The e-commerce industry is preparing for major changes due to the entry into force of the EU Omnibus Directive. It obliges all stores and marketplaces to fairly advertise the sale and inform about prices. Traders are now obliged to adjust their stores until May 28th.
Grounds for the Omnibus Directive
The decision to introduce those regulations is well justified. Very often, stores artificially manipulate prices before their reduction, which can be seen on the examples of Black Friday and Cyber Monday. There were analyses of the promotions from such days conducted in 2021, they clearly show the phenomenon of price manipulation. The actual reductions were only of about 3.6%, and some entrepreneurs had manipulated prices of their products even earlier in order to reduce them to the previous amount. Moreover, according to the EU legislator, the provisions that were in force until now were not adapted to modern digital solutions, which are with increasing popularity offered to customers. Online stores must guarantee users clarity and transparency throughout the whole purchase path.
How does it work in practice?
E-commerce businesses, i.e., all online stores, sales platforms, or marketplaces are obliged to adapt to new regulations, which cover several areas:
Promotions, sales, discounts
According to the Directive, when providing information on the reduced price of a product or service, the trader must also include the information on the lowest price applicable within 30 days before the reduction. In the event when the good or service has entered the market in less than 30 days, the lowest price from the date of entry into sale should be displayed.
For example, the Timberland store informs about prices in this way:
The new rules also apply to advertisements. This means that all rules on information about promotions and prices also apply in the advertisements, which should not cause doubts for consumers and should enable price comparison. Moreover, search engines and marketplaces must make the search results transparent - distinguish which are paid advertising, or sponsored offers, etc. The boundary between organic and paid results is to be clearly visible to users. For example, in Google search results, the ad is marked, but many people do not notice it:
An example of good practice of OLX Group:
In the case of automations that individually adjust the price on the basis of choices made by users, sellers should inform their customers about the use of such systems. Another responsibility of the seller is to present, on the online store and on marketplaces, the main parameters that determine the order of product or service presentation in search results. As a result, customers will be able to understand why products or services are displayed on the website in a given order.
Product or service reviews
The Omnibus Directive is intended to end the unfair practices that aim to confuse consumers; including opinions posted on the online store which are very often published by unreal buyers. So, if a given store provides the function of issuing opinions, the owner should verify them in terms of authenticity. A good solution provides, e.g., Amazon, which allows adding feedback only after the order has been confirmed and the transaction completed. This option is available only in the user's account in the tab of "My Orders".
The provisions of the EU directive also indicate the need to inform consumers about obligations concerning the seller and platform owner, e.g., in the field of complaints or returns. This applies when customers make a purchase on the platform, but they have no idea whether they are buying a product or service from trader, platform, or someone else. In consequence they do not know to whom to submit, for example, a complaint.
Until now, such a provision was included in the regulations, however, the new directive require it to be included, for example, on the product card, shopping cart, or e-mail message.
In practice, the owners of sales platforms will be obliged to inform customers about the division of responsibilities and whether the seller is a private individual or a professional trader.
It is particularly important because the user who purchased the goods from a private individual does not have certain rights, for instance to return a product.
What are the penalties for failure to comply with the regulations?
Traders who will not adapt to the EU regulations will be imposed financial penalties. The Directive carries severe fines comparable to those of the EU’s General Data Protection Regulation (GDPR). The power to impose them is to be exercised either by competent authorities, by recourse to other competent authorities or other public authorities, or by instructing designated bodies.
Concluding, more and more entrepreneurs are implementing or developing their own trading platforms. However, they must pay attention to the above-described legal issues and adapt their regulations, product cards, search engines, or modules of opinion to the EU legislation in order to avoid any inaccuracies, and to ensure a trustworthy image of the seller.