Cross-border geoblocking and the supply chain's last mile

I recently spoke with Robert Thiemann, the Founder of BPM-Lux and Advisor of BPM, Logistics & Transport to discuss recent changes in cross-border geoblocking regulations in Europe and the implications for consumers and sellers. As a result of these changes, Thiemann details why online retailers will need to consider how to design last mile supply chain solutions to facilitate cross border deliveries and the return of unwanted goods for end consumers.

Dustin Mattison (DM): Can you define cross-border geoblocking in Europe?

Robert Thiemann (RT):

All of us have probably suffered geoblocking restrictions while buying airline tickets, booking hotels, car rental, buying software and ordering products online. When buying from cross-border sellers we were restricted in choice of brands, selections, and there were big gaps in prices. Online sellers apply barriers and impose restrictions to consumers by nationality or place of residence, segmenting markets along national borders, in detriment of end consumers and their growth – which the European Union (EU) considers as unjustified geoblocking. Despite having a single European market with around 500 Million consumers, online retail is divided by 28 member countries and different laws. As a consequence, today:

• 36 percent of European web shops do not sell cross-border.
• 27 percent of them do this to avoid cross-border deliveries.
• 22 percent do not allow payment transactions from foreign payment providers.
• The European Regulation 2018/302 is banning Geo-blocking, thereby helping end consumers and retail.

This will have an impact not only in Europe but also in other regional markets, as has happened with the European General Data Protection Regulation (GDPR).

DM: Why is this important?

RT:

The goal of the European Commission is the free movement of European citizens and goods within the European Borders. This new regulation wants to:

1. Stop discrimination by the place/country of residence within the EU.
2. Make cross-border retail easier.

End consumers and business shall be able to place orders online in other countries, the same as if they were tourists strolling along the shopping mall in a different country as their country of residence. For example, imagine a Belgian citizen going into a shop in Paris, and as soon as the shop manager recognizes his nationality, the Belgian tourist would be asked to leave the shop. That would be discrimination, and that is what is still happening in online retail.

DM: Who should be concerned with this topic?

RT:

All end consumers, businesses and retail. All will profit from this regulation.

1. End consumers will get a wider selection of products, brands and increase their buying power.
2. Online retailers can and must sell to all Europe, increasing their sales.
3. Businesses may order from suppliers all around Europe.

DM: How should they change the way they do business?

RT:

Retailers selling from a European based shop should:

• Stop blocking website access to customers with foreign European IP`s.
• Stop forwarding to other European domains. It is not allowed, except when you have national regulations which provide so, for example, when you are selling tobacco, alcohol, etc.
• Stop publishing different prices and conditions by nationality, country of residence or location of the customer.
• Stop denying foreign European credit cards. If you accept a French MasterCard in France, then you have to accept also an Italian MasterCard.
• Stop denying sales to foreign online shoppers. If you deliver within France, then a German Customer may provide an alternative delivery address in France for his order, and the shop has to deliver.
• Delivery, and this is important: Deliver within your own country, also for foreign shoppers.

Shops are not obliged to deliver cross border. They shall sell and deliver as they usually do within their borders.

DM: Do you have any examples you can share?

RT:

Well, you will find small, medium and large shops which do not deliver cross border for one reason or another, especially if you have to consider 28 different national laws. Since 2005 we implemented a solution for cross border purchases allowing customers worldwide to order at shops which do not deliver to other countries, offering a local delivery address. Take Luxembourg, a whole country as an example, where end-consumers, shops, and business are still obliged to order within Benelux instead of the country of origin in Europe, as the traditional distributions channels are built this way. Yes, there are many, and for each step of the transaction.

1. While searching: A French customer wants to access the German version of an online store’s website. Even though she types in the URL of the German site, she still gets redirected to the French site because of his IP.  After 3 December 2018 this is restricted. Being redirected will require the customer's explicit consent. Moreover, even if the customer gives consent to the redirection, the original version her or she sought to visit, in this case the German site, should remain accessible.
2. While ordering: the customer must be able to provide the invoice address of his place of residence, with his own Zip code and address. As you know Dutch zip codes, are different from Germans, and British. Not allowing placing a European Zip code or addressing while ordering will be considered as discrimination.
3. While paying: A German retailer accepts German, MasterCard or Visa, however, has refused payments from French IP`s or French Visa or MasterCard’s. That has to be changed.
4. The same French customer wants to buy a camera and has found the best deal on a German website, which only offers delivery/pick-up points in Germany.  The customer is entitled to order the goods and collect them at the retailer’s premises or have them delivered to another address/pick-up points in Germany, just like any German consumer.

In conclusion, retailers are obliged to do free trade. They do not need to create new websites in other languages, deliver to other countries, or get involved in foreign law, they are just obliged to sell. Of course, they may retain the goods until they are sure the transaction is safe and the funds are secured. This is a benefit for both, sellers and buyers.