Why eCommerce is under attack
May I start with a question? What do you think is one of the most innovative businesses in mankind? Commerce. To sell and buy is a business started from peer-to-peer business to mobile business today. Especially in the last two hundred years commerce developed the way to shop from flying merchants to marketplaces to shops to supermarkets to shopping malls to eCommerce and to Mobile-Commerce. Millions of people like to shop online and use several innovative ways of commerce. The consumer decides how they want to shop, not governments and not enterprises.
But, eCommerce like we know it is under attack.
A growing number of brands and manufacturers are restricting Internet trade, for example using contract terms to stop sellers from selling goods on Online-Shops and online marketplaces.
What happened? Speaking with Online Sellers for many years now one topic is coming up louder and louder year by year. Platform Bans. After Adidas made it public mid 2012 that they are restricting sellers from selling online and via online marketplaces, this topic seems to be the biggest issue for Online-Trade. To be clear on that, platform bans mean that brand owners prohibit to sell on platforms and marketplaces like Allegro, Amazon, eBay, Priceminister, Rakuten and so on.
In my point of view manufactures and brands act against SMEs, cross-border trade, online and consumers. And this is not a gut feeling – EU Parliament is saying it as well.
At the study „Discrimination of Consumers in the Digital Single Market“ you can find the statement „From the consumer’s perspective, the distorted access to goods or services means discrimination within the internal market.”
But how does this discrimination works? Platform bans and other online restrictions mean that there is less Intrabrand and Interbrand competition. (Inter-brand competition is the competition between manufactures who are selling different brands of the same or equivalent goods. Intra-brand competition is competition among retailers of the same brand.) From this it follows less selection because brands only want new models on sell, less convenience because not each seller is able to run an app, less channels mean consumers cannot buy where they are used to buy, less availability because of less sellers, less information because of missing reviews and test reports. And all ends in higher prices.
We asked thousands of European SME Merchants if this is true. First thing we did was running a petition to see how important this topic is. Unexpected more than 14,000 small and medium businesses signed this petition, cross Europe and cross verticals.
The list of all SMEs who signed the petition was handed over to the Vice-President Olli Rehn in December last year.
To understand the status quo of online restrictions we ran a survey. Now we have input from more than 2,000 Online Sellers, all over Europe, all verticals and most are SMEs.
Close to 60% of business sellers are affected by platform bans, 15.3% more sellers than last year. The highest increase over last 4 years!
And more than 5% of European Business Sellers fear insolvency because of online restrictions by brands.
Next thing we asked for was the impact. And these numbers are remarkable, too.
More than 60% of the Business Online Sellers said that the amount of Online-Sellers will decline, Manufactures will obtain monopoly, diversity of supply will decrease and prices for consumer will increase.
To be clear, these points of impact describes the impact consumer will see. That means the consumer gets only goods brands want them to find like newest season models but cannot find the goods they are looking for and when they find it they have to pay much more because there is no free and no fair market anymore.
Last but not least more than 50% of the sellers said that innovation in Online-Trade will be reduced. And as you know innovation is the base for growth and employment.
These numbers show how important this issue of platform ban is for sellers. And this is the reason why so many sellers signed the petition.
What does it mean? Our claim isn’t complicated:
- All parties should sit at a table and discuss the way how to run a successful eCommerce business
- Policymakers and authorities must deal with restrictions and discriminations
- We need more clearance on the legal side
- And we need guidelines how to understand the legal rules
Let´s Stop Platform Ban and discrimination in Online-Trade. See you on http://www.choice-in-ecommerce.org
Guest eCommerce Blogger