A new report on "Barriers to E-commerce", presented by EU Consumer Commissioner Meglena Kuneva shows that online shopping is increasingly popular in the EU, but warns that barriers to cross border trade are holding back its development. The report published on March 5th 2009, presents a detailed analysis of current trends in e-commerce across the EU; including per country, most purchased items and obstacles for consumers and business online.

According to the conclusions put forward by Commission's report "Barriers to E-commerce", between 2006 and 2008 the proportion of EU consumers buying at least one item over the internet increased from 27% to 33%. These average figures mask the huge popularity of online shopping in countries like UK, France and Germany where more than 50% of internet users have made online purchases in the last year.

In the Nordic countries (Denmark, Sweden, Norway, Finland and Iceland) the proportion of internet users who bought products and services online was 91% in 2008. Countries like Italy and Spain are also fast growing markets, although against this pattern of fast growing national markets, the extent of online purchasing cross border remains small, at only 7% in 2008 (compared to 6% in 2006).

The report warns that numerous obstacles linguistic, practical and regulatory as well as important trust issues, are holding back the development of online shopping in the EU.

"Barriers to E-commerce". Main findings

E-commerce is doing well

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

• Consumes 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.

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.

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 e-commerce remained stable. Only 7% of consumers currently buy cross-border online. And the gap is widening not narrowing.

Main barriers to E-commerce

The report concludes that one of the main barriers which still remain is geographical segmentation as, although most traders now have a website that is visible to consumers everywhere, 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.

There are also some practical and regulatory obstacles, which include:

• Language barriers, these remain an issue for most traders and consumers, although we should be careful not to overstate their importance. 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 inter-operability 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, the national transposition of EU legislation on waste disposal for example.
• Barriers undermining consumer confidence – in particular reluctance linked to issues of payments, delivery, complaints, application of guarantees, requests for refunds (after sales support), as well as privacy issues. Difficulties are perceived to be aggravated in cross border transactions.

Back in February this year, a European Parliament report highlighted the beneficial influence of Internet on cross-border trade, but raised a number of aspects which were still posing obstacles to its full development and slowing down the process, such as the lack of confidence, therefore calling for more certainty in transactions among other measures. This report provides a series of data on these aspects.

Presenting the report, Commissioner Kuneva, highlighted the benefits that Internet has brought to consumers, as "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. 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 independent "mystery shopping" 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 e-commerce, the Commission's final report on the retail sector is due in Autumn 2009.