EU regulators open cross-border e-commerce

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The European Council agreed yesterday to a new draft regulation to ban geo-blocking, one of the largest barriers to cross-border e-commerce within the European Union (EU).

Geo-blocking covers several different practices that the Council said discriminate against shoppers trying to make cross-border online purchases.

Those practices include providing discounts and special offers only to domestic shoppers, redirecting cross-border shoppers to alternate online stores that service their market, and outright preventing shoppers in other countries from making a purchase. A 2015 European Commission survey found that only 37% of European websites allow cross-border customers to reach the final step of completing a purchase.

European regulators are heavily focused on the EU’s Digital Single Market initiative that aims to create an open market where all EU residents have equal access to digital goods and services from across the EU’s member states. This would allow EU residents to find better shopping deals offered in other EU countries and use their preferred digital devices and services in different states at no extra cost. Tackling geo-blocking is a key part of this initiative that could encourage more cross-border online shopping.

Another key part is cracking down on higher parcel delivery costs for cross-border deliveries. The European Commission found that logistics companies charge up to five times higher prices for cross-border deliveries to other EU countries. And online sellers have turned to geo-blocking to avoid those higher costs for cross-border sales. The European Commission has recommended improving pricing transparency for cross-border deliveries to counteract these higher costs.

Despite these major barriers to cross-border transactions, European online shoppers have been completing more cross-border purchases in recent years, according to a 2015 survey by ANEC, a European regulatory body.

  • The survey found that 15% of online shoppers in the EU have completed a cross-border purchase with a merchant in another EU country, up from 12% a year earlier.
  • PayPal’s 2016 Cross-Border Consumer Research report found that consumers in certain EU member countries like Ireland and Portugal were among the most likely to shop from online stores based in other countries.
  • However, there is still a great deal of untapped potential for cross-border e-commerce in the EU. If regulators can overcome the market barriers caused by geo-blocking and cross-border delivery costs, it would provide a massive boost to that market.

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