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Jonathan Reynolds

By Jonathan Reynolds

Reflections on the EC Communication on E-Commerce

Visiting researcher, Marta Blázquez Cano writes:

On January 11th the European Comission adopted the Communication on E-Commerce and other Online Services previously announced in the Commission’s Digital Agenda. The objective is to set out the Commision’s vision for the potential represented by on line services, to identify the obstacles of the development of internet economy and propose some recommendations to facilitate it. The Communication is based on a qualitative and quantitative research study conducted in the 27 Members States. (Click here for the research.)

A particular finding of the study is the missing potential of cross-country e-commerce. Taking into account a hypothetical situation of a 15% share of internet retailing and a Single EU consumer Market consumer, the research calculates that welfare benefits would be in the order of 70.4 billion Euro per year. This looks attractive, even within the context of the 3.5% current share of Internet retailing in the EU.

But beyond the data, cross country e-commerce has a lot of advantages, especially for eastern Europe, small countries or geographically isolated areas, because it provides people access to a wider range of products and, as a consequence, to price savings and better choices.

However, half of the respondents of the study don’t currently shop in other countries and, what’s worse, in most of the countries of Eastern Europe a third of respondents don’t shop on line even in their own countries. How can consumers be expected to consider shopping on line in other countries if they don´t have confidence to do it in their own countries? It’s probably initially easier to overcome the obstacles of the development of internet economy in the countries with a lower rate of on line shopping.
The reasons for people not shopping on line reported by the study are only provided at the country level, which is unhelpful for solving what may be quite practical problems. The obstacles in general terms are predictable: preference for seeing the product in a shop, extended delivery times, fear of misuse of personal/payment details and the perceived difficulty in resolving problems if something goes wrong. The same conclusions apply for such different places as UK, Germany or France, (with high-speed internet access and high percentages of on line shoppers), as much as places such as Malta and Cyprus, with more than 40% of non-on line shoppers.

There’s a big potential in e-commerce. Many Europeans live in a multichannel retail environment but such consumers think in a different way. The report includes an interesting chapter focused on consumer shopping behaviour through different channels. It spells out the various touch points consumers use in their buying strategies. We already know that when consumers prepare to purchase they take different steps that are a combination of on line and off line strategies. For example, if they are going to buy a product on line it’s normal that they go to the shop to see it before the purchase. Or if they want to buy something in a store, they try to research prices and opinions of other consumers on line. They’ll use price comparison websites too. Here’s some useful data to confirm the extent of this multichannel behaviour across the region.
In this sense the measures proposed by the European Commission are sensible and positive: to increase consumers’ confidence: reassure over on line payment systems, offer the same consumer rights across the EU, move to protect personal data, develop measures against fraudulent on line sellers such as dispute resolution systems, etc. But they need to walk before they can run. It’s also necessary to better understand the idiosyncrasies of each country and to develop strategies to counter particular obstacles to shopping on line first. Only then can it really be possible to set up cross-country e-commerce that will deliver the welfare benefits anticipated by the Commission.

 

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