When it comes to e-commerce, there is no Europe

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European shoppers looking to purchase products from other EU countries on the Web are likely to fail three times out of five, according to a European Commission study on cross-border consumer e-commerce, published yesterday.

Such failures occur when an online retailer does not accept international payments or is simply not prepared to ship its products abroad.

To research the phenomenon, the Commission carried out a ‘mystery shopping’ study where shoppers across the EU attempted to buy a list of 100 popular products, ranging from cameras to CDs, books and clothing – from a retailer in a different Member state. In total, over 11,000 test orders were carried out and what the study found was that no less than 60% of transactions could not be completed because of inadequate payment options or limited shipping abilities.

Hence, the EC concludes that three out of five cross-border purchases fails, which it rightly identifies as a big problem.

The publication of the research findings comes more than half a year after the Commission published another report on cross-border e-commerce in which it had already concluded that online shopping is becoming increasingly popular in the EU but barriers to cross-border trade might be holding back its further development.

The European Commission seemingly has outdated numbers for the size of the European e-commerce market, which it estimated to be worth 106 billion euros back in 2006, 70% of which was turned over in key markets like the UK, France and Germany. It did cite more recent numbers for European online shoppers, which the EC says grew from 27% to 33% in share from 2006 to 2008, while cross border e-commerce remained more or less at the same level during the same time frame (6% to 7%).

The Commission says the business potential for cross-border online trade is definitely there but is not materializing the way it expected. According to its research, 51% of European retailers sell via the internet but only 21% are currently conducting cross-border transactions, down from 29% in 2006 (in the EU25). The same proportion (21%) advertises cross-border, and retailers who do trade cross-border usually only sell to very few Member States: only 4% of those retailers trade with 10 or more Member States, most trade with one or two other Member States.

So how does the EC know there’s potential? Well apparently, one third of EU citizens have indicated that they would consider buying a product or a service online from another country if it were cheaper or of better quality, and 33% of EU consumers say they are willing to purchase goods and services in another language. In addition, 59% of retailers are said to be prepared to carry out transactions in more than one language.

“Achieving a Digital Single Market is a top priority for Europe”, said Viviane Reding, EU Commissioner for Information Society and Media. “We won’t have a real Digital Economy until we remove all barriers to online transactions, also for end-consumers. This must be on top of the list of all policy initiatives to re-launch the single market project.”

European Commissioner for Consumers Meglene Kuneva gets quoted as saying that Europe’s consumers are being denied better choice and value for money and that the European Commissions must “simplify the legal maze” that is apparently preventing online traders from offering their goods in other countries.

They’ve talked the talk, now let’s hope they walk the walk.

(More information about the report is available here – hat tip to European Voice)

  • http://blog.idolmasti.com/when-it-comes-to-e-commerce-there-is-no-europe/ IdolMasti

    When it comes to e-commerce, there is no Europe…

    European shoppers looking to purchase products from other EU countries on the Web are likely to fail three times out of five, according to a European Commission study on cross-border consumer e-commerce, published yesterday.
    Such failures occur when an…

  • http://www.joaorei.eu Joao Rei

    The EU has been in the forefront of consumer protection. So I’m sure that with studies like this they will push member states.

    On the other hand, it’s all about the vendors to make sure they ship across borders and accept payments from other EU countries. What is stopping them?!

    The EU is a huge market, and anyone setting up shop in a small country (e.g. Estonia) has access to the whole market. Why aren’t more companies taking advantage of this?

    The consumers want it. The market should provide it. The legal framework is already there…

  • Matthew Ford

    cross border shipping? The postal service is pretty poor within the UK never mind sending anything abroad.

    • Delacroix

      Europe is not just the UK, which, ironically here, is not within the Eurozone because it continues to use Pounds Sterling rather than the Euro currency.

      Besides, recent strikes at Royal Mail in the UK are a small and temporary issue. As the Royal Mail faces increasing competition from rival delivery companies, it seems likely that it will need to streamline radically in the months and years to come.

      A streamlined Royal Mail as well as the presence of competing companies will ensure that the UK can more than cope with delivering Europe-wide.

      Beyond the UK, I’m sure this represents an opportunity not just for existing national delivery companies but for new ones to offer better, faster, cheaper delivery services with a strongly European flavour.

    • Mark V

      You might try Spain then. Sending a package to France from Spain can cost you up to 3x the postage of sending it in the other direction.

  • http://aleatory.clientsideweb.net/ rutherford

    If these sites just added payment service providers such as paypal, google checkout, etc to their site would they not break down these barriers straight away?

    • Delacroix

      Hi Rutherford. No, this doesn’t seem to be about the logistics of collecting payment, which is very easy via the services you mention.

      This is more about the simple logistics of sending goods, dealing with tax, and the cultural barriers that make businesses assume it’s difficult to buy and sell cross-border.

      This is less about the technical and more about the cultural.

      • Patcito

        there is no need to deal with taxes inside the eurozone.

      • Delacroix

        What utter nonsense. The UK has VAT for a start.

  • http://wildcabbage.net Eyebee

    I’ve not met any European friends that are happy with the Single Currency. They all complain they are worse off under the Euro than they were with their previous national currency.

    I’ve never been an EU supporter myself, it’s just one extra unnecessary level of wasteful bureaucracy. Less leaner smaller more efficient government is needed not more.

    • Delacroix

      Increase your circle of friends.

    • Ken Aston

      And your field of vision.

    • Stefan

      quote: “Less leaner smaller more efficient government is needed not more.”

      uhm, ever heard of scaling? large scale = more efficient.

      And I agree with delacroix, you apparently don’t have a lot of friends in the EU, or you (subconsciously) pick people that are anti-EU to be your friends.

    • http://twitter.com/asus78 Rob

      That is quite ignorant of you indeed.

      A unified Europe is the best thing that can happen to all of us.

      I heart Europe!!!

    • france

      I am happy with the EURO :D

  • Delacroix

    A genuinely interesting article, Robin. Most of TechCrunch’s European-centred articles are quite unnecessarily harsh, particularly because of the strong regulation that has affected US-based companies like Microsoft.

    This article is important and constructive.

    I’m in the UK and the European idealists have for years tried to persuade us of the benefits of the union. Unfortunately, intentions to provide radically open borders to benefit Europe’s 830 million consumers remains an ideal rather than a reality.

    There are good companies like Pixmania.com, who operate successfully across 25 European countries, demonstrating the benefits of the Eurozone, but such European-wide companies fostered natively are few and far between.

    By and large, I think the Americans are some of the best business internationalists. I think of the way US-based companies such as Apple and Google localise their services very carefully across Europe.

    As a brief but telling example, the term ‘movies’ in the US version of the iTunes Store is changed to ‘films’ in the UK version. A wonderful attention to local detail.

    The European Union needs to tackle the problems decisively, so that the promise of a Digital Single Market, which is breathtakingly bold, can be fully achieved. Less talk, more action. As ever.

    • Realist

      My impression of American “entertainment” companies are quite different. Each time they provide movies, music, books, tv etc. it is available in Europe much later.

      Take Amazon for example. We didn’t get access to Kindle until this week…

      • Lou Natick

        Speaking of Amazon, they don’t seem to have any problem shipping products to any number of countries. Perhaps ineptitude on the part of some of these European online retailers is what’s really to blame.

      • http://www.zemanta.com Andraz Tori

        Try ordering a dvd or consumer electronics from German Amazon to be delivered to some “new europe” countries.

        Not to mention the problem with digital media.

        andraz tori

      • Delacroix

        That’s exactly the point of the article, Andraz. Buying from one European state to another is difficult, regardless of who is operating the online store: American or otherwise.

      • Marcus Hast

        I rarely have problems ordering from stores within EU (or outside it for that matter). I regularly order books, CD’s and movies from sites and I don’t really have to care if they are in Asia, Europe or North America.

        And so far I’ve never had a problem doing this.

        I think the first problem for people to overcome is buying things online at all. And once that’s done you have to give people an opportunity to pay securely. (Card works for me.)

        I think the biggest shame of the EU wrt € is that they didn’t standardize a electronic format at the same time. (Mostly for having a cheap and easy way of paying by card in stores, but also to pay online.)

  • Bob Jones

    Why would anybody want to do this except for a few rare and niche items?

    I’m highly unlikely to buy a DVD from Germany when the packaging will be in German and English audio tracks might well not be included.

    With software and hardware, why I would want to burden myself with the problem of warranties and support across territories? I would not want the problem of sending products back at huge expense or having to deal with a support team who speak a foreign language.

    More over, if the EU has created economic and price harmonisation across the Euro Zone, doesn’t this remove much incentive to buy from another nation? If prices are broadly similar, why bother shopping in another country?

    This might be a dream for pen pushers in Brussels, but how many real people would concern themselves with this?

    • http://wildcabbage.net Eyebee

      That last line sums the EU up for me.

      It was dreamt up by the pen pushers of Brussels. (It’s far removed from the original 1957 Treaty of Rome). It’s perpetuated by the pen pushers of Brussels, for the benefit of the pen pushers of Bussels. Bureaucracy breeds bureaucracy.

      Real people? They don’t matter to bureaucrats, and only to politicians at voting time.

      Hopefully the UK will continue at least to remain outside of the Eurozone.

    • Delacroix

      European consumers should care very much about this issue.

      Yes, many online stores in Germany are likely to be selling German-language products, but this isn’t just about what’s happening today: it’s about the potential for Europe to become a truly open commercial territory.

      Once the ‘barriers’ come down, imagine how much more choice and competition will be introduced.

      German stores may start to sell more English-language products, competing directly with UK companies who will be forced to be more competitive, either by offering cheaper products, or better quality, or faster delivery or other benefits.

      This is a way to keep everyone on their toes: the consumer is the winner in all this.

    • puzzled

      ” … With software and hardware, why I would want to burden myself with the problem of warranties and support across territories… ”

      Software is the magic word. Just curious how ‘across territories’ applies here?
      and with hardware – why not? fill in the address and ship.

      • Delacroix

        Exactly, we need to aim to make Europe one commercial ‘territory’, so that sending back goods will be as easy to do whatever European countries you operate within.

        At the moment, it may be a logistical headache or a cultural no-no to deal with customer support in multiple languages and with shipping goods from, say, the UK to Bulgaria: but stop getting hung up on the status quo and open your mind the amazing possibilities of single market in Europe.

        As to language, and as a native English speaker, we will all eventually speak English as a matter of course.

    • Maks

      I’m not really sure you know what you’re talking about? Have you ever lived in a EU nation? Shopping for DVD’s only in Slovakia/Czech Republic/Estonia would greatly limit your selection. It would be similar to limiting yourself to shopping in a particular state like Kansas…

      Regulations that remove tariffs and other difficulties that have to do with cross-border commerce will directly benefit consumers since they will have more variety and more competition => better quality & price.

      • Bob Jones

        I live in the EU, in the UK. There’s little cross-border shopping here, from our point of view. The Irish might do it from us, but we’re unlikely to do it from them.

        It might be different from in the East, but even then I suspect that the larger countries simply provide shops for the smaller countries. I don’t expect Germany to supply the UK or vice versa. It’s unlikely to ever be unified.

        Think of the increased shipping, staffing costs involved in cross-border trade. It’s simply not going to make things cheaper.

      • Delacroix

        History tells us that unification has been happening for decades and that nothing is likely to stand in the way of increasing unification. Soon enough, Germany will be selling to the UK as easily as to their own population and vice versa. Again, look not just to the status quo, but to the logic of the European movement that no one is any longer powerful enough to stop.

      • Stefan

        Typical British tunnel vision. You seem to have forgotten that Britain got wealthy thanks to worldwide trading.

      • http://www.sebbi.de Sebastian

        I live in Germany and regularly order stuff from the UK because it’s really cheap (even with shipping). Can’t believe that I am the only one who noticed that …

        I am all for cross-border shopping. If corporations can produce in the cheapest countries they find, why shouldn’t I buy their stuff in the cheapest country I find (most of the time UK, the US or Hongkong) …

      • JK

        I live in Brazil and regularly buy stuff from the UK because it’s much cheaper and royal mail pretty fast and efficient.
        Gotta send it Posta Restaute though. Else it goes ‘missing’ :(

  • http://www.gtm360.com Ketharaman Swaminathan

    I’m not sure if the expectation that a single currency would lead to a boost in cross-border transactions was correct in the first place. After all, apart from differences in language of the retailer’s website, there are many other sources of friction that are greater than currency viz. non-availability of cross-border warranty for durables, higher shipping costs, non-availability of cross-border language stock of goods like books, and so on.

    • Delacroix

      This is a long process, evolutionary rather than revolutionary. Introducing a single currency is just the beginning. Over time, we will reap the rewards of a more open Europe.

      Imagine thousands of cottage industries suddenly able, with little resistance or difficulty, to sell as easily to France as to Germany, the UK, or elsewhere.

      The Web has opened up commercial opportunities to businesses large and small. A robust Eurozone presents an opportunity to make cross-border trade even easier.

      We’re not there yet. This is the start.

  • http://www.charlesneville.com Charles Neville

    Payment is the one of the biggest hurdles, as Visa and Mastercard don’t provide address checks for foreign cards (UK & RoI is an exception). Therefore sellers of higher value goods are reluctant to send those products abroad due to fraud risk. Sure, Paypal and Google Checkout are an option, but Paypal’s fraud protection for merchants is laughable – a merchant in good standing can have their entire account frozen for one instance of fraud, AGAINST them! Of course, bank transfer would solve that, if it weren’t for the fact that international bank transfers (even in the same currency) carry bank charges for both sender and receiver. If a customer sends you money they pay a fee, and if they forget to pay ‘all fees’ the merchant pays a fee, eating into their margin, so bank transfer as a general use option is best avoided.

    Another impediment is one created by the EU itself – the Distance Selling Regulations in the UK, based (possibly) on an overzealous interpretation of an EU directive, means that a consumer can request a full refund, for any reason whatsoever, within 7 business days of receiving the package. Full refund means ‘including shipping charges’. Example: a consumer in Spain orders a hard disk from a UK online store, who charge him £10 (say) to deliver it. Consumer receives it, decides he doesn’t like it, so he sends it back (he pays return shipping). The online store then has to refund him the purchase price PLUS the shipping, as well as eating any administration costs and possibly not being able to sell the returned product as new. Instead of making a (small) profit on this deal, they make a loss. It doesn’t take many situations like this to make a company think ‘you know, we’re not going to ship internationally’.

    Of course there’s language as well – the cost of translating an online store to another language, and providing customer service and support in that language makes it impractical for most companies. If only the EU would mandate that all commerce was conducted in English then maybe we’d get somewhere on this ;)

    The EC can hardly say ‘this is a big problem’ without identifying that European Union regulations, which are far from business friendly, are at least partially responsible.

    • Delacroix

      So the consumer should not enjoy protection? I’m sure there are problems with payment provision in the EU, but this is a minor problem that can be overcome: certainly minor in comparison to the huge cultural and regulatory changes that are required to provide a truly open European commercial territory.

      Either way, the consumer should enjoy protection because they do not have the resources that many companies enjoy. It makes sense that businesses absorb the costs of returns, otherwise consumers would be substantially more wary about buying goods online at all.

      • Bob Jones

        This is another reason it won’t happen. The EU’s negative attitude towards business. They pile heaps of regulation and control on business, and then wonder why they don’t follow the EU’s plans.

        Also, no I don’t think that protection is right. I don’t think a shop should be forced to accept a product somebody bought & changed their mind on at a COST to the business itself. Unless the intention is to empower eejits to use their brain even less before they buying.

      • Delacroix

        Bob, the consumer needs protection because it cannot be guaranteed that they will receive precisely what they ordered. If I order a crate of bananas and receive a crate full of apples, then I jolly well expect to get a full refund.

        I agree that some consumers abuse the situation, perhaps, by making spontaneous purchases that they regret and immediately return, but you can’t have one law for spontaneous purchasers and another for more considered shoppers.

        Consumers buying online do not have the benefit of seeing the goods in front of them. In buying from a distance, they are taking a risk that benefits online businesses who are grateful for consumers taking the risk.

        The distance selling regulations in the UK are designed to protect all consumers from the risk of receiving inappropriate goods.

      • http://www.charlesneville.com Charles Neville

        It’s the size of the ‘some consumers [who] abuse the situation’ that poses the problem – a large % of frivolous returns can ruin an otherwise profitable business. I’m all for consumer protection when someone receives a wrong/faulty product but changing your mind shouldn’t mean the retailer picking up the tab.

        The argument used to support DSR is that it levels the playing field with offline shopping, but if that were the case, offline shops would have to refund the customer’s original cost of travelling to the store to buy the product in the first place.

        Amazon UK, as well as many other large online retailers, lobbied unsuccessfully against that part of the DSR.

    • http://twitter.com/asus78 Rob

      Maybe you guys havent heard it yet, but one big step is the just now introduced Sepa direct debit method accross Europe.

      That is a huge step.

      All we need is a unified postal service with fair rates and we are good to go…

      • coldbrew

        I thought DHL handled shipping around the EU. I used to sell and ship across the EU from the US with minimal problems. When problems did occur, they were normally worked out within a day. We handled RMAs as well allowing our customers to ship back on our DHL account. What am I missing?

  • Captain Eurotrash

    The main obstacles standing in the way of a “true common online (and offline) market” are lack of infrastructure, not psychology (at least not on the part of consumers). There is no European FedEx that will ship overnight to most locations in the EU; there are no EU-wide banks to provide financial services to companies that want to operate across the union. No doubt a lot of the lacking infrastructure is also in the form of lack of harmonisation and too much red tape (no, the two are not mutually exclusive), but most companies simply don’t understand that they have a potential market of half a billion people if they really make an effort.

    There is huge potential for those willing to do the groundwork needed to smooth out the differences that exist in various industries; the “FedEx” example being the most obvious. Companies think that to operate across the EU they need localised sites for every little country in order to sell to them (Amazon, looking at you), but in reality people don’t care: They just want to be able to order the products they want at the lowest price possible. So all you really need is a way for people to pay and ship their orders, once you have that consumers will come. RyanAir and EasyJet mostly get this (I know they don’t ship packages, but they operate online and they ship *people* which is a lot more work with much higher stakes), and they’ve completely crushed the competition.

  • http://wildcabbage.net Eyebee

    I’ve never been against removing trade barriers. My beef about the EU has been all the extra layers of bureaucracy that cost a small fortune to taxpayers.

  • crossborderonlineshopper

    Let’s look at this in practice:
    I have put up my residence in Finland, where prices are high and choice really limited.
    Pretty much everything I can, from decking boards to Apple’s Snow Leopard I get much cheaper from other EU countries (particularly with recent GBP EUR exchange rate developements). A friend of mine has even contacted vendors in UK and Estonia for shipping him a small hoover craft to Finland (which you cannot get here).
    Not sure how the study counted, but if a website does not include my payment option/delivery to my country, but has the item in stock at the price I want, I email them and sort it out. Never failed me so far. My wife has gone crazy since she found out that Next and Marks & Spencers now have the full catalogue with EU wide delivery option (saves the hassle of that extra email). When living in the UK, we once did all our xmas shopping online (2006), maybe soon we will be at that point again, only cross border.’

    Unfortunately, most of the natives here are not so bold, leaving the local choice, price and service at the place under the stone where it has been since ever.

    Otherwise whey would realise that even ordering a few photo prints from UK is way cheaper than the cheapest local option; and they even get it delivered to their door priority in 3 biz days, which a Finnish provider would never do without a fat premium.

  • http://www.advertisespace.com Chad Randall

    My only question is, who got to keep that 11,000 orders worth of loot!??

  • http://christianprada.net/ Christian

    It’s a fallacy to think the Euro alone would increase cross-border transactions. There are also other barriers to consider besides currency and payment options: Language differences of the retailer’s website and customer, warranties, shipping costs, cultural resistance to deal with other countries, etc.

  • http://forumnexus.wordpress.com/2009/10/23/recommended-readingwhen-it-comes-to-e-commerce-there-is-no-europe/ Recommended reading:”When it comes to e-commerce, there is no Europe” « Forum-Nexus Blog

    […] When it comes to e-commerce, there is no Europe […]

  • Bill

    Reminds me of the time I tried to spend “Scottish pounds” down south in England. The UK can’t even get it together enough to barely recognize money across its own ‘borders’.

    Of course, I knew what was going to happen – I was a tourist just being a prat :-).

  • http://www.imonlinegroup.com Arie

    For those merchants/retailers that ARE interested in selling overseas and from member to member countries- please contact us.

    imOnline, an full service eCommerce company, might be the ultimate solution for you.

  • http://thursdaybriefing.eu Tom Redford

    I’m a student in the Netherlands, with about 40 other people on my course. To illustrate the benefit that easy cross-border shopping can bring, we all need to buy roughly €100 (at least) worth of books for our courses, but books here are expensive, so most of us order online. After discovering a retailer in the UK that will ship for free to the whole of Europe, a good number of us used that company instead of Amazon, or other online retailers that made it more difficult or costly to shop internationally. That’s lots of business for the company that thought beyond the English Channel.

    Even with companies like that though, the physical infrastructure (banking, shipping, &c.) just isn’t good enough to make cross-border shopping as easy as national shopping, especially for consumers in large countries, where the product being sought after is probably available locally. It isn’t a legal problem, just no companies seem to have the appetite to really link up their offerings on a EU scale.

  • http://cybersweetness.com igebadia

    what about america which doesn’t ship to Canada on a lot of sites?

    • puzzled

      Any respectful ecommerce site sell to Canada. From a legal/payment/shipping etc. perspective – no problem. What you are referring to is that some online retailers prefer not to be distracted by Canada market. Simply too small to bother..

  • Michael

    They should also need to make a standard EU plug that in the long-term will replace all plugs.

    It’s a joke that they can get around a table to discuss how large a strawberry should but when it comes to electric plugs, that are a true pain for everyone, they don’t do anything.

    I’d vote for a mix of the Italian and Swiss one. Basically as robust as the Swiss one but all 3 plugs in a row so you don’t have the hassle of putting it in the wrong way when you can’t see the socket holes.

  • http://www.jdmhub.com Bryan Willians

    The idea of almost same shipping cost for all lower 48 states in US, is a major advantage for US seller to do interstate business. When it comes to international selling, the total cost of a e-commerce purchase is more than double in low cost items.

    More than payment problem, i guess its the shipping problem that is dragging the growth of e-commerce in Europe or any other international commerce.

  • http://maboum.com Doug

    A summary of the real problems:
    – Web sites
    – Instruction manuals
    – Movies / subtitling / dubbing
    Intellectual property rights (licensing is national, not pan-European)
    – Keyboards (QWERTY / AZERTY / accents)
    – Power connectors
    – Currency
    – VAT/TVA rates
    – Vendor pricing policies
    – Higher incidence of cross border credit card refusal due to tighter fraud checking.

    I’m a Brit who’s lived in France and now in Monaco, which is not in the EU, sort of, and experienced every one of the above problems.

    Amazon does a great job of breaking down these barriers, but it’s still caveat emptor for most of the above.

  • http://www.fxcapitalgroup.co.uk Nigel Verdon

    A topic close to my heart as I am founder and CEO of an international foreign exchange and payments business and see many of these these issues daily across our client base.

    I am not going to comment on fulfillment (e.g. postal services), restrictive business practices, or legal issues as this is not an area of expertise.

    Let’s face up to some big hairy issues holding European e-commerce back for both merchants and consumers from a structural financial perspective:

    1. Only two currencies? No

    You would think it would be simple as there are only two currencies EUR (Euros) and GBP (UK sterling). However, Denmark has similar currency opt out as the UK and many of the new member countries (including Sweden) have their own currency as have not yet met Euro criteria. So in fact we have EUR, GBP, DKK, SEK, LVL, EEK, LTL, PLN, CZK, HUF, RON and BGN. 12 in total.

    Therefore, to be able to truly handle being a European e-commerce (and further afield) merchant, you will need to accept that you need to price your goods and accept payments in multiple currencies.

    2. Accepting Online Payments is Easy? No

    Paypal is OK if you accept their fraud protection policies and the imposed cost (by that I mean the per transaction and the embedded/hidden foreign exchange costs).

    Otherwise there is real variability in the quality/range of services offered by merchant providers both in-country and across borders.

    This is mainly driven by to issues: 1. Regulatory environment that generally hand-cuffs card issuers to issue cards to residents in-country and; 2. the stunning in-efficiency of the card processing business.

    The people who get a raw deal here are both the card holders and the online merchants.

    I have colleagues trying very hard to change this industry, but to do so is giving them grey hair!

    3. Keeping Costs of Payments Down? Would love to!

    For larger goods, where the merchant needs to accept/make EUR 10k+ payments, the Paypal / Card mechanisms are too costly in their transaction fees and massively too expensive in their embedded FX charges.

    International payments (often referred to as SWIFT payments) can be charged at up to EUR 25 per payment and landing fees on top of this.

    This is a complete rip off by the banks, as I know the internal “at cost” rate card of several of the banks, where a SWIFT payment is GBP 1.25 and landing fees are GBP 50p

    Industry and government needs to put co-ordinated and concerted pressure on the banks to reduce these costs as they are completely un-reasonable.

    4. Europe has an efficient payments infrastructure? No

    While SEPA is a good step forward, the key issue to face up to is that each country has local banking clearing mechanisms to handle the basics of electronic transfer, direct debit, etc. etc. All these local clearing mechanisms are 100% in-compatible.

    European governments need to focus on harmonizing into one pan-European local clearing mechanism that can handle multiple currencies and small payments efficiently. Perhaps even using a Central Counter Party model to remove the default risk (e.g. build on top of LIFFE / Euronext)

    Thinking laterally, this could make Europe as a central hub for potentially clearing global currency business, which would bring massive competitive benefits. The USA would never do this (as they only understand the USD), but India or China are smart enough to do this.

    5. True Cost of Currency Risk? Unknown?

    One of the biggest “hidden” costs is the cost of foreign exchange at the point of transaction or from holding currency accounts in non-core currency.

    For example, many merchant providers only allow the merchants to receive funds in a single currency, so that if the merchant decides to price goods in another currency, the card provider will layer on another 1-3% of FX into the price, but this will be totally opaque to the merchant.

    Pricing goods at a morning FX rate with +3% embedded in the rate to customers can mean that if the market moves against you more than 3%, you will be losing money. With current market volatility, this has taken many merchants by surprise.

    If a merchant wishes to price goods in another currency and remove currency risk automatically on their site they need access to a real time inter-bank FX feed and FX trading via a rich and simple currency risk API. These are not provided by Banks to small customers, not by the Paypals of this world.

    Therefore, to fully take advantage of the European multi-currency market (and USD etc, markets) the merchant needs integrated FX technology and a proper FX risk management strategy.

    6. In Conclusion

    We are now in what might be termed “e-Commerce v3.0” where the merchant has to work in world of multi-currency, multi-payments and currency risk management.

    The original “Version 1.0” mechanisms (e.g. Paypal, Worldpay etc.) were never designed to handle this type of environment and are structurally not designed for this.

    To be a “Merchant 3.0” you need to integrate currency risk capability and payments capability via real-time API’s (e.g. RabbitMQ) or near real time API’s (e.g. REST / JSON).

    Thankfully there are now currency / payments brokers who have woken up to this and have been working away on the technology for the past 18 months – watch this space !

  • http://www.goebel.net/technews/ Markus Goebel

    Why would I buy from other countries?

    German e-commerce offers literally everything. And if there are special products like unlocked Italian iPhones, which you can’t officially buy here, there is always a merchant like Retailkeyshop who imports them in big numbers to sell with guarantee, invoice and right of return to German customers. Prices are OK.

    • Captain Eurotrash

      You’re missing the point by not allowing your mind to escape the status quo. If everything else was the same but you could get a product at 80% of the price including shipping and taxes from, say, Denmark, would you not buy that instead? The point is that a bigger market means better prices and a bigger selection for consumers (=you). You buy from within Germany because there are obstacles between you and the products for sale in the rest of the EU; what would happen if those obstacles were removed? If we remove this friction, we’re going to benefit enormously from it.

      Imagine if you got a new job and had to move to Spain; you’d have to spend all this time and effort on finding out what all the local shops are called when you could instead just keep using an EU-wide retailer if such a thing existed. Things like these are a huge impediment to worker mobility, which is again an impediment to a flexible and dynamic economy.

  • http://everydaypanos.com everydaypanos

    It’s unbelievable..! Everyone seems to ignore the elephant in the room (mainly because they are Brits…)

    The shipping costs is NOT REALLY the problem.
    The multi-currency is NOT REALLY the problem.
    The delivery times(which are a little off) is NOT REALLY the problem.

    The MAIN REASON why EU cross-member-state retailing hasn’t taken off is the Language barrier.
    At the end of the day, even if the choice is more affordable, you will NOT buy something from e.g. Portugal, Greece, Finland, Turkey(?), Hungary e.t.c.

    Even if the retailer offered an English version of his website (which most ones do), the translation goes only so far. Product descriptions, privacy policies, user agreements, and many other “dynamic” data would still be in Portuguese. That would be a language barrier.

    Even if we ignore that and let’s suppose that sb (like Anamo.eu) offered a 100% translated version there would still be great reluctance. Mainly because no one wants to try to deal with sb on another country on post-transaction issues (And yes, a shopping experience doesn’t end on the “Confirm Order” button).

    These issues might be guarantees and returns, customer service inquires, VAT and other tax issues and the list goes on. NO ONE with a practical mind would want to make a purchase from sb on another country with no guarantees that on the other end they would speak his language or even speak English.

    And yes (revelation no2), most middle-aged-and-above Europeans do not speak English and let’s not forget that they have all the money.

    The language problem is the main reason why people are reluctant to buy (and sell) things to another member state. The lucky ones in this whole ordeal are the British but in a truly pan-European manner UK cannot really make a difference.

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