EU eCommerce: Burdened by Borders?

Another fine Munich evening.  I was sitting in a small cafe near the opera house sipping an espresso and enjoying the last few fleeting days of a pleasant autumn evening before the cold of winter sets in.  On the menu is the standard Bavarian fare along with a smattering of German, French and Italian wines and imported Italian coffee (honestly, I’ve become so addicted to this Lavazza Oro stuff that I now order it from Amazon instead of settling for any other brand).  It seems so natural that all of these things could be found together in one of Europe’s great cities.   So why does it continue to be more difficult to purchase things across geographical boundaries via a web site than through more traditional brick-and-mortar channels?  Is eCommerce failing to live up to the promise it has for consumers across the continent?
ECommerce in Europe, it will come as no surprise, is doing very well.  In fact, out of the €550 billion eCommerce market, €200 billion of that business is generated in via EU eCommerce.  The number of online consumers continues to grow, but there are barriers to eCommerce sites doing as well as they could, and it turns out the barriers are as clear as the lines delineating the borders of European countries. Internet Retailing recently reported that the percentage of consumers that shop online increased from 27% to 33% between 2006 and 2008, but that significantly less buy across borders (only 7%, in fact).

It should also come as no surprise that there is more at play here than just geographic boundaries:  Language barriers, problems with international taxation and shipping, and legal issues that unnecessarily encumber the buyer when making a purchase from another country.  But perhaps the most telling issue that is mentioned is that most retailers operate their globally available sites like they are somehow limited on the internet to their own national borders.  This isn’t to say that sites are multilingual or omit support for multiple currencies.  Many sites support these functions quite well, but it isn’t the language issue that is complicated about building eCommerce solutions anymore.  It’s the legalities of purchasing a product from another country that may have different laws regarding shipping and taxation that are just too difficult for the average consumer to deal with.  Although Internet Retailing’s research shows that one-third of EU consumers would buy a product from another country if economically motivated, they general cringe at the thought of dealing with taxes, shipping rules and the complications regarding returns and customer service issues in other countries.

In order to begin to fully understand the barriers that inhibit international eCommerce transactions from occurring more frequently, it is important to be able to measure the impact that eCommerce has on both individual and collective economies within Europe.   A new standard is being developed to do just this and is being supported by several EU countries including Belgium, Germany, France, the UK and the European Commission.   GEMS, the Global eCommerce Measurement Standard, will provide new methodologies to measure eCommerce impact across geographies.  The hope is that a new picture will evolve of the international eCommerce selling sector as a whole.  Having this data is the first step in understanding how borders affect both selling and buying behavior and how legislation could be created (or eased) to promote international eCommerce without placing the burden of borders squarely on the consumer.

Whatever the end result might be, there are current solutions that can ease at least some of the pain.  Having the right processes in place to interface with multiple shipping companies in multiple currencies, multiple languages, potentially with different taxation rules is the first wave. Additionally, each site that supports a multi-lingual catalog should support customer service in each of the sites languages.  Whether the resulting customer support means providing detailed, language-specific online instructions for returns or the necessity of implementing a multi-language call center really depends on the audience and customer base in a particular geography.  As GEMS is rolled-out, and more is understood about cross-border customer behavior, online strategies may shift.  I’m sure that new laws, some stricter than others, will continue to enhance and hinder international eCommerce as things develop more fully.  I just hope they don’t make the coffee any more difficult to come by.

2 Comments

  1. Utz October 28, 2010
    • Kevin Carlson October 30, 2010

Add Comment