Consumers: Online shopping increasingly popular in the EU

A new report on "Barriers to E-commerce", presented today by EU Consumer Commissioner Meglena Kuneva shows that online shopping is increasingly popular in the EU, but warns that barriers to cross border trade are holding back its development. The report published today presents a detailed analysis of current trends in e-commerce across the EU – including per country, most purchased items and obstacles for consumers and business online. Between 2006 and 2008 the proportion of EU consumers buying at least one item over the internet increased from 27% to 33%. These average figures mask the huge popularity of online shopping in countries like UK, France and Germany where more than 50% of internet users have made online purchases in the last year. In the Nordic countries (Denmark, Sweden, Norway, Finland and Iceland) the proportion of internet users who bought products and services online was 91% in 2008. Countries like Italy and Spain are also fast growing markets. Against this pattern of fast growing national markets, the extent of online purchasing cross border remains small, at only 7% in 2008 (compared to 6% in 2006). The report warns that numerous obstacles - linguistic, practical and regulatory as well as important trust issues – are holding back the development of online shopping in the EU.

Commissioner Kuneva said "Consumers have everything to gain from the Internet. It expands the size of the market they operate in and gives them access to more providers and more choice. It makes it possible to compare products, suppliers and prices on an unprecedented scale. Internet use for retail shopping is destined to become pervasive. Already 150 million consumers shop online, although only 30 million shop online cross border. We must see to it that adoption of the internet platform will not be unnecessarily slowed down by a failure to remove important regulatory barriers or to address important trust issues for consumers."

The main findings:

1. E-commerce is doing well

Consumers are generally satisfied with online shopping. For particularly frequently bought groups of products such as IT product as well as entertainment and leisure goods, consumer satisfaction with internet shopping is on average higher than for retailing in general.

• Consumes are particularly satisfied when it comes to comparing prices, the wider range of offers, the affordability of products and the choice of suppliers.
• Consumers are less enthusiastic about issues such as clear product information, advertising, the protection of privacy, issues of trust and the possibility of returning goods.

2. There is a strong potential for cross border trade in online commerce

• One third of EU citizens would consider buying a product or a service from another Member State via the internet because it is cheaper or better.
• One third of EU consumers say they are willing to purchase goods and services in another language. In a multicultural Europe, there is a demand for more choice and a wider variety of offers than local stores or global brands can supply.

3. The potential of cross border trade is failing to materialise

From 2006 to 2008, the share of online shoppers in the EU has increased from 27% to 33% of consumers while cross-border e-commerce remained stable. Only 7% of consumers currently buy cross-border online. And the gap is widening not narrowing.

The main barriers:

• Geographical segmentation: Most traders now have a website that is visible to consumers everywhere. And yet most retailers still seem to operate on the assumption that the internal market is partitioned along national lines. The range of possibilities is enormous, yet in practice, consumers end up being refused sales or redirected back to their country of origin.

Practical and regulatory obstacles, include

• Language barriers, these remain an issue for most traders and consumers, although we should be careful not to overstate their importance. For example, 60% of retailers are already prepared to carry out transactions in more than one language.
• Problems in terms of the logistics relating to the inter-operability of postal and payment systems, and access issues such as broadband penetration
• There are regulatory barriers that appear increasingly unjustified to consumers and business; these include for example consumer law, VAT rules, selective distribution law, intellectual property protection, the national transposition of EU legislation on waste disposal for example.
• Barriers undermining consumer confidence – in particular reluctance linked to issues of payments, delivery, complaints, application of guarantees, requests for refunds (after sales support), as well as privacy issues. Difficulties are perceived to be aggravated in cross border transactions.

The next steps:

In September 2009, Commissioner Kuneva will present the results of independent "mystery shopping" to identify how and where consumers are being prevented from shopping online across the EU. As part of the Commission's monitoring of the retail sector, Commissioner Kuneva launched last Autumn a Commission wide process to screen for barriers to e-commerce, the Commission's final report on the retail sector is due in Autumn 2009.

http://ec.europa.eu/consumers/strategy/docs/com_staff_wp2009_en.pdf

E-commerce in the EU

The European e-commerce market was estimated to be worth 106 billion euros in 2006 (an order of magnitude comparable to the size of the US e-commerce market)

70% of turnover is concentrated in 3 key markets (the United Kingdom, Germany, and France).[1]

There is significant variation in the levels of e-commerce across EU Member States

• [2]In the UK in 2008, 57% of individuals had ordered goods or services over the internet for private use in the last year. In Denmark, Germany and the Netherlands the corresponding figure was also over 50%.
• 66% of internet users in France have made a purchase online.[3] According to the Fédération du e-commerce et de la vente à distance (FEVAD).
• In Germany in 2007, 58.3% of individuals who had used the internet in the previous three months shopped online occasionally or frequently.[4]
• In the Nordic countries (Denmark, Sweden, Norway, Finland and Iceland), 91% of internet users had traded over the internet in the previous six months.
• In the two newest Member States, Bulgaria and Romania, however, the figure was respectively 3% and 4%. Estonia, Cyprus, Greece, Italy and Portugal saw around 10% of individuals purchasing online for private use in 2008
• In 2008 the most purchased items online were: travel and holiday accommodation’, which ranks first in terms of the percentage of individuals shopping online (42%), followed closely by ‘clothes, sports goods’ (41%) ‘books/magazines/e-learning material’ (39%). Most major online sectors have been displaying impressive growth
• Internet sales are also affecting high street shopping. In 2008, 3 in 5 of all internet users compared prices online before making a purchase, often using price comparison websites.
• Internet is the fastest growing retail channel. In the EU27 in 2008, 51% of retailers made sales via e-commerce. Only direct retail sales were more common, used by 79% of retailers. Thus e-commerce is more popular than mail order (30%), sales through representatives visiting consumers in their homes (21%), and telesales (17%).
• But the gap between domestic and cross-border e-commerce is widening. From 2006 to 2008, the share of all EU consumers that have bought at least one item over the internet increased from 27% to 33% while cross border e-commerce remained stable (6% to 7%).
• The potential for cross border shopping is there. One third of EU citizens indicate that they would consider buying a product or a service from another Member State via the internet because it is cheaper or better.
• 33% of EU consumers say they are willing to purchase goods and services in another language, while 59% of retailers are prepared to carry out transactions in more than one language (on average for all retail channels).
• One third of EU citizens indicate that they would consider buying a product or a service from another Member State via the Internet because it is cheaper or better.
• Business potential for cross border online trade is also failing to materialize. 51% of EU27 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.[5]
• Currently, three quarters of EU retailers only sell domestically. One in five EU retailers (21%) sell cross-border, via distance sales methods, to at least one other EU country. Retailers who conduct cross-border trade 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.
• Market segmentation is source of increasing frustration for consumers online. In 2006, 33% of consumers reported that they had not been able to complete cross border purchases because they did not live in the same country as the trader. Again, Eurobarometer survey data published in 2008, indicates that of all consumers who had successfully made a cross border purchase in the previous year, 8% were prevented from completing at least one other cross border purchase.

[1] Source: eMarketer (2007), quoted in ACSEL (2008).

[2] Nordic e-trade index, May 2008.

[3] FEVAD, ‘Chiffres Clés vente à distance et e-commerce’, 2008.

[4] Bvh, ‘Entwicklung des E-commerce in Deutschland (BtC)’, October 2007.

[5] Flash Eurobarometer 224: ‘Business attitudes towards cross-border sales and consumer protection’ (2008).

Source: Europa Press Room