EU directives ‘disastrous’ for online retailers

Draft amendments to the Consumer Rights Directive voted through last week have been labelled “disastrous” for online retailers.

According to the Interactive Media in Retail Group (IMRG), the proposals could cost the e-commerce industry an additional €10 billion (£8.8 billion) per year in delivery charges, which amounts to a staggering 4% of its total anticipated value in 2012.

The IMRG claims this threatens to completely derail growth and prevent the development of the digital economy.

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The cost of EU returns to e-retailers without the new EU legislation is around €5.7 billion (£5 billion), based on the prevailing rate of 90% domestic and 10% cross-border returns. With the new EU legislation in place that cost is expected to soar to an “unsustainable” €15.7 billion (£13.8 billion), it said.

James Roper, CEO at IMRG, insists the hike in operating costs will force many smaller retailers out of business.

“These new amendments from the EU are some of the most disastrous for the online industry yet,” he said. “As well as being unnecessary they would inevitably lead to significant price increases being forced onto already hard-pressed consumers, pushing up prices across all retail channels, and disadvantaging SMEs to the point where many would be forced to cease trading online altogether.”

He added: “The internet has introduced levels of choice and price competitiveness that have greatly benefited consumers around Europe and the world, but this will be eroded if these damaging proposals go through, as the efficiency and transparency of the internet will largely be lost.

The IMRG’s concerns lie with several key amendments in particular. This includes a directive that will force retailers to bear the brunt of return costs for orders above €40 (£35) and another that will reduction the amount of time retailers have to refund orders.

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