The European Commission has just announced proposals to remove barriers in two key areas of the European online world:
- Supply of digital content (e.g. streaming music); and
- Online sale of goods.
These proposals are a result of the Digital Single Market Strategy, which aims to promote e-commerce by ironing out differences in practices across online Europe. Its surveys show, “only 12% of EU retailers sell online to consumers in other EU countries, while three times as many (37%) do so within their own country. Similarly, only 15% of consumers purchase online from another EU country, while roughly three times as many (44%) do so from their own country.”
The Commission reported that e-commerce in Europe has yet to take off in the same way as it has in other parts of the world, with 2014 figures showing e-commerce as having a 7.2% share of the European retail sector, whereas in the USA it reached 11.6%.
The barriers to business in trading online across Europe are clear – tackling a myriad differing consumer contract laws and the prohibitive costs of adapting to national laws of each Member State are a significant deterrent, particularly to SMEs. At present, businesses must pay €9,000 to adapt to the national contract law of a different Member State to which they are selling. Removal of these hurdles should spell good news for businesses in exploiting new markets and, ultimately, for consumers who should benefit from increasingly competitive prices as market forces do their work. Whilst these are only proposals at present, there is firm support from the Commission in pushing through a legislative regime.
Key benefits proposed for consumers
- Introduction of a two-year guarantee period, during which defective goods must be repaired or replaced by the seller without the consumer having to prove that the defect existed at the time of delivery;
- Defective digital content must be fixed, failing which the consumer should either receive a full refund or a discount; and
- An increased level of consumer trust when buying from a trader in another EU Member State.
Key benefits proposed for businesses
- Ability to sell goods online and provide digital content using one set of contract law rules, streamlined throughout EU Member States;
- Removal of the one-off fee of €9,000 for businesses when adapting to the contract law of another Member State; and
- Access to an anticipated market of 70 million additional consumers.
The Digital Single Market Strategy anticipates that over 122,000 EU businesses will make the most of the changes by selling to consumers in other Member States.
Vera Jourová, EU Commissioner for Consumers said "Today's proposals will give confidence to consumers to buy across borders and offer simplification for businesses, especially SMEs, selling online across Europe.….Harmonising contractual rights throughout the EU will facilitate the supply of both digital content and goods across Europe. Consumers will benefit from simple and modernised rules; businesses from more legal certainty, cheaper and easier ways to expand their activities."
It seems this is just the start of changes to come, with 16 initiatives being tabled during 2016 as part of the Digital Single Market Strategy. This should herald more competitive online experiences for consumers and could open up significant opportunities for those businesses ready to exploit the changes.