Diverse geographic regulations, laws and practices impacting European retailers¬í cross-border sales
One quarter) of European retailers believe that they could increase revenues by 25% if they could sell more effectively online and cross-border in Europe.
The findings are according to a new study conducted by Accenture for the European Retail Round Table (ERRT*). However, while 68% of the retailers consider expanded European cross-border e-commerce to be a medium or high priority for growth, the survey reveals that many are struggling to navigate diverse local laws, regulations and practices.
The increasing willingness of European consumers to use digital channels as part of their shopping experience is driving retailers’ focus on delivering efficient online, cross-border operations in Europe, and their aspirations for revenue growth in this area. For example, a report by the European Commission in 2011 showed that 40% of shoppers in the European Union use the Internet to buy goods and services1. And, according to the Accenture survey, 76% of the retailers surveyed report that multichannel customers spend more than their single-channel customer counterparts, and one 32% said that multichannel customers spend at least 26% more than single-channel customers.
Survey respondents cited the following as the key challenges they face in cross-border online sales success:
The diversity of product returns laws – cited by almost half (47%).
Difficulties in efficiently handling product returns cross-border – 44 percent.
42% highlighted the cost of compliance with different national laws regulating consumer transactions, such as distance selling, or data transfer requirements.
The same proportion (42% identified the differences in labour laws as being a key challenge, and 42% pointed to the cost of compliance with different national fiscal regulations.
34% noted a challenge with differing VAT levels between markets, and interviews with retailers raised a related concern: compliance with requirement that VAT be reported via locally registered companies.
38% of the retailers also cited differences in packaging and labeling laws as posing a challenge to their cross-border e-commerce sales success. Retailers that have one common inventory for both their store and Internet operations are required to put the same label on all inventory and in multiple languages, regardless of the goods’ specific destination. One retailer interviewed by Accenture estimated that the additional cost of fabric required to print the labels cost “millions,” and said his company needed to either “increase our prices…or take a hit on profitability.” Additionally, while many European markets simply require retailers to report how much packaging they use annually, some may require detailed packaging information at the individual product level.
“The opportunity for growing cross-border online sales across Europe is irresistible but successfully seizing it will require retailers to focus on the creation of innovative, low-cost, operating models that combine the agility and flexibility of the online pure plays with the brand power and convenience of store based businesses,” said Janet Hoffman, managing director of Accenture’s Retail practice.
“We are starting to see retailers shifting from a defensive position, focused on protecting their market share and capitalizing on their domestic market multi-channel opportunity, to a more offensive position aimed at tackling the cross-border challenge in Europe.”
The Retail Bulletin International Expansion Conference 2012, London, 27th March will address such issues as ’ Ensuring Smoother International Expansion Through Effective Retail Localisation Strategies’, presented by Darren Gardner, Director of New Business and Store Formats UK & Europe, The Carphone Warehouse Group. Sponsored by GfK, the theme of the day is 'Driving sales and market share, mitigating risk and strengthening your business through international multichannel growth strategies'. For full details and registration, click here.
1) European Commission Digital Agenda Scoreboard 31 May 2011
*Accenture’s study into European cross-border E-commerce comprised a survey of 146 retailers with more than 100 million Euros in annual revenues across six retail sectors – grocery, home goods, consumer electronics, clothing, toiletries and leisure goods – and seven European Union countries; Denmark, France, Germany, Italy, Poland, Spain and the U.K. Interviews with relevant executives from among the 14-member European Retail Round table (ERRT), which also included participants from the Netherlands, Sweden and Belgium, supplemented and enhanced the survey results.
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