As the title says, why do a lot of (or possibly even most) European online retailers only ship locally (and to a minor extent to their direct neighbours)?
As the title says, why do a lot of (or possibly even most) European online retailers only ship locally (and to a minor extent to their direct neighbours)?
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I’m guessing it has to do with then having to comply with every local law, per country. Also, payment systems vary between countries, which is an added complexity.
They are just lazy to adjust, I feel.. Hate that most specialized shops from Germany do not ship to my country..
they also need to charge vat at the correct rate for the consumer recipient, which is complex.
A. It’s a lot of logistical headache for a potentially very small market, and potentially quite expensive.
B. Trying to capture a foreign market is expensive and has low return on investment unless you spend a lot of money, and I mean a lot.
Different countries have different price points for various reasons. Local pricing, VAT etc..
While antitrust laws prevent brands/suppliers from dictating where and what price retailers sell at.
They can sometimes get exclusivity for a certain country or area, so they want to maintain good relationships with the suppliers. If they sell across borders they would essentially be stepping on toes and potentially ruin their relationships with suppliers.
This is one of the reasons anyway
Regulations regarding language probably.
It is mandatory to translate everything to an official language – as there are 24 official EU languages a retailer must make sure all of them are covered which is crazy as you’ll end up with a phone book instead of a 10 page manual.
Neighboring countries sometimes share languages or have quite similar languages.
As a person who is starting an e-commerce shop myself now, the answer to this is: VAT, for small online retailers the translation of websites or shipping are the smallest problems, the different VAT rates for each country are real pain in the ass.
As someone who used to work in e-commerce, it’s the shipping costs and fear of not being able to pass it on to the customer
A real problem are different warantity and Product indications.
i live in Cyprus.
I hate it with passion when I visit a EU store that says “shipping to EU” I put something in the cart, go to checkout, i am forced to sign up before I can see shipping options and then Cyprus is the only EU member country not in the list.
I work in ecom. The regulatory shite one still has to go through by country is insane.
Plus that cross-border shipments are way too expensive for the actual service provided.
Top that off with manufacturers that arent willing to harmonize prices across the EU, and you’ll end up with online retailers that simply give up.
Not a retailer, but apparently shipping wine across the border in the EU is very far from trivial due to taxes and tariffs and whatever, so much to my chagrin very few French retailers want to deal with it.
Perhaps because of the European law on taxes on packaging. If you calculate the cost of the taxes you have to pay by country, it’s not easy for everyone – you need volume. Yet another law designed for big companies, but not for small businesses.
I don’t want to bother with different VAT rates in my book keeping
Mostly due to rules and language. Each country has specific laws around consumer protection. Also laws regarding packaging tax, packaging labeling, language requirements for manuals and packaging.
Takes some time to be complient for each country.
Distribution and collecting payment is actually quite easy with Shopify and DHL for example.
There is a lot of wrong info in this thread. This is what I think based on my experience in a similar market:
Logistics is the main issue: all parcel companies have domestic price lists. If you’re a Spanish fashion e-tailer and ship a lot all over Spain, you will be able to negotiate a good price for the region for your parcels. If you now offer to ship to other EU countries, you won’t have enough scale to get good prices to ship from Spain to Germany, Sweden, Hungary etc. Those shipments will be rather expenseive, customers would likely order from online shop from their region as a result if you charge them the real cost. If you don’t, you make no profit. Having to offer mandatory returns as well as repair/warranty services for your customers only increases this problem. This applies much less for large, Pan-EU shops obviously.
Regulation can be an issue, but isn’t the biggest: many EU countries still protect their own industry from EU imports by having local laws about waste disposal, use of glues and plastic wraps, return or disposal of old products etc., which are within the responsibility of the shipper, not the consumer. As an e-tailer you would need to check/know about (or comply with) laws in 27 different countries to be safe.
VAT is not an issue: if you’re selling to consumers, you apply the VAT rate relevant in your own country (where your own tax residence and your warehouse are), even if you ship to a different country. Consumers don’t have VAT numbers, and they will not claim VAT back from their government, meaning source VAT applies.
Language is not a (legal) issue: if you are a Finnish store and sell to someone in Italy, and all documentation is finnish only, that’s not a legal issue, as the customer is asking for the product to be sold to Italy. Also a purely Finnish website isn’t a legal issue, but of course most Italian clients won’t be able to understand it.
Warranty service to consumers is not an issue: the minimum warranty is harmonized to 2 years on normal products in all EU countries. But warranty logistics might be a problem; would you as the consumer want to send back a fridge if it brakes to a foreign country, just because it was a bit cheaper there?
There are no other taxes or duties for flow of typical goods between all EU countries for consumers either; various exceptions like cars, alcohol, tobacco, chemical or medical products etc. excluded
Draghi talked in his report about a concept called internal barriers, this in my opinion is one of those internal barriers. The fact that it’s such a hassle, considering different vat, bureaucracy, and that small merchants don’t even try
As others say, this is mostly because of the VAT. But not because the pricing is difficult. If you use Amazon for instance, there are even options for them to calculate it for you if you want.
The real problem is the VAT registration numbers you need from each country. If you sell through Amazon they store your product throughout Europe and you need a VAT number for every country they store your product in. Then you have to tell your own origin VAT organization from which country to which country you sold. You’ll quickly end up with a list sold from 10 countries to 30 countries, so that’s 300 lines you have to report your taxes on.
You may also have to put your product description and safety regulations on your product in 30 languages.
Then there are different laws in different countries. As an example: If you sell to Germany you need to pay for the amount of packaging your product uses as a waste disposal fee or something. Now you have to register exactly which product you sell to Germany and what type of packaging it has. Add so many rules to so many countries, and it is a lot harder than you think.
So yes, we have open borders, and it seems simple, but it really isn’t as simple as just selling it anywhere if you want to follow the rules.
I work in e-commerce and we do ship to other countries, and it’s not really worth it. A few years ago we shipped to the whole EU, we began cutting back the countries which were less profitable and now we’re only doing 4 or 5. All of those combined is less than 5% what we make selling locally.
I think we’re keeping them out of habit more than anything else but I wouldn’t be surprised if we end up shutting the international stores altogether.
As for the translations, taxes, etc I manage the stores and once it’s all set it’s not too much trouble. There are just a few things you have to keep in mind in terms of rules and regulations but that’s it.
VAT already mentioned, another problem is legal complications.
Each country has slightly different regulations, some immutable, and a consumer can sue in their home country, which is a nightmare in terms of cost and time wasted.
Just not worth the hassle for most sellers.
I really loved a clothing store once that I found online, and it was expensive but I decided to order, only to find out they ship to places I did not even heard about, but to Hungary. I asked them why, and they said the local shipping service, the state postal service is so untrustworthy they stopped shipping here 😀 good times!
Good Luck living in Norway.
“Everyone” ships to Sweden, but many don’t ship to Norway, or it is 2-3 times more expensive.
I try to accommodate all international orders on my small shop. Biggest issue for me is packaging regulations in France and Austria. You need to be registered and pay fees for packaging recycling – but they’ve made it really cumbersome and expensive, specially in Austria.
In fact, it’s so much so, that I’m pretty sure it’s a strategy to help local merchants.
There, I’d have to register with a notary, have a representative for just this issue, and pay fees for a minimum of 1.500 kg (!) cardboard recycling. It’s several hundred euros. And it’s quite the process.
I sell mostly (90%+) within Germany and my fees for packaging recycling are like 18€ for 10 kg of cardboard. And it’s all done online in a couple of minutes.
As a e-commerce store owner. No.1 reason is shipping cost and time.
Even if you ship large amounts (1000-5000) parcels per carrier annually, to some countries you still either eat parts of the shipping cost or have to charge absurd amounts. And not all carriers ship to all countries and their shipping time and method differs. So you might have like 3-4 agreements. It’s just not standardized here.
I’m not very sure, but I suspect that what makes it most difficult and even more so for small businesses is what it may involve in bureaucracy, on the other hand the messaging and perhaps also the fear of scams (although the latter also from consumers).
The clash between certain languages perhaps also, but I don’t think it’s as much as it was years ago.