How-To-Guide: Packaging licensing in e-commerce – What do online retailers need to do?
The trade with goods bought on the Internet is constantly increasing. The number of shipped goods in e-commerce is growing every year in the double-digit range. This ongoing boom is casually generating a huge additional mountain of packaging waste. Politicians reacted by introducing a new, stricter German Packaging Act (VerpackG). What do online retailers have to do? We present an overview of the most important facts including instructions.
- Which online retailers are affected by the Packaging Act?
- Quick check of packaging licensing for online retailers
- Packaging licensing for online retailers: What changes will the Packaging Act bring to e-commerce companies?
- Instructions: How online retailers comply with the Packaging Act
- Packaging Act easily explained: 4 practical cases in e-commerce
- Legal warnings for online merchants: What penalties are threatened by disregarding the licensing obligation?
- Online traders can meet their obligations without much effort
Fast, easy, convenient – online trade is becoming increasingly important to the population. People in Germany are taking advantage of the new digital opportunities and ordering more and more every year via the online channel. An additional advantage: consumers do not even have to leave their homes to place an order. The products are delivered right to the front door – with some providers this is now even done on the day the order is placed.
In addition to the many advantages of online trade for consumers and companies, however, there is also a major disadvantage of the shipping boom: a huge pile of packaging waste is created from millions of additional cartons, shipping bags and filling materials. Legislators are reacting to the increasing packaging waste with a new, stricter Packaging Act, which replaced the previous Packaging Ordinance on January 1, 2019. Since then, non-compliance can be quickly detected by the control authority Central Packaging Register Office through the new LUCID packaging register: This can lead to high sanctions such as warnings, fines of up to 200,000 EUR or even sales bans.
Which online retailers are affected by the Packaging Act?
Every company that uses sales packaging as a so-called initial commercial distributor for the first time and puts it into circulation must participate in a dual system. By paying a "license fee", the companies contribute to the professional collection, sorting and recycling of their packaging.
Affected are online retailers as well as all other companies that put sales packaging into circulation commercially for the first time. This therefore also includes sellers at all possible marketplaces such as eBay, Amazon or Etsy. Since the implementation of the Packaging Act is mandatory from the first packaging, even small online merchants must comply with the new Packaging Act.
Quick check of packaging licensing for online retailers
- The new, stricter Packaging Act came into force on January 1, 2019.
- Online retailers must license sales packaging that they fill and put into circulation for the first time – before the first packaging is put into circulation.
- Sales packaging includes shipping and product packaging including filling materials and packaging components.
- This system participation takes place in a dual system like Interseroh (via its online store for packaging licensing Lizenzero).
- Companies must also register with the Central Packaging Register Office in the LUCID database.
Packaging licensing for online retailers: What changes will the Packaging Act bring to e-commerce companies?
Basically, the Packaging Act does not change that much. Many of the regulations were already included in the Packaging Ordinance. The aim of the Packaging Act is to increase the quota of recycled packaging, to ensure fair competition and more transparency, and to be able to sanction violations of the new Packaging Act more strictly and more easily. Ultimately, the aim is to make a valuable contribution to the environment through more recycled packaging materials.
The greatest innovation of the law is the establishment of the Central Packaging Register office, which serves as a supervisory body for the Packaging Act. Companies have to register in the associated and publicly visible register LUCID (= registration obligation). This register can be viewed by customers and competitors and makes violations of the Packaging Act easily visible.
Those who have registered with LUCID can proceed to the next step. Subsequently, companies must license their packaging with a dual system (= System Participation Obligation). A packaging license for online retailers, for example, can be acquired very easily online via Lizenzero for the Interseroh Dual System.
Finally, online traders must indicate the licensed packaging and the name of the dual system in their LUCID account (= data reporting obligation). This has to be done on a continuous basis, as the data provided by the dual system must always match the data in LUCID: So if an adjustment is made in one of the two places, it must be transferred identically to the other.
Instructions: How online retailers comply with the Packaging Act
The exact obligations of the VerpackG are listed below:
- Registration obligation: All companies concerned are obliged to register with the Central Packaging Register Office in the LUCID packaging register (a step-by-step guide can be found here: Registration at LUCID).
- System Participation Obligation: In order to contribute to the professional collection, sorting and recycling of packaging, initial commercial distributors must participate in a dual system such as Interseroh via the online store Lizenzero by licensing their sales packaging.
- Data reporting obligation: Finally, the licensed packaging volumes and the name of the dual system must be entered in the LUCID packaging register.
Packaging Act easily explained: 4 practical cases in e-commerce
1. Own online shop
As a store operator you ship the goods directly to the private end user? Since you fill the shipping packaging in this case with the ordered goods yourself and put them into circulation, you are under the obligation to implement the VerpackG specifications for the shipping packaging volumes.
In addition, you can be responsible for licensing the product packaging if you are also the manufacturer of the goods. Because in this case you also fill the product packaging with the goods, so that you are considered the initial commercial distributor of both forms of packaging and must therefore comply with the obligations for both.
2. Fulfilment service provider*
If the ordered goods are shipped by a shipping service provider, they fill the shipping packaging with the goods. Therefore, as an online retailer, you are not responsible for the licensing – your fulfilment service provider must take care of it.
Nevertheless, the same applies here: As soon as you are the manufacturer or initial filler of the product packaging, you must fulfil the obligations of the VerpackG for the product packaging.
Since you as the seller of the goods in the case of dropshipping have no physical contact at any time with any of the packaging put into circulation, since the goods are shipped directly by the producer or wholesaler, you do not need to license either the product or the shipping packaging.
*Exception: If you as a retailer can be recognized on the outside of the shipping packaging alone, you must comply with the obligations for this. However, as soon as a shipping service provider is recognizable with you, alone or none of you, the above mentioned explanations apply.
4. Import of goods to Germany
You are not located in Germany but you sell products to German private customers? Since the Packaging Act applies to all sales packaging that is put into circulation in the German market, you are also affected by the law.
Basically it can be said that always the company must comply with the obligations of the VerpackG, which is responsible for the goods when they cross the border. All imported packaging is then subject to this obligation. Even if this is usually the importer, we recommend that this be recorded in a contract with the partners to eliminate all doubts.
Legal warnings for online merchants: What penalties are threatened by disregarding the licensing obligation?
As mentioned at the beginning, one of the biggest innovations of the Packaging Act is the transparency created by the Central Packaging Register Office with its packaging register LUCID. Customers, competitors and competition centers can now easily see which online traders have registered. This is to create fair competition.
If an online trader does not behave according to the rules, he can be warned. In addition, the new Packaging Act will result in some considerable penalties for mail order companies in the form of fines and bans on sales. A violation of the law counts as an administrative offence and can be punished with a fine of up to 200,000 euros per case according to §34 VerpackG. Online traders and all tradespeople who bring sales packaging into circulation should therefore be absolutely sure to observe their obligations.
Online traders can meet their obligations without much effort
What looks like a lot of work at first glance can be done in a few minutes in practice. Registration with the Central Packaging Register Office can be carried out online in just a few steps, free of charge and in compliance with the law. And the subsequent licensing of packaging volumes in a dual system can also be done conveniently on the Internet. With Lizenzero, online retailers can create a customer account in just a few steps, determine their packaging volumes including the associated license fee without obligation using a calculation assistant and calculator, and thus conveniently implement their System Participation Obligation.
This way, companies can quickly and easily make a contribution to recycling and the environment – and have more time to concentrate on their business and their customers.