Post on 11-Mar-2020
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CROSS BORDER E-COMMERCE
JANINE TILLEMA FOUNDER & CEO
PAULA’S CHOICE EUROPE B.V.
European Parliament Retail Market Roundtable
15 February 2016
Timeline Paula's Choice Europe
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EU251 website1 language1 currency1 VAT number
EU284 + 5 websites10 languages7 currencies10 VAT numbers (+ 3 applications) Local teams or partners in 14 countries
2005 2013 201532 employees
2015 growth: 90%
13 employees3 employees
YoY avg. growth: 45-50%
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Current footprint Paula’s Choice Europe• Based in Amersfoort, NL
• Shipping to all 28 EU Member States
• 4 websites:– Netherlands, Belgium (Dutch)– UK (English)– Germany, Austria (German)– RoEU (English)
• Agency (commission) model for Germany
• Sub-distributors in 5 countries
• Resellers in 6 countries (plus Norway)
• Social presence:
– 13 accounts (10 languages / 85.000 followers)
– 7 accounts ( 7 languages / 3.500 followers)
– 7 channels ( 7 languages / 790 followers)
– 7 accounts ( 7 languages / 3.619 followers) Core countries NL+BE / UK / DE+AT
Single brand sub distributors Local partners (single or multi-brand resellers)
11.500 orders/M3.800 new customers/M
130.000 customers across EU
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Requirements for successful cross border e-commerce:
• Local presence (address, phone number)
• Communication with customers in local language (CS and marketing)
• Relevant content
• Meet customer expectationsFree shipping and returns?
• Cater for local preferencesCountry specific payment and shipping options
• Local online marketing (incl Adwords)
• Local quality/trust marks
Different cultures and languages: building trust is essential
EXPECTED DELIVERY TIME
ITALY/SPAIN UP TO 5 DAYS
GERMANY 1-2 DAYS
NETHERLANDS NEXT DAY
UK NEXT/SAME DAY
PREFERRED PAYMENT METHODS
GERMANY INVOICE IN PARCEL
AUSTRIA CREDIT CARD
NETHERLANDS ONLINE BANKING
EASTERN EUR. CASH ON DELIVERY
Business realities in the EU
Current VAT administration
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• This also has impact on systems and pan-EU promotions (only %, no absolutes)
• Applications for 3 more countries
• Considerable administrative burden
• Action announced in Digital Single Market Strategy (2015)
Country Frequency Specifics How to file
The Netherlands quarter for Netherlands and all EU countries under EU-VAT threshold digital
The Netherlands ICP month special reporting for all 0% VAT exports to other EU countries digital
United Kingdom quarter different quarterly cycle: Feb-Apr, May-Jul, Aug-Oct, Nov-Jan digital
Germany month digital
Austria quarter digital
Spain quarter payment through Spanish VAT consultancy firm digital
Sweden quarter paper
Denmark half year paper
Finland month reporting two months retrospective (f.ex. filing in November = VAT of September) digital
Belgium quarter payment per month (2 prepayments based on previous quarter and third / final payment) paper
A Digital Single Market Strategy for Europe (May 2015)
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Definition “unjustified”
Attention for position
of SME’s
Additional aspects
To support and strengthen Digital Single Market Strategy
• Review branch specific regulations through “digital lens”: allow online/digital whenever possible
• Examples EU Cosmetics Regulation 1223/2009:
– Address must be stickered on each product (why not web address where full details can be found?)
– Paper folders must be included in each order with certain information in local language (why not online, always up-to-date, reduces cost and waste?)
Note: certain aspects of regulation are better served online/digital
• Attention for SME cross border expansion issues: agency law, employment law, competition law
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Competition law aspects for SME’s in practice
• SME’s need local partners to be successful cross border
• Local partners invest in building the brand in their country/territory
• Under competition law: no exclusivity (passive sales must be allowed)
– Intra-brand competition on price
– Difficult to find partners for local markets, uncertain return on investment
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Cross border expansion would benefit if SME’s could grant local (SME) partners exclusivity to a certain extent
Price differentiation in the market
• Big differences across EU:• Purchasing Power (PP)• Costs (labor costs, rental costs, tax etc.)
• In offline retail there are (accepted) price differences between the countries
• Drive in online retail to give consumers the “best deal possible”
• For SME’s, online selling costs are location dependent
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PPS per capita
One location (SME’s) versus multi-location rather than online versus offline
Cross border competition matrix
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No level playing field Potentially disruptive competition between countries with different cost and PP levels
Selling tocustomers in country A
OFFLINE SHOP est. in country A
WEBSHOP est. in country A
INTERNATIONAL WEBSHOP est. in
country A
INTERNATIONAL WEBSHOP est. in
country B
INTERNATIONAL WEBSHOP est. in
country C
(same costs and PP as in A)
(lower costs and PP than in A)
OFFLINE SHOP est. in country A same costs and PP same costs and PP same costs and PP lower costs and PP
WEBSHOP est. in country A same costs and PP same costs and PP same costs and PP lower costs and PP
INTERNATIONAL WEBSHOP est. in country A
same costs and PP same costs and PP same costs and PP lower costs and PP
INTERNATIONAL WEBSHOP est. in country B (same costs and
PP as in A)same costs and PP same costs and PP same costs and PP lower costs and PP
INTERNATIONAL WEBSHOP est. in country C (lower costs and
PP than in A)lower costs and PP lower costs and PP lower costs and PP lower costs and PP
Some observations
• Difficult for SME’s to compete cross border in countries with lower cost level (competition) and lower PP (consumers)
• Variations in PP may lead to difference in brand position across EU
• Through local partners: some costs may be lower, maybe lower price level possible (more in line with local PP)
• Cross border race to the bottom?
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Geo-blocking / Geo-redirect
• Geo-redirect to direct customers to the right website
• .nl: NL, BE EUR, Dutch, NL and BE VAT
• .de: DE, AT EUR, German, DE and AT VAT
• .co.uk: UK GBP, English, UK VAT
• eu.com: all EU countries EUR, English, NL VAT for below threshold countries, above threshold local VAT is applied
• Prices are the same across EU• VAT differs per country (above threshold)• Margins differ per country (shipping subsidy, non-Euro
currency exchange rates)• When is geo-blocking considered to be “unjustified”?
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Conclusion
• Digital Single Market Strategy is a major step forward for encouraging cross border e-commerce and unlocking SME potential
• Review and align branch specific regulations with the goals of Digital Strategy
• Attention for level playing field aspects
• Attention for SME cross border expansion issues:• Competition law
• Commercial Agents Directive (86/653/EEC)
• Employment law
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