Almost 60% of the 515 million internet users in Europe make purchases online. In 2015, e-commerce shifted approximately €455,000 million around the continent, 14% more than the previous year. And in 2016, that figure constitutes no less than 2.59% of the EU’s GDP and is set to repeat this double-digit growth. All data indicates that the rise of European e-commerce is a growing reality.
This strong growth contrasts with the general perception that it is unsafe for consumers and companies to buy and sell online respectively. In this sense, what challenges has the e-commerce yet to overcome and what measures have been taken in the EU to improve the situation?
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The challenges of e-commerce for buyers and sellers
A recent report by Ecommerce Europe of over 25,000 European companies that sell goods and services online reveals that 59% of respondents consider the European regulations for online purchases to be complicated, and 48% sees overly complex taxation and customs rules dominating European e-commerce.
European Commission - Fact SheetOnly 15% of consumers buy online in other EU countries and only 8% of companies selling cross-border.
Why so few? The process is complicated and expensive.
There is a clear paradox between the perception of e-commerce and its actual rate of adoption, which poses the following challenges for both buyers and sellers:
- For buyers: e-commerce requires greater consumer confidence, convenience and, above all, greater sense of security when making transactions online.
- For sellers: a far greater volume of online sales is needed, as well as a means of effectively combating the growing rate of fraud and cybercrime on the web.
Measures adopted by the EU to strengthen trade online
To address some of these challenges, the European Union approved a series of measures in late May to encourage online commerce in Europe, focused on solving three key issues: geo-blocking, cross-border delivery of packages and consumer confidence.
- Geo-blocking: avoiding the geo-blocking of certain websites and prevent other forms of discrimination on grounds of nationality or residence.
Geo-blocking refers to the bad practice of certain online vendors denying access to a website if the visit comes from another EU member state. It also refers to the barriers that some traders put in place so that customers from other member states can not view certain products or services, or forcing users to exclusively make payments by credit cards issued in a certain country.
On the websites examined by the survey, only 37% of buyers were permitted to complete a transaction with the successful introduction of data from their credit or debit card.
With the new measures, the EU wants to completely discourage such discriminatory practices.
- Cross-border delivery of packages: aiming to ensure greater fairness and transparency regarding the prices charged for cross-border transport services.
When shopping online from stores based in other countries, transport costs are a factor that deters many buyers from finalizing a transaction. This not only affects buyers but also vendors, since it hampers them from reaching new markets. In addition, prices for cross-border shipments do not justify, in many cases, the underlying costs.
51% of companies that sell, have sold or have tried to sell online to other EU countries consider that delivery costs are too high. And 27% believe that this is a major problem.Source: Flash Eurobarometer 413 - “Companies engaged in online activities”. (2015).
Thus, the new proposed regulation for package delivery services has been adopted by the EU to improve the regulatory framework and achieve maximum transparency in transport prices between member states.
- Consumer confidence: the intention here is to boost consumer confidence by outlining their rights against unfair practices when buying online.
The new measure taken by the EU is a review of the Consumer Protection Cooperation Regulation, established in 2007 with the aim of bolstering consumer rights across Europe. However, today there are still many websites that do not respect them and this has negative consequences for trade:
37% of e-commerce websites pertaining to travel, entertainment, fashion, electronic goods and consumer credit services do not meet the basic standards of consumer protection, resulting in a €770 million annual decrease of online cross-border purchases.Source: European Comission - Fact Sheet. Boosting e-Commerece in the EU. Q&A. May 2016.
Since very few national organizations can respond adequately to consumer rights infringements committed by companies, the EU has decided to bolster the Consumer Protection Cooperation Regulation with the aim of improving the mechanisms that these organizations have to combat illegal and abusive practices and enforce compliance with the law.
Although much remains to be done to realize the full potential of e-commerce in Europe, these measures continue to remove barriers that further advance the commercial integration of all EU member states.
How to minimize the risk of phishing in online shopping?
Another law that has prompted the European Union to continue its integration process while having positive ramifications on the development of European e-commerce, is the Regulation 910/2014, known as eIDAS, which entered into force on 1 July.
This EU regulation establishes a common legal framework for cross-border use of trust services for electronic transactions and electronic identification services, including certificates and electronic signatures. These tools are a guarantee of additional security in online transactions, both for buyers and sellers.
Because the use of electronic signatures or digital certificates reinforces customer digital identification when registering on the company’s website to access its products and services. In the particular case of advanced electronic signatures, these are uniquely linked to the signer by definition, thus allowing users to be unequivocally identified.
With these measures in place, online businesses minimize the risk of identity theft when selling products or services online, and buyers also have their own safety reinforced. If a company requires the transaction to be completed by electronic signature, it significantly reduces the risk of stolen identities being used to make online purchases.
Ultimately, all these measures and regulations aim to achieve a single European market in which both goods and services, people and capital can circulate freely, securely and with equal conditions among all member states.
This post is also available in Spanish.