Online retailers may be hit by £9bn red tape headache

It's been one of the more profitable sectors of the retail industry, but could ecommerce about to experience 'the perfect storm'?

by Emma Haslett
Last Updated: 06 Nov 2012
New regulations proposed by the European Union could cost retailers €10bn (£9bn) a year, according to figures by online trade body the Interactive Media in Retail Group. Plans under the EU Consumer Rights Directive would mean online retailers would be forced to deliver anywhere in the EU, and incur the costs of a return if goods are worth more than £35 (and if that’s a return from the outer reaches of Turkey, that’s not going to come cheap). Not surprisingly, businesses aren’t all that impressed…

On the whole, retailers have been having a tough time of it lately, but online retailers have bucked the trend, outperforming their high street rivals reasonably consistently. But the new rules could put a stop to all that. They might be aimed at simplifying retail regulations across the EU, helping to level the playing field between consumers’ and traders’ rights. But under the proposals, the ‘cooling off period’ under which customers can return their purchases will be extended to 14 days after purchase, rather than the seven it is now. Which doesn’t feel like a very level playing field to us.

The Forum of Private Business has pointed out that that extension could have a disastrous effect on cash flow, making it even less reliable for businesses already struggling with low consumer confidence after rises in VAT and inflation. And suddenly having to get to grips with regulations in countries many businesses would otherwise not have considered trading with could, as the FPB put it, ‘create a perfect storm’ for independent retailers. Particularly when it comes to businesses that are only licensed to sell their products in one country.

The FPB was fairly uncompromising in its condemnation of the legislation, calling it ‘yet another completely pointless, expensive, unenforceable, unworkable piece of red tape’. And while it’s a nice change not to have to point the finger of blame at the Government for once over new red tape. But there are concerns that in its enthusiasm to get UK businesses trading overseas, it might embrace the legislation. The FPB’s message, though, is that although trade is good, this isn’t the best way of going about it.

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