GUEST COMMENT The Digital Single Market - will it actually bring down borders for e-commerce in Eur
The Digital Single Market holds the potential for UK retailers to achieve greater cross-border sales goals and to create a strong trading environment across the Eurozone – but only if the terms serve the consumer and the retailer.
The online appetite is there with European online retail sales predicted to reach €233.9bn by 2018
; which is an increase of 67% from €156.28bn in 2014
. It is clear from this that consumer confidence to spend is high and the revenues this pours back in to the market is really important for a healthy economy to flourish.
Consumer behaviour is changing, but can the legislation keep pace?
The online retail environment had been fairly calm up until a few years ago, with consumers previously defaulting to homeland online retailers for ease and simplicity of purchase. However, consumers are more frequently landing on content from international retailers as they use the internet to proactively search for a product. Be it an image they like on social media or Google Shopping results, the internet provides a greater variety of options to shoppers and it is vital that retailers create the right environment to make these national and international online sales flourish.
To create an open, flexible market that reflects the dynamic nature of the digital economy, we must ensure the Digital Single Market is working towards a more competitive business environment in order to reduce the cross border sales barriers for both consumers and internationally minded retailers.
Today’s digitally-savvy customers are actively searching for their favourite brands online, looking for greater variety and the best deals and paying no heed to geographical boundaries. However, the continent's patchwork of national markets and outdated legislation looks increasingly anachronistic in this new world. As a result, there are crucial barriers that digital businesses need to overcome in order to compete globally such as shipping, taxes, currencies and returns.
The following areas need to be addressed in order to meet customer needs and achieve cross-border success:Simplified VAT rules must be implemented
The challenge for retailers to offer products in just one new, often untested market, can be so intensive that it deters retailers from expanding. The need to register for VAT in every single market and to comply with regulations and product restrictions may inhibit international expansion. While not all leaders will agree on preferred rates for VAT across Europe, having a single and centralised system for registering the tax would be a major step forwards.
The DSM commission touches on this issue and will make legislative proposals next year, however this may take too long for retailers currently operating in the ecommerce market. Retailers can save time and money by using a global partner who deals with all VAT related regulation. Fairer and more transparent pricing must be welcomed
Shipping prices are a major barrier to cross border e-commerce. Current legislation does encourage competition to make shipping methods and pricing levels more competitive, yet it is doubtful that this initiative alone will significantly reduce prices for online customers.
From the retailers perspective, in order to be able to offer a more efficient and competitive delivery service they must rethink their operational processes and offer multiple shipping options at highly competitive rates, otherwise international customers will default back to their domestic webshops.Different payment methods across European countries need to be addressed
Each country has its preferred payments providers such as Multibanco in Portugal, Giropay in Germany, iDeal in the Netherlands, for example. Many shoppers will be price conscious, while others will be seeking their preferred payment menthols for ease of purchase. Meeting both of these needs is an important characteristic of the modern day online retailer.
As online retailers and consumers continue to evolve at rapid speed, regulations and legislation need to keep pace with this change. Until regulation is in place, merchants must have the right tools to support their international ambitions. Removing cross border barriers can be a difficult task that requires huge investment. However, retailers can find a global partner to better service their needs and meet international sales expectations. It’s the only way to stay true to their customer service pledges and enable seamless, flexible and simple cross-border commerce which really delivers return on investment. Nir Debbi is co-founder and CMO of Global-e