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28 September 2015

6 Tips When Using e-Commerce to Export

Posted By: AIB Business

The increasing popularity of internet shopping has led to a rapid rise in online export selling, but doing it right means taking the time to address some key legal and non-legal matters, writes John Whelan, Export Sector Specialist at AIB.

Irish SMEs have taken to e-commerce relatively more readily than those in most other EU countries, with 24% of Irish SMEs selling online and generating 37% of their sales from this source, according to the latest Eurostat survey. This is significantly above the average for the EU of 15%. In addition, 11% of Irish SMEs sell internationally; again this is well above the EU average of 8.8%.

An e-Commerce business model allows companies to be established anywhere there is a good internet connection and a computer-savvy population willing to buy off the internet. But selling internationally presents many potential pitfalls for the unwary.

The harsh reality is that, to build a good long-term online export business, a number of key matters must be addressed:

  1. As of 13th June 2014, customers are no longer bound by online contracts unless information on the goods, provider, pricing, delivery, method of payment, withdrawal period, complaints handling, after-sales services, duration of contract and functionality or interoperability (in the case of digital products) is provided in a clear and comprehensible manner.

  2. Be aware of the 30 day period for order completion. If you trade with customers within the EU, purchased products or services must be delivered within 30 days from the day after the placing of the order, unless otherwise agreed. If you are unable to uphold your end of the contract, you must inform the consumer who then must agree a revised date of delivery. If the contract is not fulfilled during this additional period of time, the customer will be entitled to terminate the contract. In reality, most on-line shoppers expect a same day service for perishable goods such as food stuffs and a three-five day delivery on other goods. Hence, it is essential to put in place an efficient logistics service system. DHL and An Post have good low cost services in place to support internet sales with delivery services across the EU and USA, as do a number of other international express delivery companies.

  3. In the EU, customers have 14 working days within which to cancel or withdraw from a purchase without having to give any reason. When a customer exercises this right, traders have 14 days within which to refund the money. The only charge that may be made to the customer is the direct cost of returning the goods unless the trader has agreed to bear them or the trader failed to inform the consumer that the consumer has to bear them.

  4. Contract terms should always be drafted in plain and intelligible language, and any ambiguities will be interpreted in favour of consumers. Protect your customers’ data and publish a privacy statement. As part of your long-term strategy for selling products and services, include steps to protect your customers’ data. As a trader, you are responsible for the type of data that you collect and the reason why.

  5. Effective from 1st January 2015, all businesses that sell their electronic services online within the EU must charge VAT at the rate applicable in the consumer’s member state rather than the seller’s. The rules are introduced to stop companies that trade online – from multinationals like Amazon, Apple and Google to start-up businesses – from routing purchases through low-VAT countries such as Luxembourg. VAT on digital products such as e-books, music downloads and apps were previously charged in the country of the supplier. However, from 1st January 2015, VAT will be payable in the country where the digital product is bought. The EC ruling is that electronic services from here on will “always be taxed in the country where the customer belongs” – regardless of whether the customer is a business or consumer or whether the supplier is based in or outside the EU.

  6. Be aware of fraudulent practices, as the risks arising from fictitious addresses or fraudulent use of credit cards are usually borne by the seller. If a card has been used fraudulently, the buyer’s liability cannot exceed €150 under EU Recommendation 97/489/EC. However, in Ireland, in practice the liability is generally lower. Remember your buyers are protected by the European Directive on consumer rights (Directive 2011/83/EU) – known as the Consumer Rights Directive – which aims to ensure that consumers can expect the same minimum level of protection no matter where a trader is based in the European Union (EU). The Directive was incorporated into Irish law by the European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013 (SI No. 484/2013) with effect from 13th June 2014.

For non-EU sales over a website, any problems that arise are usually resolved by reference to the terms and conditions of sale shown on the website; hence it is very important that these are checked out with a legal adviser who is competent in international commercial law.

While selling your products through a website is a simple, low-cost way of entering the European and global markets, you should make it clear who you are to your customers and why they should buy from you. Your website should be optimally designed and easy to use. There is a legal obligation to have information such as your company’s name, as well as postal and e-mail addresses, permanently available to your consumers. Include a set of terms and conditions on your website.

A well-designed and optimised website, addressing legal and non-legal issues, and putting your customers first will go a long way towards building an online export business that is set up for success.

Written by: John Whelan, Export Sector Specialist at AIB


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