EU4Digital is an initiative that aims to extend the European Union’s Digital Single Market to the Eastern Partner states, developing the potential of the digital economy and society, in order to bring economic growth, help businesses, generate more jobs and improve people’s lives. Harmonisation of digital markets through EU4Digital helps to eliminate barriers to pan-European online services for businesses, citizens and public administrations.
At the beginning of 2020, EU4Digital has started activities to further harmonise e-commerce between the EU and the Eastern Partner countries, and is now launching a pilot between Armenia, Azerbaijan, Georgia and Germany to increase e-commerce volumes.
Businesses and consumers are increasingly moving online to buy and sell goods and services, a trend that has greatly accelerated due to the COVID-19 pandemic. EU4Digital stresses that, when businesses move online, they face two major challenges: the additional investments required to introduce goods online and lack of know-how and skills to operate online. That is particularly true for microbusinesses and SMEs. At the same time, the EU introduces new legislation, such as the VAT E-commerce Package, which will be fully applicable in the Union as of 1 July 2021, which brings important changes to e-commerce processes of which businesses and governments have limited awareness.
Background of the EU4Digital e-commerce study
EU4Digital rightly points to the fact that the EU has established its own e-commerce rules, processes, know-how and ways of engaging stakeholders and that, naturally, the Member States expect these rules to be considered and followed by all their trading partners, including non-EU businesses. This is particular important also in terms of safety of products coming into the EU Single Market. Otherwise, different rules create barriers that complicate e-commerce transactions.
To avoid such complications, EU4Digital insists on the need to harmonise the digital environments between the Eastern partner countries and the EU. This includes harmonisation of the e-commerce ecosystem and approximation to relevant EU legislation and standards. For this reason, in June 2020 EU4Digital developed the baseline and recommendations to provide guidance to harmonise e-commerce among the Eastern partner countries and the EU in three main areas: ecosystem, legal framework and standards.
A pilot to increase e-commerce flows
During the state-of-play assessment in the Eastern partner countries, EU4Digital identified the following challenges for cross-border e-commerce:
- Major marketplaces operating in the EU are available in the Eastern partner countries but not commonly used for reasons such as lack of awareness and high cost to enter the EU market.
- Local marketplaces selling cross-border in the Eastern partner countries are not common and not personalised for EU consumers.
- Average delivery time for cross-border sales is longer in the Eastern partner countries than in the EU.
This led EU4Digital to look for a possible solution to strengthen the e-commerce ecosystem and increase volumes. Hence the pilot solution to establish national virtual warehouses/databases of local goods to connect e-commerce actors so they can automatically exchange information about sales, customs and delivery. The virtual warehouse will support retailers, marketplaces, delivery operators and customs while placing the products for sale abroad and completing cross-border delivery. In particular, the solution will have the following benefits:
- For retailers: cost and time efficiency. The businesses manage the inventory in real time on a single virtual warehouse that marketplaces themselves can use to place products for sales.
- Marketplaces: trust and growth. By allowing to list goods on the interfaces, the virtual warehouse serves as trustworthy and real time database that allows the marketplaces to grow a portfolio of products.
- Postal operators: timely delivery and quality. Once the sale happens, marketplaces notify the virtual warehouse through the application programming interface (API) so that the national post can initiate cross-border transportation procedures on time and deliver the goods within 72 hours.
- Controlling authorities: transparency/quality of products – database provides the baseline for the quality control of local products and listings.
An additional goal of the pilot activity is to prepare e-commerce actors in the Eastern partner countries for the 2021 EU VAT E-commerce Package.
The e-commerce pilot activity started In January 2021 with a meeting with the pilot countries Armenia, Azerbaijan and Georgia, and Germany from the EU side. As the scope of the pilot includes applying the EU standards for product listing in a virtual warehouse, once the pilot is completed, EU4Digital stresses that the solution can be adapted for cross-border e-commerce with other members of the EU and the Eastern partner countries, as well as up to 192 countries within the Universal Postal Union that use the same standards.
One of Ecommerce Europe’s Associative Partners, the logistic-natives, is closely and actively involved in the pilot initiative. You can address any questions or remarks you may have on the pilot initiative to florian.seikel@logistic-natives.com .
