Less than one in ten Europeans buy online from other EU countries. For both consumers and sellers, the process is simply too complicated.
Legal differences between EU countries are one of the remaining barriers to the internal market. To boost cross-border trade, cut costs and give customers greater choice, the EU has drafted a Common European Sales Law.
Maria Baeva Petrunova, from Bulgaria, experienced these obstacles first hand:
“Last year I tried to buy a kindle online for my husband as a birthday present,” she says, “but unfortunately I wasn’t able to. I did everything I was required to to complete my order, but despite that, in the end they said they wouldn’t deliver to Bulgaria”.
Both in her private life and as a dentist, Maria has found that she has greater choice and better prices if she buys her goods from abroad.
But she quickly realised that things were not going to be that easy for her as a Bulgarian citizen.
“I wanted to purchase supplies for my dental surgery from a German company via the internet.” says Maria. “But the next day they sent me an e-mail saying that they couldn’t process my order as it had to be 300 euros minimum for delivery to Bulgaria.”
Maria didn’t want to place such a big order unless she could be sure about delivery times, packaging, and sales documents, which might not be compatible with the Bulgarian tax system.
In the end, she did find a way to buy what she needed, but it wasn’t easy:
“I order goods from Germany to be sent to a friend’s address there,” she says.
“My friend then sends the parcels to me or I collect them when I visit her. So that’s the round-about way I found to get hold of my goods.”
Bulgaria is one of the countries in Europe where it is most complicated to purchase cross-border goods online.
People living in Belgium, Latvia, Malta and Romania have similar problems.
For them, 70 percent of cross-border transactions end in failure.
The European average is hardly better: only four in ten cross-border deals work out.
Ignat Arsenov is director of the European Consumer Centre in Bulgaria:
“In many cases we’re not given any explanation. Sometimes, the sellers simply state in their terms and conditions that they don’t deliver to Bulgaria. Sometimes they say there is problem with the credit card. In many cases, traders mention the legal framework as part of the problem,” he says.
A seller can turn down an online transaction with someone in another country if he doesn’t feel comfortable with the laws and regulations that would apply to the deal.
E-commerce policy expert Stefan Krawczyk explains:
“It’s often a big challenge to be aware of all the details of the rights that are applied to a consumer’s transaction in other countries. In particular for small companies, it’s just too much for them to bare, and therefore they choose the simple solution wich is simply not to sell across borders,” he says.
Only 9% of consumers in Europe buy online from other countries. The same small number of sellers take on the challenge of cross-border trading. In response, the EU has decided to draft a Common European Sales Law.
Family-run business Bivolino is among the first in Belgium to expand online to new markets.
Today the company sells its products in 19 EU countries, but at what price?
Carine Moitier is the co-founder of Bivolino.com:
“First of all, you have to invest in your brand abroad. That’s the first step,” she says.
“Then there’s the language barrier, so you need native speakers to help you in each country. That also represents a considerable cost for a small company,” she adds.
“There’s also the whole question of online payment, which varies from country to country. Other major obstacles include differences in VAT and consumers’ rights. So, for example, in some countries, the maximum delay for returning goods is two weeks, in others it’s only one week, so there again, we need to have a different approach according to the country.”
Each business transaction is based on a contract.
Here again, rules vary between countries, making it more costly to export abroad.
It’s estimated that each additional export market costs a business an average of 10,000 euros.
“In order to sell goods in another EU country, you first need to analyse that country’s legislation,” says Carine Moitier. “This means you need to hire a legal expert there, who will help you understand how the law differs from you country.”
The Common European Sales Law – CESL – would mean sellers don’t have to cope with up to 26 different versions.
It would be applied on a voluntary basis.
Traders could choose to sell their products abroad according to a single set of rules which would be an alternative to the national contract law.
Both parties to a cross-border sales deal in the EU would be able to choose which of the two they want to apply.
The aim is to simplify expansion to new markets for businesses and give consumers more choice.
“European cross border trade, obviously, in the area of e-commerce and online commerce, could be a lot better. We are nowhere near where we should be and the European Commission has realised that as well. The CESL can have an impact on the lack of cross border trade. I think one of the key problems is consumers’ trust and anything that can help in strengthening that trust will of course help cross border trade,” says Stefan Krawczyk.
Another obstacle yet to be addressed is the whole question of transport, delivery and postal services.
The ultimate aim being a harmonisation of rules in what many see as a future United States of Europe.