Notes ·
Europe's New Packaging Rules May Make Small Sellers Stop Shipping There
Joshua MorrisI don't think this is really a tabletop gaming story.
It is a small-business story.
The EU's new Packaging and Packaging Waste Regulation, or PPWR, began applying on August 12.
The environmental goal is reasonable.
If companies put packaging into a market, somebody should ultimately be responsible for the waste it creates.
The problem is what that looks like when the "company" is one person in California mailing 30 packages a year to customers scattered across Europe.
Under PPWR, businesses selling packaged products directly to EU customers can become responsible for the packaging in the member state where it ends up.
That includes businesses outside the EU.
And while PPWR creates a common EU framework, extended producer responsibility still involves registration, reporting, fees and national systems in the individual member states where packaging becomes waste.
There are 27 of them.
That changes the economics considerably for small sellers.
A $40 sale can create an entire compliance relationship
This is the part of Rascal's reporting that really caught my attention.
Small tabletop publishers are going through their sales records country by country and asking whether they sell enough products in each place to justify remaining there.
Some have already temporarily stopped EU shipping.
One publisher told Rascal that EU customers represent about 10% of annual revenue, which is meaningful, but perhaps not meaningful enough to justify the time and expense required to understand and comply with all of the applicable rules.
Another described the accumulating international regulatory burden as another reason that making physical products is becoming difficult to justify at all.
That calculation will not be unique to role-playing games.
Imagine an independent artist who sells prints.
A tiny record label shipping vinyl.
Someone selling electronics kits from a personal website.
A woodworker.
A zine publisher.
A replacement-parts business.
A person running a Kickstarter.
A small Etsy seller who also takes orders directly.
These businesses may have customers in France, Germany, Spain, Italy and a dozen other countries, but perhaps only a handful in each.
For a large company, registering, reporting packaging quantities and paying compliance services is another operating expense.
For someone shipping five packages to Spain this year, it can make more sense to stop selling to Spain.
That is the part I think deserves much more attention.
The regulation can be reasonable and still have a bad scaling property
I don't think the answer is simply that environmental regulation is bad.
Packaging waste is real.
Someone has to pay to collect and recycle it.
Making producers bear some of that cost is a defensible application of the polluter-pays principle.
But regulation has its own economies of scale.
A company selling a million units can distribute a compliance cost across a million sales.
A company selling ten units cannot.
The actual amount of cardboard or plastic introduced by the tiny seller may be almost irrelevant compared with a multinational retailer, while the administrative cost of proving compliance can be enormous relative to the seller's revenue.
Rascal quotes tabletop designer Josh Fox describing exactly this problem.
His advice to small publishers is effectively to determine which EU member states generate enough sales to cover the associated costs and stop selling to the rest.
That is rational.
It is also a terrible outcome if it happens broadly.
The regulation intended to make packaging more sustainable could unintentionally make international commerce increasingly practical only for companies large enough to maintain compliance operations.
The web made tiny businesses global
One of the things I have always liked about the web is that it destroyed some of the old assumptions about who could have an international business.
You don't need offices in Germany to have a customer in Germany.
Someone can discover a weird little website in California, buy something directly from the person who made it, and have it arrive a week later.
That is remarkable when you think about it.
The independent web and inexpensive international logistics allowed incredibly small businesses to behave globally.
Regulation can reverse some of that without anyone explicitly intending to.
If selling one product into another country creates enough fixed administrative cost, the rational response is to geoblock that country at checkout.
Eventually the customer sees:
Sorry, we don't ship to your country.They never see the compliance spreadsheet behind that sentence.
This is arriving on top of everything else
Small physical-product businesses are also not dealing with PPWR in isolation.
Rascal points to the EU's General Product Safety Regulation, changes to de minimis treatment, tariffs, customs requirements and increasingly complicated international fulfillment.
Each requirement may have a perfectly reasonable policy justification when considered separately.
Businesses experience them together.
That matters.
There is a point where the cumulative cost of figuring out how to legally mail a $30 object to another human being exceeds the profit from selling the object.
Large companies respond by hiring compliance specialists and logistics providers.
Small companies respond by turning off international shipping.
That creates a strange kind of regulatory centralization.
Nobody passes a law saying only Amazon-sized companies may sell internationally.
We just gradually construct a system where Amazon-sized companies are the ones with enough infrastructure to do it economically.
There should be a genuinely small-seller path
PPWR does contain provisions intended to reduce burdens on micro-enterprises in some circumstances.
But "micro-enterprise" exemptions are not a universal exemption from the regulation, and the details depend on which obligation and which part of the supply chain is involved.
That is part of the problem.
A person running a tiny shop should not need specialized regulatory counsel to discover whether mailing a board game in a cardboard box to Belgium requires registration.
There ought to be a proportional path.
A meaningful de minimis threshold.
One registration covering the EU for genuinely small cross-border sellers.
A simple standardized reporting mechanism.
Marketplace or carrier collection of small packaging contributions at the point of sale.
Something where compliance for a seller shipping 50 parcels is approximately proportional to 50 parcels rather than looking like a miniature version of the compliance program required for 500,000.
The European Commission says one purpose of PPWR is to strengthen the Single Market and facilitate cross-border business through common rules.
I hope implementation eventually gets closer to that goal for small sellers.
Because the early signal from the tabletop industry is going in the opposite direction.
Publishers aren't necessarily changing their packaging.
They're changing where they are willing to have customers.
I suspect we're going to see the same calculation happen across a lot of small U.S. businesses over the next year.
Not because they don't want European customers.
Because selling a few things to them may no longer be worth the administrative cost.
And that would be a real loss.
The internet made it possible for the smallest businesses to have customers almost anywhere.
We should be careful about rebuilding borders out of paperwork.