Ecommerce in Serbia

I. E-commerce sector – fact and figures

E-commerce in Serbia has been steadily on the rise. Now, out of the havoc caused by the global COVID-19 pandemic to the trade and business of many brick-and-mortar stores, e-commerce and online stores have risen and are thriving. 

According to the latest report of the on the use of information and communication technologies conducted in 2019 by the Bureau of Statistics of Serbia, the number of online shoppers grew by 33% that year. More than 1,800,000 citizens bought goods and paid for services online in 2019, 600,000 more than in 2018. 

The citizens of Serbia most often bought clothes, household products, electronic equipment, books and tickets for cultural events. However, unlike some EU countries, where the process is done online from start to finish, domestic buyers still prefer to avoid modern technologies in payment.

COVID-19 has certainly made a mark in the landscape of e-commerce, both acting as a catalyst for the acceleration of e-commerce growth regarding the number of transactions, as well as changing the habits of consumers, who have also started buying and selling products online that had previously, in the minds of the consumers, been almost exclusively reserved for purchase in brick-and-mortar stores. The latest reports form the Serbia Chamber of commerce suggest that e-commerce doubled from March to July 2020 compared to the same period on 2019. The resistance of Serbian consumers to online payments has also been lifted to a large degree.

Seeing the scale of growth which Serbian e-commerce has experienced, it seems that the amendments to the Serbian Law on electronic commerce (the “Law”) in 2019 were timely and the effects COVID-19 has had on online trading will only serve to test their quality and provide feedback if further amendments are necessary in the near future.

II. Setting-up e-commerce business

1. Is the established local presence of a foreign company required to start selling online?

There is no need for a business entity to establish a local presence, a foreign entity is free to sell products or services from abroad. This is defined by the Law, however this article of the Law will come into force when Serbia joins the EU and until then, this question is governed by general provisions.

Foreign entities that wish to sell their goods/services in Serbia may do so by establishing a local branch/entity regardless of whether they plan to sell their goods online or in a bricks-and-mortar store.
Even if a company chooses to do so, there is no mandatory requirement for a foreign company with a local presence to sell its goods/services online.

It must be noted that selling from abroad may require tax registration (registration of a VAT attorney or representative is mandatory in some cases) without an established presence.

2. Are there any licence/permit requirements applicable to e-commerce businesses?

In general, no licences or permits are required for companies that want to establish an online presence. However, note that an obligation to abide by the laws of Serbia exists in certain areas, thus, to sell certain products such as dangerous chemicals, a permit must be obtained. Similarly, to conduct online gambling, a permit/concession to organise games of chance is required. Similar requirements may also apply to other goods.

Furthermore, selling from abroad may require tax registration (registration of a VAT attorney or representative is mandatory in some cases) without an established presence.

3. What e-commerce specific contracts must be concluded before starting an e-business?

Even if e-commerce is only an extension of the bricks-and-mortar activity, and the business already has various supply and logistics contracts in place, there are some specifics for setting up an e-commerce platform that should require consideration.

  • Domain name: The domain name serves as an address for the e-commerce business. A wide choice of domain extensions is available, both national (.rs), and international, more suitable for cross-border activity (such as .com). It is also possible to offer goods via marketplaces.
  • Hosting services: Sourcing hosting services is a more complex process as there are various options. Hosting services can be acquired in particular as cloud servers, shared webhosting, virtual private servers and dedicated servers. 
  • IT-related services: A smooth ordering process is one of the key elements of creating a good customer experience. To achieve this, the e-commerce business has to ensure an appropriate level of IT services.
  • Creative services: Sourcing creative services is required to set up a website, including both design and the technical aspects of various applications and functionalities, such as invoicing, accounting, marketing tools and customer relationship management.
  • Logistics: Logistics is the backbone of a successful e-commerce business. The logistics processes include in particular product sourcing, stock (inventory) management, order management, packaging and delivery, as well as management of (and sometimes picking up) product returns.
    E-commerce logistics may also be outsourced to a third-party logistics provider. A new alternative to the traditional logistics chain is dropshipping. In this model, the e-commerce entity forwards customers’ orders to another company, which fulfils the orders by shipping the items directly to the customer on behalf of the e-commerce entity. 
  • Payments: Cash on delivery remains a popular payment method; however, a wide array of electronic and non-cash payments are also available to e-commerce businesses. These include payments by various types of credit and debit cards, quick online transfers, electronic wallets, mobile money, and alternative currency payment processors. 

III. Key considerations for running e-commerce

1. Defining the audience: does the business need to decide upfront if the e-commerce website addresses consumers and/or professionals?

There is no such obligation, but if the e-commerce website is directed to consumers, the key is to ensure that all consumer rights are observed. This is significantly different from B2B relations, in each part of the transaction, so that crucial information and all consumer rights are observed before and after a contract is concluded, especially regarding product returns, liability for defective goods, etc.

On the other hand, if a website is dedicated to businesses only, e.g. sale of equipment to professionals only, consumer regulations will not apply, but in this case it should be ensured that an online store is accessible only to professionals, which might prove difficult, especially in cases where the e-commerce website is set up as an entity abroad and such barriers may clash or add difficulty regarding personal data protection laws.

2. What are the mandatory elements of an e-commerce business website?

The law does not stipulate any restrictions on the content or the layout of an e-commerce website. 

However, the law does envisage several requirements regarding information which must be provided to the buyer before the purchase contract is concluded. That information is:

  1. the procedures envisioned when concluding the contract;
  2. contractual provisions;
  3. general business terms/conditions, if they are an integral part of the contract;
  4. languages offered in which to conclude the contract;
  5. codes of conduct in accordance with which service providers act and how these codes can be reviewed electronically;

The e-commerce business is also obliged to provide technical means to all potential consumers/users so they are able to view the entered data and correct any errors before it is sent.

Thus, despite nearly complete freedom in website design, it is necessary for a website to provide the stated necessary information to the consumer as well as any other possibly relevant information when making a purchase.

3. Is it mandatory that the website information be provided in the local language?

There is no such requirement in the Law, however, the website must display the languages it offers for concluding the contract and the consumer/user must understand what he/she is buying/requesting.  Furthermore, the obligation exists to state the languages in which the contract is offered.

4. Are there specific restrictions that impact on the selection of products offered for online purchase?

Specific restrictions do apply and relate to products/services which are restricted or banned for sale in Serbia, such goods may not be sold (such as illegal drugs and unregistered firearms).

The second set of restrictions exists regarding the sale of certain goods which may be sold and bought only by certain licenced or approved entities (explosives, certain chemicals, radioactive materials, and similar products).

The third category are products which require licencing or inspection such as medicine, supplements or similar products which require prior approval from an inspector or agency before they can be sold in Serbia.

Another form of restriction applies to products such as alcohol and cigarettes, which require confirmation that a buyer is older than 18 and which may prove problematic to enforce in practice.

5. Do special rules apply to product returns and defective goods?

Rules regarding defective goods under the Consumer Protection Law apply to e-commerce and a special provision regarding distance contracts also applies. We would highlight the right of the consumer/user to withdraw from the contract within 14 days of its conclusion as a distance contract specific right of the consumer/user.

Explicit consent is required for sending marketing communications through electronic means (such as emails and SMSes) for which the data is obtained through registration or other means when the user is using the e-commerce website.

7. What are the main competition risks regarding online selling?

There are no specific risks which are associated with competition laws in Serbia.

Serbian laws follow EU trends and limit business practices which restrict competition or provide grounds for the abuse of a dominant position in the Serbian market. Therefore, notwithstanding restrictions regarding the sale of certain items which are prohibited or require a licence, there are no restrictions to sell or offer services.

In Serbia, payment and financial services are governed by the laws and bylaws issued by the Ministry of Finance and the National Bank of Serbia, and the law which regulates this legal area is the Law on Payment Services. There are no specific requirements imposed on e-commerce.

In Serbia, there are no special authorities regarding e-commerce, the Ministry of Electronic Communications and IT Companies (the “Ministry”) is in charge of all e-commerce business.

Inspection supervision over the application of this law is performed by the Ministry through market inspectors and inspectors for IT companies, in accordance with this law and regulations governing inspection supervision.

The Commissioner for Information of Public Importance and Personal Data Protection is in charge of all matters regarding personal data and this body is also responsible for enforcing and monitoring data safety.

10. What is the landscape for private enforcement of consumer rights in the context of e-commerce?

Consumers can seek to enforce their rights before a civil court, and the proceedings are to be held rapidly and without delay. 

Another option for the consumer for peaceful resolution is to file a complaint electronically, via the internet portal of the National Register of Consumer Complaints and also to seek means of alternative dispute resolution through government mandated bodies which are able to provide arbitration or mediation.

Furthermore, there is also the “Protection of the collective interests of consumers” which is a procedure led by the Ministry of Trade against a seller/service provider which has:

  • breached the rights of at least ten consumers, by the same act/in the same way;
  • in the case of conducting an unfair business practice under the Consumer Protection Law

No amendments to the Serbian Law on electronic commerce or other relevant laws have been announced. The recent 2019 amendments made significant changes and we will see if the impact of COVID-19 has revealed any necessities for further changes in the near future.

Portrait of Srđan Janković
Srđan Janković
Attorney-at-Law
Belgrade