The following video, European Ecommerce Faces Shake Up from Webcertain TV, discusses, among other things, the EU’s attempt to forge a Digital Single Market.
According to Wikipedia, a single market is, “A type of trade bloc in which most trade barriers have been removed (for goods) with some common policies on product regulation.”
It is further stated on the European Commission’s website that, “The single market is all about bringing down barriers and simplifying existing rules to enable everyone in the EU – individuals, consumers and businesses – to make the most of the opportunities offered to them by having direct access to 28 countries and 503 million people.”
Simply put, the EU is trying to simplify trade between consumers and businesses in member states.
Digital Single Market and geo-blocking
Remember when Orbitz was found displaying more expensive hotels to Apple users? Apparently, it is problematic for the EU when companies sell items at different prices to consumers in different countries. The term for this practice is often called geo-blocking, and it is affecting the EU’s ability to complete its goal of a Digital Single Market.
But not all businesses consider the EU’s attempt to curtail geo-blocking a good thing.
As I searched through Twitter’s #geoblocking stream, I found a link to this article arguing that the EC’s desire for a unified digital market will actually restrict the market’s freedom to thrive competitively.
How will it affect your software business?
Consider, for example, a situation where you can only display one price for a product to all consumers. Without the ability to display different prices in different locations, businesses will find it difficult to maximize profits from countries with higher GDP per capita because they will be prevented from extracting as much value from their products. They will also be unsuccessful in converting consumers from countries with lower GDP per capita because they will not convert at the same rate as they would with a lower price. Specifically, consumers in a country with a relatively high GDP per capita like Luxembourg will convert at a higher rate because they are getting a pretty good deal (while your business leaves money on the table), while consumers in a country like Romania will not be able to afford the product (thus damming a potential revenue stream for you).
Another hardship that arises with this idea revolves around exchange rates. Will businesses be forced to update their websites every day with the current exchange rates for countries that do not use the euro? Solving the complexity around this issue will require additional tools and people at a cost to your business.
Watch the rest of the video to find out about:
- Global online consumer demographics
- The Russian ecommerce market
- Privacy issues with cookies in the EU
