There are widespread problems with refusals of orders for EU consumers trying to purchase goods online in another Member state, according to a new European Commission report on cross border consumer e-commerce. The research found that 60% of cross border transactions could not be completed by consumers because the trader did not ship the product to their country or did not offer adequate means for cross border payment. The Communication presents a series of measures to be taken to reduce the complex regulatory environment which is acting as a disincentive for businesses to serve consumers in other Member States.

The European e-commerce market was estimated to be worth 106 billion euros in 2006. The internet is the fastest growing retail channel. In 2008, 51% of EU retailers sold online.

But the gap between domestic and cross-border e-commerce is widening as a result of barriers to online trade. While the share of EU consumers who shop online grew from 27% to 33% in two years (2006-08), the share of those who bought anything online from another EU country was stagnant (6% to 7%). And only 21% of traders currently sell at a distance across borders.

Yet the potential is clearly there. One third of EU consumers say that they would consider shopping online from another EU country if the product was cheaper or better, and a third are willing to buy in another language. 59% of retailers are prepared to trade in more than one language.

The mystery shopping

An online test conducted on behalf of the European Commission set out to check the opportunities and barriers for consumers shopping online across borders in the EU by going through the shopping process. Testers in all EU countries searched for 100 popular products on the internet, checking what savings can be made when buying across borders and how difficult it is to buy online from another EU country. In total, close to 11,000 test transactions were carried out.

The main findings are:

• Substantial savings for consumers are possible. In 13 countries out of 27 and for at least half of all product searches, consumers were able to find an offer in another EU country which was at least 10% cheaper than the best domestic offer (all costs, such as delivery to the consumer's country, included).
• Access to products which are unavailable at home. Shoppers in 13 EU countries could not find domestic online offers for at least 50% of the products which they searched for, but found them in another EU country.
• Most orders fail. On average, 61% orders placed online in another EU country failed, mainly because the trader refused to serve the consumer’s country of residence or did not offer adequate means of cross border payment.

The barriers to e-commerce

The communication published today presents a strategy for tackling the barriers to cross-border online trade. Some of the priority areas for action are:

• Create a simple, single set of rights for EU consumers. The proposal for the Consumer Rights Directive aims to replace the current confusing patchwork of laws with one simple EU-wide set of rights, offering equal protection to consumers while reducing compliance costs for retailers and offering them legal clarity.
• Boost cross-border enforcement. Coordinated EU-led action to enforce consumer law should continue, to stamp out illegal practices and boost consumer confidence in cross-border shopping.
• Simplify cross-border rules for retailers, e.g. on value-added tax, recycling fees and copyright levies. Currently some retailers must deal with several tax authorities, face different national rules on recycling electronic waste, and may end up paying copyright levies in several countries for the same goods. The Commission’s proposals address the first two problems. On levies, practical solutions must be found quickly.

This is not the first investigation that the EU makes on electronic commerce within the Union: a recent study by the Directorate General for Health and Consumers warned about the fraudulence of a high percentage of European sales websites, and previously the Commission had issued the eYouGuide, an online tool to advise the European consumers about electronic commerce.