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Package deals

Strong currency fuels online shopping surge

By Claire Compton
Staff Writer, The Prague Post
August 6th, 2008 issue

JAN PŘEROVSKÝ/THE PRAGUE POST
DHL parcel services at Ruzyně Airport have seen a much larger influx of packages from the United States this year.
JAN PŘEROVSKÝ/THE PRAGUE POST
The average weight of individual parcels from the United States also radically increased from last year.
The rise of Czech purchasing power abroad has left postal workers and customs officials buckling under the weight of foreign-bought packages.
Locals are taking advantage of the strong crown by putting it toward purchases outside the country, using internationally based Internet stores to get better deals on everything from electronics to brand-name clothing.
The shopping frenzy has overburdened customs offices and caused shipping companies to expand their deliveries at an unprecedented rate: In the first half of 2008, DHL-delivered imports from the United States increased 99.6 percent year on year, said company spokeswoman Pavla Krápová.
Prague’s Customs Administration has hired an additional 12 employees to handle the influx, which threatens to hopelessly backlog the office. “The strong crown makes purchases abroad cheaper, and so the situation at customs is now much worse than it was at Christmas. There are at least 50 percent more parcels than last year,” office spokesman Marcel Ptáček told daily Hospodářské noviny Aug 1.
The bulk of deliveries still come from Germany and the United Kingdom, but the United States and China follow closely, Krápová said.
While increasing in number, parcels are also growing in size. “If we compare the average shipment weight of last year’s imports from the United States with this year’s numbers, we have an increase in weight of 110 percent,” Krápová said.
Local shipping giants DHL and PPL, both owned by the Deutsche Post group, have expanded significantly in the past year, opening new logistics centers in Humpolec, southeast Bohemia and in Líbeznice, near Prague. The companies also opened joint terminals in Teplice and Plzeň.
State-owned Česká pošta (ČP), the leader in parcel delivery in the Czech Republic, also saw dramatic increases. The postal service delivered 120,000 shipments from the United States in the first half of 2008, up from 70,000 in the same period last year.
The most commonly delivered items from the United States were electronics, according to Customs Administration spokesman Maik Křtěn. “This is the result of easier Internet access, greater knowledge of English and good prices in the United States,” he commented.
The recent inundations has led the Customs Administration to consider further departmental expansions to keep operations moving at a reasonable pace, Křtěn said. Currently, the administration’s Prague 5 offices are the sole clearing station for incoming international parcels.
Shipments worth more than 22 euros ($34/526.5 Kč) mailed from stores outside the European Union are subject to customs fees.
According to Křtěn, the value-added tax (VAT), at 19 percent, represented the most commonly imposed tariff on incoming goods. In come cases, a customs duty, which can range from zero to 15 percent, may also apply.
Personal computers and digital cameras are not subject to customs duty, Křtěn said, while flat-screen televisions carry a 15 percent surcharge.
Despite these added costs, local consumers find products online for lower prices than in Czech shops.
The Economist’s yearly Big Mac Index, which compares global prices using the ubiquitous McDonald’s Big Mac as an indicator, confirms that Czechs can find big savings by shopping abroad.
A Big Mac in the Czech Republic costs 66 Kč. While a Big Mac in the United States costs $3.57, implying an exchange rate of 18.5 Kč/dollar. In reality, this rate hovers around 14.5 Kč/dollar.
The Big Mac indicator implies that goods cost 28 percent more in the Czech Republic than in the United States. Therefore, the crown — which since last year rose nearly 15 precent and 25 percent against the euro and the U.S. dollar, respectively — may not be the only factor driving online shopping.
U.S. retailers, facing an economic slowdown at home, have turned to foreign markets and are shoring up their online stores to take advantage of consumers who aren’t tightening their belts in the face of a recession. In January, U.S. retailers Saks Fifth Avenue and Neiman Marcus added countries to their online shipping lists in an effort to tap into the global market.
According to a Nielson survey published that same month, 93 percent of Internet users in Europe had made a purchase online.  
The overall online market increased 40 percent in the past two years, and more than half of Internet users make a purchase online at least once a month. In the Czech Republic, 95 percent of online respondents claim to have made purchases online. Books were the most popular items, making up 39 percent of transactions.

Claire Compton can be reached at ccompton@praguepost.com


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