There’s no business like E-business

Business Legal Agreements

The potential of e-commerce remains largely untapped

The online retail sector is growing, although the current economic situation is reflected in the sales of online stores. Studies suggest that the rate at which Finns buy online is on par with the European average, but the Digital Barometer 2015 survey shows that Finland lags behind other Nordic countries in online sales. Thus, Finnish online stores do not yet seem to reach (or even aspire to reach?) customers outside of Finland. Finnish retailers are clearly not seizing opportunities in this area. Failure to utilise the full potential of e-commerce has been identified across the EU. Only 15% consumers buy online from another EU country, and only 8% of companies sell across borders.

The EU Commission’s recent proposals for regulations to promote e-commerce

Creating a digital single market and boosting e-commerce are some of the EU’s strategic objectives. The European Commission has again recently proposed new measures that will help consumers and companies to do business online more easily and confidently across the EU.

The new legislation proposed by the Commission seeks to ensure that consumers who wish to buy goods or services in another country are not discriminated against in terms of price, payment conditions, or other terms of sale, unless this is objectively justified. However, the Regulation does not mean that a company would be obligated to deliver goods to all parts of the EU. Companies falling below the lower limit of national value added tax (VAT) are also exempt from the application of certain provisions.

The proposed Regulation will improve price transparency and regulatory oversight of cross-border parcel delivery services, so that consumers and retailers can benefit from affordable deliveries and return options. The Regulation requires that third parties have transparent and non-discriminatory access to cross-border parcel delivery services and infrastructure. The Commission will also publish publicly listed prices of universal logistics service providers to increase competition and price transparency.

The Commission aims to increase consumer confidence in e-commerce by, for example, giving national authorities additional powers to monitor the implementation of consumer rights. This e-commerce package complements two legislative proposals, presented in December 2015, on the supply of digital content and online and other distance sale of goods, and the upcoming VAT simplification proposal to be presented in autumn 2016.

There is no business like E-business

The Commission estimates that the elimination of disparities arising from contract law alone will lead to more than 122,000 companies opening up their online stores to consumers in other Member States and up to 70 million consumers being able to start buying online from other EU countries. This is expected to generate markets especially for small to medium-sized enterprises (SMEs), strengthen competition and promote economic growth. We are not talking small numbers here. A drop in consumer prices is expected to accelerate spending in the EU by €18 billion and to increase the EU’s gross domestic product (GDP) by €4 billion.

The proposals have been submitted before the European Parliament and Council, and we will continue to follow with interest what the content of the final regulations is. Despite the harmonisation of regulations, online retailers have to tackle a variety of practical issues and also work within quite a jungle of regulations, through which Fondia is happy to help you navigate and to which I am sure I will return to in later blog posts.