Brussels, 11th March 2011
Consumers at Home in the Single Market? Questions and Answers on the 5th Consumer Scoreboard
I. THE SCOREBOARD
What is the Consumer Scoreboard for?
The Consumer Scoreboard is a tool which aims to make sure that the EU single market is working for European consumers, by offering them a greater choice of products and services, competitive prices, effective complaints handling and ensuring that they are supported by effective national consumer institutions.
Consumers' welfare is after all the 'acid test' for the internal market and for the national markets. If it works for them, it is competitive and innovative.
How often is the Scoreboard published?
From 2010 the Scoreboard is published twice a year.
The spring edition 'Consumer Conditions Scoreboard' such as the one published today (5th Scoreboard) examines progress in the integration of the EU retail market from the consumers' perspective.
It also monitors improvements in national conditions for consumers, reflected e.g. in the consumers' trust in their national consumer authorities and consumer organisations or the effectiveness of handling their complaints.
The autumn edition (6th Scoreboard) 'Consumer Markets Scoreboard' screens 50 specific consumer markets across the EU to identify those which may be malfunctioning from a consumer point of view. In-depth market studies of the most problematic sectors are then carried out.
II. NATIONAL CONDITIONS FOR CONSUMERS
What is the Consumer Conditions Index?
The Scoreboard measures the quality of consumer conditions in EU countries through the Consumer Conditions Index.
The objective is to create a data set which can be used by EU countries to estimate the impact of policies on the welfare of their citizens thereby promoting best practices.
The key components of the consumer conditions index are the quality of regulation concerning consumers and businesses, the effectiveness of resolving disputes and handling complaints, consumer trust in authorities, retailers, advertisers and consumer organisations, and the degree of trust in the safety of products on the market.
The key indicators used to calculate the Consumer Conditions Index are percentages of consumers (and/or retailers as relevant) who:
- feel adequately protected by existing regulations and law enforcement;
- trust public authorities to protect their consumer rights;
- trust consumer organisations to protect their consumer rights;
- trust sellers / providers to respect their rights;
- did not encounter misleading or fraudulent advertising and offers;
- complained when faced with a problem;
- were satisfied with how their complaint was handled;
- find it easy to resolve disputes thorough alternative-dispute-resolution (ADR) schemes;
- find it easy to resolve disputes through courts;
- do not think that a significant number of products on the markets are unsafe.
How have national conditions for consumers evolved since 2009?
The Consumer Conditions Index reveals that conditions have generally improved from the significant fall in 2009, with most Member States matching or surpassing 2008 levels.
Most EU countries (24 countries out of 27) have experienced an improvement in their national consumer conditions (see Figure 1 and 2).
The ten countries with the best conditions are the UK, Ireland, Luxembourg, Austria, Finland, the Netherlands, Italy, Denmark, Germany, Belgium and Sweden, all of which are also above the EU average.
Figure 1: The Consumer Conditions Index -- values
Figure 2: Consumer Conditions Index - evolution
II. INTEGRATION OF THE RETAIL SINGLE MARKET
How is cross-border commerce doing in the EU?
The proportion of consumers shopping across borders within the EU (both online and offline) has grown only very slightly in 2010: 30% of EU consumers made at least one cross-border purchase in the past year, compared with 29% in 2009 and 25% in 2008 (see Figure 3).
Figure 3: Consumers, at least 1 cross-border purchase
The proportion of retailers carrying out cross-border transactions (both online and offline) actually fell in 2010: 22% of EU retailers sold to at least one other EU country in 2010, compared with 25% in 2009 and 20% in 2008 (see Figure 4).
Figure 4: Retailers: sales to at least one other EU country
The average value of a cross-border purchase as reported by consumers fell to €653 in 2010 (down from €785 in 2009 and €797 in 2008), which may be a reflection of economic conditions.
How is e-commerce doing in the EU?
The Scoreboard shows continued healthy growth of e-commerce in general, with 40% of EU consumers having ordered goods and services online (whether from national or foreign sellers) in 2010 (37% in 2009).
The trend suggests that the ambitious targets set by the Digital Agenda for e-commerce (50% of consumers shopping online by 2015) remain realistic.
Online sales in the EU have seen a continuous growth in the past five years. This will benefit not only online shoppers but all consumers because if e-commerce works well, it also puts pressure on offline retailers – what they sell and how much they charge.
How is cross-border e-commerce doing in the EU?
In contrast to the dynamic growth of e-commerce in general, cross-border e-commerce is still growing at a slow rate.
As a result, there is a growing gap between domestic and cross-border online purchases.
In 2010, 36% of EU consumers bought goods or services online from national sellers, compared with 34% in 2009.
But only 9% ordered from elsewhere in the EU, compared with 8% in 2008 (see Figure 5). This means that efforts must be increased to meet the Digital Agenda target of 20% of consumers buying online across borders by 2015.
Figure 5: The growing gap between domestic and cross-border online purchases
The proportion of those buying from national and EU retailers also varies significantly from country to country (see Figure 6). The experience of Luxembourg, Malta, Cyprus, Austria and Ireland suggest that there is no inherent lack of consumer confidence in cross-border e-commerce.
Figure 6: Domestic and cross-border online purchases by country
National trends in certain EU countries (Figure 7) again give grounds for optimism and support the hypothesis of supply side obstacles.
Figure 7 Evolution in the percentage of cross-border shoppers
What are the main barriers to cross-border e-commerce?
Earlier Commission studies have demonstrated a clear potential of cross-border online shopping for consumers in terms of money savings and consumer choice (see IP/09/1564 and MEMO/09/475)1. But the data on the proportion of cross-border shoppers confirm that the potential is still largely failing to materialise.
While the perceptions and concerns of consumers are a factor in this, there are also important obstacles on the supply side.
- Consumer perceptions vs. consumer experience
The Scoreboard suggests that consumers' perceptions appear to be a important barrier to cross-border e-commerce. Among consumers who have not made a cross-border distance purchase:
- 62% are worried about fraud and scams;
- 59% cite concerns about what to do when problems arise;
- 49% are put off by expected delivery problems.
However, these concerns are much less widespread among consumers who have actually shopped cross-border (34%, 30% and 20% respectively).
Among consumers who have already shopped cross-border, 61% were equally confident in cross-border and domestic online shopping compared to only 33% of the general population.
In actual consumer experience, cross-border e-commerce appears to be at least as reliable as domestic e-commerce or even more. For example:
- the delivery was delayed for 16% of cross-border purchases (compared with 18% for domestic purchases);
- the product did not arrive in 5% of cross-border cases (compared with 6% for domestic purchases).
The findings suggest that consumers' concerns are not an inherent barrier and can be overcome if consumers can be persuaded to make at least one cross-border purchase.
They also suggest a key role for more effective information about existing consumer advice, enforcement and redress mechanisms for cross-border consumers. These include:
- the Consumer Protection Co-operation (CPC) network, which brings together national enforcers to detect, investigate and stop cross-border infringements (http://ec.europa.eu/consumers/enforcement/index_en.htm),
- the European Consumer Centres Network, which is an EU-wide network providing free help and advice to consumers shopping in the Single Market (http://ec.europa.eu/ecc-net)
- Major obstacles on the supply side
An earlier Commission study published in 2009 (see IP/09/1564 and MEMO/09/475) revealed the extent to which market fragmentation is a barrier in the growth of cross-border e-commerce. The study showed that more that 60% of orders placed by consumers online in another EU country failed, mainly because the trader refused to serve the consumer's country of residence or did not offer adequate means of cross-border payment.
The Scoreboard now shows that the proportion of retailers selling to other EU countries fell to 22% in 2010 (25% in 2009).
National data reveals the considerable potential for the use of e-commerce in retail, as shown by the figures for use of the Internet by retailers in UK, Ireland, Denmark, Austria, Slovenia and Greece (Figure 8).
Sources: EB 300
The rewards for those who do sell cross-border are significant: 56% estimate more than 10% of their e-commerce turnover came from sales to other EU countries.
The Scoreboard suggests that the main challenge is to convince still more retailers of the merits of cross-border e-commerce.
III. CONSUMER AFFORDABILITY
What is consumer affordability?
Consumer affordability, measured in the Scoreboard, is the ability of consumers across the EU to afford the same goods and services. It takes into account both the relative levels of income and the cost of living in each EU country.
How affordable is life for consumers across the EU?
The data from 22 countries which are available suggest that large differences still exist within the EU in the consumers' ability to afford the same goods and services, taking into account both the average incomes and the price levels (see Figure 9).
Figure 9. Real adjusted gross disposable income of households per capita (Purchasing Power Standards, 2009)
What is the situation of vulnerable consumers?
The Scoreboard provides data on the evolution of the "material deprivation rate" (see Figure 10).
The rate is a measure of social exclusion and affordability for consumers; it focuses on the share of the population whose living conditions are severely affected by lack of resources.
The rate is the percentage of the population who cannot afford at least three of the nine following items: unexpected expenses, one week annual holiday away from home, mortgage or utility bills, a meal with meat, chicken or fish every second day, keeping their home adequately warm, a washing machine, a colour TV, a telephone or a personal car.
The Scoreboard shows very large differences between EU countries in their proportion of vulnerable consumers (from 4% to 55.5%)
On the other hand, in most countries the percentage of vulnerable consumers has not grown significantly in 2009 despite the crisis.
Figure 10. Material deprivation rate
III. What is the Commission doing to tackle the barriers to cross-border commerce?
In October 2009, the Commission unveiled a strategy for dismantling barriers in the internal market for consumers (see MEMO/09/475).
Since then, several flagship Commission initiatives have been launched which aim to make the single market deliver better for consumers and businesses. They include:
The Single Market Act
Launched in October 2010, the Single Market Act contains some 50 concrete measures aiming to boost growth by developing the single market, including helping to end the current market fragmentation in online commerce (see IP/10/1390 and also MEMO/10/528).
The Digital Agenda
Launched in May 2010, the Digital Agenda is a flagship initiative which includes actions to remove barriers which hamper access e.g. to pan-European telecoms services, digital services and content. One of its aims is to open up access to legal online content by simplifying copyright clearance, management and cross-border licensing. Other actions include e.g. making electronic payments and invoicing easier (see IP/10/581).
The proposal for the Consumer Rights Directive
In its current form, the proposal aims fully to harmonise certain core consumer rules including for distance selling and off-premises selling, e.g. the proposal fully to harmonise the cooling-off period. The Directive was voted in the relevant committee of the European Parliament in February 2011 (see MEMO/11/61) and it is scheduled for vote by the Parliament in March 2011.
One of the aims of the proposal is simplify cross-border purchases for consumers but also to encourage traders to sell to other EU countries by creating a level playing field and reducing transaction costs in certain core areas of e-commerce.
Initiatives on Alternative Dispute Resolution
The Commission is exploring which EU action would have the most added value in helping consumers to settle disputes through alternative dispute resolution (ADR), that is though out-of-court (non-judicial) schemes.
The aim is to increase consumer confidence in shopping in the Single Market by ensuring easier, faster and cheaper out-of-court solutions to settle disputes between EU consumers and traders.
In January 2011, the Commission published a public consultation on the use of ADR, as a means to resolve disputes between consumers and traders in the EU. A legislative proposal is planned for November 2011 (see IP/11/45).
III. MORE INFORMATION
The full Scoreboard report, including detailed country-specific data: http://ec.europa.eu/consumers/strategy/facts_en.htm#5CMS
See also IP/11/280
Commission Communication on Cross-Border Business to Consumer e-Commerce in the EU: http://ec.europa.eu/consumers/strategy/docs/COM_2009_0557_4_en.pdf