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The Postcode Penalty: How Some Online Retailers Are Disadvantaging The Postcode Penalty How some online retailers are disadvantaging Scottish consumers SHORT REPORT 2012 by Sarah Beattie-Smith, Policy and Parliamentary Officer Contents Contents................................................................................................................1 The Citizens Advice Service in Scotland................................................................2 Introduction..........................................................................................................2 Key findings...........................................................................................................4 What consumers told us.......................................................................................6 Delivery surcharges..............................................................................................8 The Postcode Penalty..........................................................................................11 The Good the Bad and the Ugly..........................................................................12 The Good...............................................................................................................12 The Bad..................................................................................................................14 The Ugly.................................................................................................................15 Excluded Consumers...........................................................................................18 The usual suspects .................................................................................................18 The missing millions...............................................................................................20 Transparency of charges and policies.....................................................................21 Late delivery...........................................................................................................22 Royal Mail ...........................................................................................................23 The postcode penalty for businesses..................................................................25 Conclusions and recommendations............................... ....................................27 Acknowledgements....................................................... ....................................28 Appendix 1 – Who responded to our survey.........................................................29 Appendix 2 – issues faced by consumers in Scotland............................................35 Appendix 3 – Research methodologies.................................................................36 Appendix 4 – The postcode penalties for businesses............................................39 Appendix 5 – Companies named...........................................................................48 The Postcode Penalty - 1 The Citizens Advice Service in Scotland Citizens Advice Scotland and its member bureaux form Scotland’s largest independent advice network. CAB advice services are delivered using service points throughout Scotland, from the islands to city centres. The CAB Service aims: to ensure that individuals do not suffer through lack of knowledge of their rights and responsibilities, or of the services available to them, or through an inability to express their need effectively and equally to exercise a responsible influence on the development of social policies and services, both locally and nationally. The CAB Service is independent and provides free, confidential and impartial advice to everybody regardless of age, disability, gender, race, religion and belief and sexual orientation. In 2010/11, citizens advice bureaux (CAB) in Scotland helped over 230,000 clients with over half a million new problems. That’s over 1,500 new problems brought to CAB each day of the year. More than 2,200 trained volunteers and paid staff ensure that thousands of people in Scotland receive vital advice every day. However, the Scottish CAB Service isn’t just the country’s leading independent advice service. It’s also a leading advocate for social change. Introduction In late 2011, the Scottish CAB Service surveyed consumers in Scotland about their experiences of online shopping, looking specifically at the issue of delivery. From the initial 900 responses, we published our interim findings into the problems facing Scottish consumers. Our report – Free Delivery* - is available online.1 In total, 3191 people responded to our survey between November 2011 and January 2012. Consumers from across Scotland – from the Borders to the Highlands and Dumfries and Galloway to Aberdeen told us of a wide range of problems. From high surcharges to late delivery and many survey respondents told us that they had even been refused delivery because of where they lived. Others reported that retailers refused to send items via Royal Mail whose universal service obligation means that delivery costs the same, regardless of where you are in the UK. The Postcode Penalty - 2 We asked consumers to tell us their postcode and their experiences of online shopping delivery and to name any specific companies with which they had had particularly good or bad experiences. This allowed us to look beyond the anecdotal experiences of consumers and to examine the policies employed by retailers. A total of 640 different retailers were named by survey respondents. This report details the findings of our research into 534 of those companies’ policies (the remainder had either gone out of business, did not sell online, were courier companies or were one of several companies by that name). A handful of companies were highlighted as providing a good service and we detail them in this report. However the majority of retailers named by consumers were highlighted as providing a poor service. Therefore the research presented here focuses on the retailers which consumers told us were problematic. The report is intended to be used as a snapshot of current consumer experiences of delivery and the policies employed by a selection of retailers. Given that these retailers were identified by consumers as providing a poor delivery service, this report should serve as a guide to “what not to do” rather than a reflection of the practices of all online retailers. This report is the product of several months of research which would not have been possible without the hard work and enthusiasm of staff and volunteers in citizens advice bureaux across Scotland and the local communities which they serve. Specific thanks are due to several people in particular and these are detailed at the end of the report. In addition, over the last year Citizens Advice Scotland has worked closely with the Office of Fair Trading, Consumer Focus Scotland and Highland Council Trading Standards. Our joint work is undoubtedly of benefit to consumers and we are grateful to all of our partners for their excellent research and campaigning, support and collaboration in working for a fairer deal for consumers. • At least 1 million Scots face surcharges, late delivery or are refused delivery altogether when they try to buy goods online. • Consumers in Scotland’s island communities face a postcode penalty of nearly £19 extra (£18.60) to deliver goods they buy online – that’s a 500% mark up on the standard delivery price. • Consumers in the Highlands are charged an extra £15 per delivery on average • Of the 534 retailers whose policies we investigated, 335 of them (63%) charged extra for delivery to certain parts of the UK. 72% of those surcharges applied to consumers in Scotland, indicating that Scottish consumers are disproportionately affected by delivery surcharges. The Postcode Penalty - 3 Key findings • 55% of retailers who restricted the areas of the UK to which they would deliver refused to deliver goods to any Scottish islands, disadvantaging the estimated 100,000 people who live in island communities. • Ofcom’s latest statistics show that UK shoppers spent an average of £1000 on online shopping on 2011 • 85% of the consumers who responded to our survey said they would warn family and friends against using a retailer with unfair delivery practices • 34% of retailers we investigated said that delivery would take longer for consumers in some parts of the UK. 39% of these retailers took an extra three or more days to deliver to consumers in certain parts of Scotland, with some customers waiting as long as 35 extra days for delivery compared the rest of the UK. • A quarter of retailers who told their consumers that delivery could take longer to them did not specify how long it would take. In addition, 44% of retailers who took longer to deliver did not specify which parts of the country were affected • 69% of retailers we investigated did not offer delivery by Royal Mail, despite the Royal Mail’s universal service obligation meaning that delivery by this method costs the same across the UK • 63% of the retailers who charged extra for delivery to some locations did not offer delivery by Royal Mail as an alternative. The Postcode Penalty - 4 Postcode areas of Scotland Postcode Postcode area Postcode Postcode area Postcode Postcode area AB Aberdeen HS Outer Hebrides PA Paisley DD Dundee IV Inverness PH Perth DG Dumfries & KA Kilmarnock TD Galashiels Galloway EH Edinburgh KW Kirkwall ZE Lerwick FK Falkirk and Stirling KY Kirkcaldy G Glasgow ML Motherwell The Postcode Penalty - 5 What consumers told
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