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Geo-blocking over: what does it mean for online sellers?

On 6 February MEPs agreed on a regulation to end geo-blocking and country redirects in the EU. 3 December is the date on which the new rules against unjustified geo-blocking become reality.

Retailers will be obliged to give people access to goods and services on the same terms across the whole EU, wherever they may be connecting from.

How will it affect (cross-border) ecommerce in Europe and online sellers? Read on!

Unjustified geo-blocking over: new ecommerce era is coming

The new rules against unjustified geo-blocking entered into force on 22 March 2018. The 9-month period before 3 December was to give merchants enough time to adapt and make necessary changes to comply with EU rules.

According to the Vice-President for the Digital Single Market Andrus Ansip, the Commissioner for Internal Market, Industry, Entrepreneurship and SMEs Elżbieta Bieńkowska and Commissioner Mariya Gabriel, in charge of the Digital Economy and Society:

European citizens will enjoy the freedom of shopping for goods and services online. This is not only the end of unjustified discrimination but also opens new opportunities for European companies to grow and innovate. Ending unjustified geo-blocking is part of our efforts to encourage ecommerce across borders in the EU, along with more transparent parcel delivery prices, stronger consumer protection and simplified VAT rules.

Geo-blocking: a few basics

Geo-blocking has to do with any restrictions imposed by online stores based on nationality, place of residence, establishment or place of connection.

Take this situation as an example. Shopping from Belgium, you find the product of your interest on a French website. You add it to your cart and click the “buy” button. You see the country redirect “You are being redirected to the Belgian page of this website”.

You find yourself on the page where the product is … not available.

Country redirect is one of the barriers preventing shoppers from choosing their preferred online store.

But customer discrimination goes beyond that. It is also possible that your means of payment, e.g. credit cards, won’t be accepted at the checkout of a different EU country. You may not even be able to register on the website.

What’s the scale of such unfortunate purchasing events?

According to a study by the European Commission, in only 37% of cases were shoppers able to complete a purchase from another EU country and buy the products they were after.

Far too often online buyers experienced some form of restriction. That’s geo-blocking in progress.

There may of course be justified reasons for merchants not to sell abroad, such as higher international shipping costs or the need to register at the foreign tax authority.

Yet discrimination between EU consumers based on the desire to segment markets along national borders to increase profits to the detriment of foreign customers is unjustified geo-blocking.

Examples of geo-blocking:

  • Blocked access to websites across borders;
  • Lack of possibility to purchase goods, finalize the order or download content when accessing a website from abroad;
  • Denied delivery or shipment abroad.
  • Different prices and conditions, depending on nationality, country of residence or the consumer’s location.
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Country redirect is one of the barriers preventing shoppers from choosing their preferred online store.

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Why stop geo-blocking

Europeans love online shopping. They order products online not only in their home countries, but also shop online across borders.

One third of online buyers shop from a retailer in another EU member state.

Unfortunately, buyers often come up against various barriers whilst trying to finalize their online purchase.

For example, some companies unnecessarily stop consumers using their online service in another country and redirect traffic to a local store with different products than those in other countries.

The EU Parliament wants both online and offline buyers to benefit from an integrated single market. Stopping geo-blocking is a step forward.

The new regs apply to a wide range of goods and services, such as:

  • Physical goods, e.g. electronics and furniture;
  • Online services, e.g. website hosting or cloud services;
  • Entertainment services, e.g. tickets to leisure parks and concerts.

Further, there is a possibility that the geo-blocking ban will be extended to cultural goods in 2020. Copyrighted materials, such as ebooks or software, will be considered.

According to Monique Goyens, director general of BEUC, a European consumer protection group:

This law is only a first step. Cultural goods will have to be included in the revision taking place in two years.

Today millions of Europeans live abroad and would like to access cultural goods from their home country. Geo-blocking often makes it impossible. Certainly this makes the motivation to revise the clause very strong.

The end of geo-blocking will benefit EU consumers in many situations. For example, German customers will be able to shop online in any other EU member state, without any extra fees or without being rerouted to a different site.

Situations and examples when there can be no justified reasons for geo-blocking:

  • The sale of products without physical delivery. A French customer wants to buy a washing machine. They find the best deal on a German website. They will be entitled to place an order and collect the washing machine at the trader’s premises or organize home delivery themselves.
  • The sale of electronic services. A Romanian buyer wants to buy hosting services for their website from an Italian supplier. The buyer will now have access to the service, can register and purchase it without paying extra fees compared to Italian consumers.
  • The sale of services provided in a specific physical location. A Spanish family visits a Portuguese theme park and can benefit from a family discount on the entry tickets’ price.

To allow time for adaptation, the new rules were scheduled to apply on 3 December 2018. The Commission will evaluate their impact on the internal market within two years after coming into effect.

Selling cross-border: it’s not an option

… it’s a must! At least it seems it’s becoming more and more a must. The geo-blocking move will force online businesses to sell products to EU buyers regardless of their country of residence.

This is actually great news. Today international ecommerce is the biggest growth opportunity for ecommerce sellers.

The geo-blocking regulation adds nicely to the recent change in VAT regs: online merchants no longer have to register for VAT in each of the EU countries in which they trade.

europe-globe-stars-ecommerce

The destiny of many EU online retailers may not be necessarily written in the stars, but more in EU laws. It’s just getting simpler and more profitable to sell across the EU. Your cross-border fate may have been sealed.

Selling internationally pays off. A properly implemented international strategy can transform your business.

Take British online retail success stories, e.g. ASOS. Today ASOS receives around 60% of their orders from abroad. It expanded internationally at an impressive rate within a short period of time.

What’s behind ASOS’ success? The company has provided its international buyers with a fully localized, end-to-end shopping experience.

So why aren’t more online sellers doing this?

In short: because they THINK it’s complicated. Granted, to provide a fully localized buyer experience, you must consider a bunch of topics, such as language, currency, import duties, legal issues, SEO & marketing, customer service, payments or international shipping.

However …

  • First, you don’t need to localize all these elements from day one.
  • Second, you don’t need to, and probably shouldn’t, do it on your own.

So how can you go global without spending hours upon hours, days upon days on localization?

Today there are ecommerce tools that make localization and selling internationally hassle-free. An automated cross-border sales solution can change the future of your online business quickly and easily.

Check out the ecommerce localization solution powered by Webinterpret. You will better understand how hassle-free localization works and how it can help you double your online sales in a short amount of time.

In a nutshell

Geographically-related restrictions, such as geo-blocking, undermine online shopping and cross-border sales.

The new rules should put an end to customers being blocked from accessing goods and services online based on their IP address, postal address or country.

We’re expecting a huge boost in cross-border ecommerce.

Cross-border trading (CBT) is already in full swing. Still, the end of geo-blocking will make CBT more of a norm in the EU that it has ever been. Prepare your online store for this big opportunity and maximize your sales potential, while minimizing your efforts. Localize and rock your sales!

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