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EU reports on barriers to cross-border ecommerce

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“Barriers to E-commerce”, a new report from the EU Consumer Commissioner Meglena Kuneva, has found that online shopping is increasingly popular in the EU, but warns that barriers to cross-border trade are holding back its development.

The report includes detailed analysis of current trends in ecommerce across the EU – including per country, most purchased items and obstacles for consumers and business online.

Overall, one hundred and fifty million Europeans have now shopped online, 33% of the total population and up from 27% two years ago. The percentage of consumers willing to make a cross-border online purchase, however, has stayed almost static at 7% compared to 6% in 2006.

Key findings from the report are:

1. Ecommerce is doing well

Consumers are generally satisfied with online shopping. For particularly frequently bought groups of products such as IT products and entertainment and leisure goods, consumer satisfaction with internet shopping is on average higher than for retailing in general.

  • Consumers are particularly satisfied when it comes to comparing prices, the wider range of offers, the affordability of products and the choice of suppliers.

  • Consumers are less enthusiastic about issues such as clear product information, advertising, the protection of privacy, issues of trust and the possibility of returning goods.

2. There is a strong potential for cross-border trade in online commerce

  • One third of EU citizens would consider buying a product or a service from another Member State via the internet because it is cheaper or better.

  • One third of EU consumers say they are willing to purchase goods and services in another language. In a multicultural Europe, there is a demand for more choice and a wider variety of offers than local stores or global brands can supply.

3. The potential of cross-border trade is failing to materialise

From 2006 to 2008 the share of online shoppers in the EU has increased from 27% to 33% of consumers while cross-border ecommerce remained stable. Only 7% of consumers currently buy cross-border online. And the gap is widening, not narrowing.

The main barriers, both practical and regulatory, include:

  • Geographical segmentation: Most traders now have a website that is visible to consumers everywhere. And yet most retailers still seem to operate on the assumption that the internal market is partitioned along national lines. The range of possibilities is enormous, yet in practice, consumers end up being refused sales or redirected back to their country of origin.

  • Language barriers: These remain an issue for most traders and consumers, although its importance should not be overstated. For example, 60% of retailers are already prepared to carry out transactions in more than one language.

  • Problems in terms of the logistics relating to the interoperability of postal and payment systems, and access issues such as broadband penetration

  • There are regulatory barriers that appear increasingly unjustified to consumers and business; these include for example consumer law, VAT rules, selective distribution law, intellectual property protection and the national transposition of EU legislation on waste disposal.

  • Barriers undermining consumer confidence — in particular reluctance linked to issues of payments, delivery, complaints, application of guarantees, requests for refunds and after sales support, and privacy issues. Difficulties are perceived to be aggravated in cross-border transactions.

“Consumers have everything to gain from the internet,” says Commissioner Kuneva. “It expands the size of the market they operate in and gives them access to more providers and more choice. It makes it possible to compare products, suppliers and prices on an unprecedented scale. Internet use for retail shopping is destined to become pervasive.”

“Already 150 million consumers shop online, although only 30 million shop online cross-border,” she added. “We must see to it that adoption of the internet platform will not be unnecessarily slowed down by a failure to remove important regulatory barriers or to address important trust issues for consumers.”

In September 2009 Commissioner Kuneva will present the results of an independent mystery shopping survey to identify how and where consumers are being prevented from shopping online across the EU. As part of the Commission’s monitoring of the retail sector, Commissioner Kuneva launched last Autumn a Commission-wide process to screen for barriers to ecommerce and the Commission’s final report on the retail sector is due in Autumn 2009.

Readers can download a pdf copy of the full, 75 page report free of charge.

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