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Consumer Activity Reveals that Obstacles to Cross-Border Online Sales Remain an Issue; Plans to Rejuvenate Internet Trade Continue

The European Commission has recently published its “Consumer Conditions Scoreboard” which monitors national conditions for EU consumers and examines the integration of the EU’s retail market. That and the Consumer Markets Scoreboard constitute key instruments for monitoring consumer activity in the Internal Market, thereby providing input for a wide range of EU and national policies.

First of all, the Consumer Conditions Scoreboard examines the quality of consumer conditions on the basis of three conceptual frameworks, namely, knowledge and trust, compliance and enforcement, and complaints and dispute resolution. In this regard, the following points will be of interest to Hong Kong sellers:

  • Consumers’ and retailers’ awareness of some important consumer rights remains limited. Additionally, trust in product safety has not particularly increased over the years, with only 69% of consumers agreeing that most non-food products on the market are safe.
  • In order to enhance compliance with and enforcement of consumer rights, the Commission is planning to review the Consumer Protection Cooperation Regulation, which, among others, allows authorities to stop breaches of consumer rules when the trader and the consumer are established in different countries. It also plans to update the Unfair Commercial Practices Directive which, among others, lists several prohibited trading practices to safeguard consumers.
  • There exist a number of EU initiatives to help consumers enforce their rights, such as new rules on alternative dispute resolution mechanisms, an EU-wide online platform for disputes arising from online transactions, the European Consumer Centres providing information to consumers in respect of cross-border litigation, and the European Small Claims Procedure simplifying cross-border litigation for low-amount claims.

Secondly, the Consumer Conditions Scoreboard draws attention to the findings of a 2015 annual survey that low consumer confidence in online transactions is still an obstacle to completing the Digital Single Market. In this respect, the Digital Single Market Strategy, adopted in May 2015, sets out further actions to be delivered by the Commission in 2016 in order to modernise consumer rules for online and digital purchases and to review the Consumer Protection Cooperation Regulation.

Moreover, the Scoreboard indicates that half of Europeans bought goods or services over the Internet in 2014, which represents an increase by almost two and a half times over 10 years — from 21% in 2004 to 50% in 2014. However, only 15% of consumers are reported to have bought goods or services via the internet from other EU countries, while 44% bought from their national market’s sellers/providers in 2014.

More importantly for Hong Kong’s online sellers, consumers who bought online from sellers outside the EU remain at 8%, being most popular in Malta, Finland, Luxembourg and the UK.

On the other hand, the Commission is of the view that the incidence of cross-border online purchases within the EU is likely to be under-reported, since consumers do not always realise that they are buying from outside their national borders. This leads to the conclusion that such consumers are not fully aware of applicable contractual terms, which could result in higher return costs in case of withdrawal from the contract.

Concerning statistics on some specific purchases, clothes and sports goods are the most common category of online purchases which have seen remarkable growth in recent years. These are followed by travel and holiday accommodation, household goods, tickets for events, and books/magazines/e-learning materials. Purchases of digital content and the use of online services (whether paid or free) are becoming increasingly popular. The table below compares purchasing trends over recent years:

Table: Purchasing Trends over Recent Years
Table: Purchasing Trends over Recent Years

From retailers’ perspectives, the Scoreboard determines that 41% of European retailers sell online to final customers while most of such online sales are made to domestic customers. It should be underlined that only 13.7% of EU retailers sell online to final consumers in other non-EU countries. Furthermore, online sales are less common among retailers who sell food products than among those selling services or non-food products, accounting for 34%, 47%, and 42% respectively.

Hong Kong traders can click on the following to access the Consumer Conditions Scoreboard.

Content provided by Picture: HKTDC Research
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