily, or any other services for the performance of which the postalnetwork or its parts are used. One can not help feeling that all this almost serves as further justificationfor preserving a monopoly in the domain of traditional postal services with the potential of includingin its costs the costs of various commercial and other activities16. However, if we were to consider only postal network and determine only the cost of itsmaintenance and improvement, it would become much simpler. According to this model, thecompany(s) providing traditional postal services would be only one of the users of the ‘postal’network, in addition to public administration, businesses dealing with financial operations, i.e. thoseengaged in e-business in the broadest sense. When it comes to delivery segment in Serbia, delivery of certain types of shipments has beendeclared a service of general interest, with the obligation of the designated public postal operator, PTT‘Serbia’ Public Company, to provide them continuously, on the whole territory of the Republic ofSerbia, within the prescribed quality, at affordable prices and under the same conditions for all userswithout discrimination. Among other things, this mode involves ordinary and registered letters, as wellas packages up to 10 kg in the domestic, or 20 kg in international traffic, which is particularlyinteresting for us here. We have already discussed the lack of foundation of declaring these servicesfor services of public interest , whereby no one should particularly be convinced about the speed andinevitability of replacing paper correspondence with the electronic one. Practically, it is estimated thatin the next ten years everything that can be digitized will be digitized (a written statements are the firston the list), while the price of a chip will fall below 1 cent17, which is far lower than the price of thecheapest letters in any European country, including Serbia.2.4. E-commerce – a Service of Public Interest? Let us go back for the time being to the previous statement that some postal services aredefined as services of general interest, which is unlikely to change in the near future (and this is nottypical only of Serbia). Therefore, if we declare some, we could say outdated postal services, to be of16 Joel Tolenado, the Chairman of The European Regulators Group for Postal Services (ERGP), a truerepresentative of ‘the French Postal School’ of a ruthless monopoly, has given a recent interview which is full ofstatements that the question of sustainability of universal service should be our main concern, including anespecially boring story on the necessity of allocating the cost of the public postal operator; however, sheultimately concludes that ‘the biggest market losses are not related to the emergence of competition, but to thereduced volume of traffic due to electronic substitution’ (www.acerp.fr) [Accessed 26/09/11] (by the way, theChairman of the ERGP Working Group, dealing with the issue of allocation of costs is also a French -interestingly, since the French La Poste, has not allocated the cost of provision of universal postal services to thepresent day despite the numerous directives and recommendations).17 Mičio Kaku, Fizika budućnosti, Laguna, Beograd, 2011, str. 35. ( Dr Michio Kaku, Physics of the Future,2011.)
  8. 8. general interest, there is no rational reason why a parcel delivery service in the function of therealization of e-commerce service should not be declared the service of general interest in a particularsense. In a practical sense a public postal operator, through the information-communication and postalnetwork that he has been entrusted with to managed, would have an obligation to provide theseservices continuously throughout Serbia, within the specified quality, at affordable prices and equalconditions for all users, without discrimination. Or more specifically, this would mean that thesegment of delivery of products ordered electronically is regulated both in terms of transport, prices,proper packaging, responsibility for non-delivery, or damage of packages, return flows of the damagedor inadequate goods and the like. We assume, but for the time being, we do not claim, that theseconditions would be harsher than those now prescribed for parcel delivery. Of course, with thefulfillment of these conditions, other postal operators could also deal with this type of delivery, whocould, like other legal entities, ‘access’ the postal network of the public postal operator on the basis ofthe avoided phases of delivery, which they would perform themselves. In addition to appropriate andnecessary regulation, this would prevent the establishing of formal legal monopoly of the public postaloperator in this segment. On the other hand, the already mentioned fact that PTT ‘Serbia’ Public Company has over1500 objects which are all electronically connected, covering virtually every town or place in Serbia,may represent a solution to ‘one of the biggest problems’ according to the Trade DevelopmentStrategy. That problem is ‘related to the supplying of the population in sparsely populated areas, i.e. aninsufficient degree of development of trade network in these areas’. Starting from a logical definitionof the postal network of the public postal operator as a public good, there is no reason why the stateshould not use this network as a substitute for the missing trade network, and electronic commerce isan ideal form for the practical realization of the above mentioned.2.5. World Postal Union and E-commerce Recent research carried out by the Universal Postal Union (UPU), a specialized UnitedNations organization (known for a fairly conservative attitude when the preservation of the monopolyon postal services is at stake) has shown that these are not ‘revolutionary’ or unfamiliar ideas.According to the research, over 70% of public postal operators surveyed consider e-services ofstrategic importance for the development of the postal market (in this context e-commerce and e-financial services are particularly underlined)18. As a result of this, the next UPU Congress, which willbe held during October 2012 in Qatar, the adoption of relevant resolutions is expected that willpromote electronic mail services as an essential component of a new global strategy of the UniversalPostal Union. The same study pointed to the various experiences with the scope of incorporatingelectronic postal services by public postal operators, where these services form only 1.5% of thenational postal income, while in some countries this percentage goes up to 30% (e.g. in 2010 theAustralian Post Office increased its profit in the segment of parcel delivery by 36%, primarily due toelectronic commerce; in the same segment, when quarterly results are compared from the end of 2011with those from 2010, German Post Office had an increase of as much as 70.4% ). When it comes tothe volume of electronic commerce, what is more interesting is that at the top there are, besides theexpected postal administrations of most developed countries, those such as Belarus, together with highrankings of, for example Tunisia and Ukraine. An important conclusion could be drawn from this data- the possible lack of economic wealth or development is not an insurmountable obstacle to thedevelopment of electronic commerce, if there is the appropriate innovative potential and determinationto support the development in this segment. To go even further, if some of the most developedcountries can perceive electronic commerce as a matter of convenience, it is exactly in creating thepreconditions for the expansion of electronic commerce where a country like ours needs to see adevelopment opportunity for the broadest view of the national economic system.2.6. A Practical Example of the Proposed Model If we return to our field, we can underline a remarkable information-communication capacityof The Post of Serbia, which is one of the basic requirements for joining the aforementioned‘mainstream’. The rhetorical commitment to the development of electronic postal services, which has18 Rhéal LeBlanc, Posts ride technology wave, Union Postale 4/2011, Bern, str. 11-15
  9. 9. always been a feature of management of our public postal operator, has recently gained more andmore confirmation in the practical activities of the Post of Serbia with the aim of offering differenttypes of these services. One of the recent and particularly interesting examples is that of a value addedservice: ‘Post Export’+ SI - safe Internet19. In fact, it is the service of goods export, which in additionto a shorter customs procedure, involves getting the ADSL Internet connection and free qualifiedelectronic certificates on the card with the reader. With a bit of generalization, this may be an exampleof how electronic commerce could function in the future, whereby it is not limited only to theinternational business. Also, including that service in the ‘value added services’ implies a degree ofextravagance, and the point of our discussion is that it is precisely these and similar services whichshould be included in the usual and regular ones, or more precisely, into the services of generalinterest, where the state would stimulate these kinds of business operations through appropriateregulatory and other procedures. At this point we can further clarify the concept of ‘network access’ which we have mentionedabove. Through the information-communication and delivery network of the public postal operator,the state guarantees the possibility of trading electronically on the whole territory according to thecost-oriented prices, with the specified quality and equal conditions for all. The manufacturer, i.e.seller can directly perform a complete electronic sales operation through this network and according tothe conditions defined above. However, if he has for example his own information-communicationresources, he can achieve adequate savings, since he could use the network of public postal operatoraccording to predetermined prices only in its delivery area. Also other authorized postal operators, incompliance with all the prescribed requirements for delivery within electronic commerce, could againuse, with pre-specified prices, the information-communication infrastructure of the public postaloperator, while various other combinations are also possible... This effectively prevents the establishment of the monopoly of the public postal operator inthis segment, whereby the state is required to determine the mechanisms of compensation of possiblelosses incurred by the public postal operator (of which, we are confident there would not be any).What is significant in this whole concept is the fact that this principle excludes commercial quantitydiscounts, introducing only a predetermined discount on the ‘avoided phases of the business process’,what puts small and medium enterprises into as much as possible equal position in relation to largecompanies. This would essentially be indirect subsidizing of small and medium enterprises, and itseems to us, in a far more practical and efficient way than subsidizing them directly, which is alwaysaccompanied by a threat of possible poor operating results, or something even worse, making thesefunds lost forever.2.7. The Question of Trust in E-commerce We have already mentioned the problem of trust of the companies and citizens in thereliability of electronic commerce, both in the phase of electronic ordering and paying for goods, andin the delivery phase. In this regard, the results of a global research of social values published severalyears ago have a very disheartening effect20. The fact is that the citizens of Serbia are at the very topregarding all issues related to lack of confidence in various institutions, whereby we particularly pointto the data suggesting that in Serbia, only 15.3% of citizens believe that most people can be trusted(world average is 26.4%), i.e. that even 14.6% of our citizens think that most people want to takeadvantage of them (the world average is 10.7%, while in the west-European countries it isapproximately 5%). In fact, here we recognize a lack of what Francis Fukuyama called ‘social capital’,defining it as ‘the expectation of some community members that all other members of the communitywill act regularly, honestly and cooperatively ..."21, which is definitely a serious obstacle to thedevelopment of electronic commerce. What is interesting for us is that Fukuyama draws the generalconclusion that such societies need a certain dose of state intervention in terms of establishing19 http://www.posta.rs/struktura/lat/posalji/posteksport-izvoz-robe.asp [Accessed 03/04/12]20 Nataša Tomić-Petrović, Dalibor Petrović, Pravne i kulturološke pretpostavke za razvoj elektronske trgovine uRepublici Srbiji (Legal and Cultural Assumptions for the E-Commerce Development in the Republic of Serbia),PosTel 2011, Beograd, str. 74-7521 Frensis Fukujama, Sudar kultura, Zavod za udžbenike i nastavna stredstva, Beograd, 1997, str. 33-40. (FrancisFukuyama, Trust. The Social Virtues and the Creation of Prosperity, Hamish Hamilton, London, 1995.)
  10. 10. regulatory rules, and sometimes direct financial support to certain business activities, which, webelieve, corresponds with our consideration in the essential elements. The fact that the public postaloperator could be an integrating factor in this segment is also indicated by the results of another surveycarried out at the European level - after fire-fighters, doctors and teachers, the postal service is in thefourth position concerning trust that the citizens of European countries have in it, far ahead ofmanagers, employees of marketing companies, not to mention the politicians22 ..., This fact hasalready been emphasized in the literature, noting that ‘postal facilities can act as a third party whomone can trust, especially in the field of e-commerce, where buyers and sellers usually do not knoweach other’23 . In this regard it is significant that our state agencies devote considerable attention to theactivities of informing businesses and citizens about the resources and opportunities offered byelectronic commerce (albeit this is mostly related to the first part of electronic commerce, the phaseordering and paying for goods) - starting from the campaigns of the ministry in charge of trade, to therecent publication of a special manual by the Digital Agenda, to mention just a few. However, webelieve that without the creation of appropriate infrastructure and a series of regulatory rules thatwould largely guarantee the security of the implementation of electronic commerce, no popularlydevised campaign will bear fruit - in fact, these have to be complementary and simultaneous activities.That is why we believe that the formation of a special working group of the Serbian Government withthe task of building a national broadband network is of great importance, especially if one bears inmind its potential activities on defining regulatory requirements for the sustainability of publicinfrastructure in this area.2.8. The Possible Organization of the Regulatory Body in Charge of E-commerce Development Building on the above, and not denying the importance we have attached to theaforementioned working group, we feel free to propose what, in our opinion, would be a longer-lastingand more comprehensive solution for the definition of institutional authority that would be responsiblefor the regulation of electronic commerce, than is the ad hoc governmental body, always potentiallysubject to political turbulence. In fact, in Serbia there is an independent regulatory body in charge ofthe regulation of electronic communications – The Republic Agency for Electronic Communications(RATEL). Also, the same body is formed for regulating the postal market operations - The RepublicAgency for Postal Services (RAPUS). The characteristic of Serbia, that beside Macedonia and Bosniaand Herzegovina, it is one of the few European countries where these two regulatory bodies have notmerged into one, will probably not last for a long time and it is reasonable to expect their merger soon.On the other hand, the Trade Development Strategy of the Republic of Serbia stipulates the formationof a special government agency, that is, the Council for the development of electronic commerce. Ourproposal basically comes down to the merger of all the three agencies into one, and not primarilybecause of the often complaints concerning the number of such bodies in the country (although thatmay be a valid reason for someone). The point is that such organization in one state agency wouldinclude all the regulatory (and we also suggest some surveillance) services related to electroniccommerce, which, we are convinced, would have a stimulating effect on its further development. Onthe other hand, it is common that the formation of bodies such as the proposed agency, that is thecouncil of electronic commerce, is accompanied with sometimes long-lasting problems related to thethings such as the lack of financial resources, appropriate personnel, and even office space. If thisagency should be formed within the process of merging of the existing two agencies that already havethe personnel and material and technical conditions for work, the planned activities of electroniccommerce development could begin almost immediately. Yet, we once again repeat the argument thatit is natural and necessary to regulate all activities related to electronic commerce in one place, startingfrom the phase of electronic ordering and payment through to final delivery of goods to the consumer,22 http://www.b92.net/info/vesti/index.php?yyyy=2008&mm=08&dd=27&nav_category=15&nav_id=315640[Accessed 11/02/12]23 Jelica Petrović-Vujačić, Snežana Kaplanović, Poslovanje poštanskog sektora u uslovima globalne ekonomskekrize (The Functioning of the Postal Sector under the Conditions of the Global Economic Crises), PosTel 2011,Beograd, str. 64
  11. 11. because we consider this argument to be essential and more important than others, of technical andpolitical character. 3. CONCLUSION To summarize, we perceive adequate treatment of the phase of goods delivery as an integralpart of the regulation of electronic commerce, by which many ‘starting mistakes’ could be avoided.These are the mistakes that the comparable economies went through during the development of thistype of trade. The fact that in terms of delivery of postal items significant state resources have beeninvolved, both the resources of the postal network, and information and communication ones, canplace electronic commerce, especially because of its wider development potential, among the servicesof general interest, long before some of the traditional postal services. The fact that a new law on postal services is being prepared enables the implementation ofsome of the proposed solutions in a relatively short time. On the other hand, as the same ministry is incharge of both electronic communication and information society operations, as well as the postalservice operations, a comprehensive and coordinated approach to the problem of the development ofelectronic commerce can reasonably be expected (or required), which is the only guarantee for the fullimplementation of its potential as an important segment of the overall economic development andraising the welfare of citizens. REFERENCE LITERATUREFrensis Fukujama, Sudar kultura, Zavod za udžbenike i nastavna stredstva, Beograd, 1997, str. 33-40.(Francis Fukuyama, Trust. The Social Virtues and the Creation of Prosperity, Hamish Hamilton,London, 1995.)Rhéal LeBlanc, Posts ride technology wave, Union Postale 4/2011, BernDejan Marković, Mladenka Blagojević, Đorđe Popović, Konkurentske strategije na liberalizovanompoštanskom tržištu sa aspekta lokalnih i mass usluga (Competitive Strategies in Liberalized PostalMarket in View of Local and Mass Services), PosTel 2009, BeogradJelica Petrović Vujačić, Snežana Kaplanović, Konkurencija na evropskom tržištu poštanskih usluga –podsticaji i prepreke (Competition on the European Postal Services Market – Incentives and Barriers),PosTel 2009, BeogradJelica Petrović-Vujačić, Snežana Kaplanović, Poslovanje poštanskog sektora u uslovima globalneekonomske krize (The Functioning of the Postal Sector under the Conditions of the Global EconomicCrises), PosTel 2011, BeogradBojan Stanivuković, Pošta kao integralni provajder elektronske trgovine (Post as E-Commerce IntegralProvider), PosTel 2007, BeogradMaja Stanivuković, Direktiva o elektronskoj trgovini ( Directive on E- Commerce) , Evropskozakonodavstvo, br. 6/2003.Ina Steiner, Would You Miss Your Post Office If It Closed, http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2011/9/1315681076.htm l [Accessed 08/10/11]Nataša Tomić-Petrović, Dalibor Petrović, Pravne i kulturološke pretpostavke za razvoj elektronsketrgovine u Republici Srbiji (Legal and Cultural Assumptions for the E-Commerce Development in theRepublic of Serbia), PosTel 2011, BeogradMilan Vukotić, Evolucija univerzalne poštanske usluge (Evolution of the Universal Postal Service),PosTel 2005, Beograd