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Financial Solutions
03 Sep 2018

Farewell geoblocking – EU-wide shopping becomes borderless

Some homework for online retailers

This is almost an early Christmas present for us EU citizens. From 3 December, the barriers to online shopping from other countries will be removed. Geoblocking will be a thing of the past. The French or Polish will be able to shop from a German online store and deliveries will have to be made to them in the same way as to buyers based in Germany, and vice versa. So I will finally be able to order by favorite wine directly from France and will no longer have to use the not-so-well stocked German store. In my blog post, I advise retailers how they can best prepare for this.

Following the elimination of geoblocking for paid streaming services, the EU has now also adopted measures against the geoblocking of goods purchases in online trade. Unfair discrimination based on nationality, place of establishment or the place of business is now in the past. But this comes with what I find to be a little oddity: there will be a two year exemption period for copyrighted products such as e-books or online games. Indeed, these are products that are very easy to deliver across borders because there is actually no physical delivery. But this is due to complex copyright law.

Retailers will generally no longer be able to reject cross-border shipments or redirect customers to the local online shop. They must accept orders from the entire EU territory, and must do so under the same terms. For retailers, this means that an international orientation of their store is not just a choice, but an obligation. For consumers, ordering must be simple, convenient, quick and international.

No redirection, no compulsory delivery

The French online retailer may no longer block access to an online shop for visitors from other countries. The ‘different origin’ can be determined in the nationality, place of residence, delivery address or IP address. Also, they may not automatically redirect the potential buyer to the relevant country store. However, every retailer may still freely select their delivery area. They must conclude the purchase agreement with me under the same conditions as with French customers. But they can let me collect the goods in France or request different delivery costs, where this is objectively justified. But they must make this clear on the website, called the ‘Orientation’. The orientation of an online store can be recognized in the language of the website and the terms and conditions, the country-specific domains, actual deliveries abroad or a hotline in the local language. So if I can call my wine dealer in German, then this indicates they offer delivery to Germany.

The important thing is that the shop operator must clearly state which countries they deliver to or do not deliver to. If a dispute were to arise with the consumer, the laws and jurisdiction of the destination country France would apply. Without such orientation, German law and the German jurisdiction applies.

Payment methods – discrimination no, differentiation yes

Payment methods may also no longer be linked to the various places of residence. Only if there is an objective reason not to offer some customers purchasing on account, for example, may the retailer do so. This may be the case if the retailer cannot perform a risk-mitigating credit check in some countries or can only do so at an unreasonable expense.

Some homework for online retailers

Online retailers should therefore assess now whether their terms of payment and delivery, the technical layout of the website and of the app and their accounting and ordering systems are aligned with the EU Directive. Because otherwise, there may be sanctions which are ‘effective, proportionate and dissuasive’. This is what the Directive says. So they should not take any risks.

Contact us promptly so that cross-border movement of goods does not become a nightmare for you.

 

Christian Maiwald,
Head of Account Management Retail/E-Commerce
at Risk Management of Arvato Financial Solutions,

christian.maiwald@arvato.com

 

 

 

 

 

Romy Rothe,
Account Manager Retail/E-Commerce
at Risk Management of Arvato Financial Solutions,

romy.rothe@arvato.com

 

 

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