CMS Expert Guide to ecommerce in CEE

Dynamic growth in ecommerce

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.

Poland is no exception regarding the dynamic growth in e-commerce in retail trade, which growth has been further boosted by the pandemic. According to recent estimates, online sales will account for approx. 8% of all retail trade in Poland in 2020, compared to 5.4% in 2019.

According to Euromonitor’s data, the size of the Polish market for electronic transactions was estimated at only EUR 0.3 billion in 2004. By 2018, the market had grown to EUR 6.8 billion (the average annual growth rate in the 2004-2018 period was 22.5%), although some estimates indicate that the e-commerce market could be worth over EUR 11.4 billion this year.
Polish internet users are more willing to purchase goods/services not only in local e-stores (72% of Polish internet users covered by the Gemius e-commerce report for 2020 declared that they were customers of local e-stores, compared to 60% in 2019) but also in e-stores outside Poland (30% in 2020 vs. 26% in 2019). 

The growing role of the e-commerce market has also led to actions by certain authorities aimed at adapting to this changing retail landscape. For example, the President of the Office for Competition and Consumer Protection has recently launched a new project called ‘Artificial Intelligence for Consumer Protection Empowerment’, co-funded by the European Commission. The project explores the possibilities of using AI to create tools that will help detect infringements of consumer law and which could be used by consumer protection authorities, e.g. detecting abusive clauses in T&Cs.

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.

There are no significant barriers preventing foreign companies from conducting e-commerce business in Poland. There is no need for a business entity to establish a local presence: products and services may be sold from abroad. However, foreign entities wishing to sell their goods/services online in Poland may perform such activity through a subsidiary or local branch.

Selling from abroad may require tax registration even without an established presence.
What is also important is that where commercial activity specifically targets Polish consumers, e.g. the website offers a Polish language version, or advertising or marketing is directed to consumers in Poland, the activity must comply with Polish consumer regulations, even if the business entity does not have an established presence in Poland

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.

As a rule, Polish law allows business entities to freely participate in e-commerce business. Starting such activity does not involve any additional obligations in terms of licencing requirements compared to traditional retail activity. In practice, there is no need to obtain a licence or permit to run an online store. 

Of course, specific rules may apply in the case of certain product categories, including an obligation to obtain a relevant authorisation (e.g. in the case of foodstuffs) or licence. However, these are product-specific requirements and apply to all sales channels.

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. 

Even if e-commerce is only an extension of brick-and-mortar activity and the business already has various supply and logistic contracts in place, there are some specifics for setting up an e-commerce platform that must be addressed.

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.

  • Domain name: A domain name serves as an address for the e-commerce business. A wide choice of domain extensions is available, both national (.pl), and international, more suitable for cross-border activity (such as .eu or .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, an 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 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 can also be outsourced to a third-party logistics provider. A new alternative to the traditional logistics chain is drop shipping. 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. 

If the e-commerce website is directed to consumers, the key is to ensure that all consumer rights are observed. This translates into significant differences compared to B2B relations, in particular ones which create: T&Cs (which must not contain abusive clauses) and the customer journey (that all mandatory information is presented at the right moment), but it is also crucial that all consumer rights be observed before and after concluding a contract, e.g. regarding product returns, liability for defective goods, etc.

On the other hand, if a website is dedicated to businesses only, e.g. sales of equipment to professionals only, consumer regulations will not apply, but in such case it should be ensured that to online store is accessible to professionals only.

On 1 January 2021, a new law entered into force in Poland which will give certain quasi-consumer protection to sole traders (in the case of contracts of a non-professional nature). This should be reflected in respective policies, help pages, T&Cs, etc., even if the website is dedicated to businesses only.

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.

There is a significant level of freedom regarding the content and layout of a website. It largely depends on the creativity of the author. However, the law imposes certain obligations that translate into mandatory elements of an e-commerce website. To a certain extent, such mandatory elements would differ, depending on whether a website is directed to consumers or to businesses only

ObligationWhat is required?How to Comply?
Providing services by electronic meansEach e-commerce website needs to stipulate T&Cs for electronically supplied services. Such services not only make it possible to make purchases via the website, but also display the website’s content, enabling the customer to create and use the account and all the other features of the website.Creating T&Cs for providing services by electronic means. These may be part of wider website general T&Cs.
Information obligation

In B2C contracts, the seller is obliged to fulfil various information obligations before the consumer is bound by a contract.  

In addition, certain specific information must be displayed just before consumer clicks the ‘buy’ button. 

In B2B contracts, certain information must also be provided, but its scope is significantly smaller.

Creating T&Cs is the most common way to provide all the mandatory information.

It is also crucial that the customer journey complies with the law, i.e. the right information is displayed at the right moment.

CookiesIf an e-commerce website uses cookies or similar technologies, it must fulfil information obligations and obtain consent to use cookies or similar technologies that are not necessary for the transmission of communication or provision of a telecommunications service or a requested service supplied electronically.Creating a cookie policy is the most common way to provide all required information.
Opt-in for non-necessary cookies or similar technologies is commonly obtained through cookie banners.
PrivacyE-commerce websites must fulfil information obligations under the GDPR and ensure that the processing of personal data complies with the GDPR rules, e.g. that processing is based on a relevant legal basis.Creating a privacy policy is the most common way to provide all required information. It should be easily available and visible on the website.
Product informationThe law provides for certain requirements regarding what information must be provided (displayed) before the customer makes the purchase. The scope of information may vary, depending on the product category.The product page should be construed in a way that reflects the legal requirements applicable to a specific category. For example, for food products it would be required to display (among others) a list of the ingredients, whereas for electronics it is required to display (among others) the energy efficiency class.

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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.

In Poland, as a rule the Polish language must be used in trading with consumers. This obligation is set out in the Act on the Polish Language and concerns all documents and information that are mandatory. Regarding non-mandatory information, the key consideration here is that it must not be misleading. In practice, a consumer-website would need to be mostly in Polish. The aftersales service should also be available in Polish.

In B2B relations, there is no analogical obligation. Website and communication may be in a foreign language.

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.

Product selection is an important aspect of e-commerce business that needs to consider specific local and EU restrictions.

These may be product-specific restrictions that apply in all sales channels, such as the obligation to obtain a relevant authorisation in the case of distributing foodstuffs. In Poland, however, there are also certain restrictions that apply to online channel only, such as a prohibition on distance sales of tobacco, e-cigarettes and certain medicines.

Thus, it is crucial to properly check all the requirements in place concerning the online sale of the relevant products, as complying only with those which apply to brick-and-mortar stores could be insufficient.

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.

The main difference compared to traditional sales is that, as a rule, consumers are entitled to withdraw from a contract made on-line within 14 days of the date of its conclusion, without giving a reason. Business entities must inform consumers of their right to do this, e.g. by providing them with the appropriate form of such statement. If the business entity does not inform the consumer of this right, the consumer may withdraw from the contract within 12 months of the date of delivery of the product.

If the consumer decides to withdraw from the contract, she/he is entitled to a reimbursement of the delivery cost but not exceeding the least expensive type of standard delivery offered by the seller. 

Regarding a standard ‘warranty’ (i.e. the seller’s liability for physical and legal defects) and producer’s ‘guarantee’, in Poland the same rules apply to traditional and online sales.

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.

In Poland, sending marketing communications via electronic (e.g. emails) and telephone means (e.g. SMS) requires an opt-in by customers as recipients. Contrary to the opt-out model, the opt-in model means that the sender can only send marketing via the mentioned communication channels if it obtains prior consent from a designated recipient for the given communication channel.

Marketing opt-in should meet the GDPR-consent standard. This means that such consent should be a freely given, specific, informed and unambiguous statement or clear affirmative action. A separate consent is required for telemarketing and for marketing sent via electronic means.

A clear affirmative action means that a deliberate and specific action must be taken to opt in or to agree to the processing. This can be done, e.g. by ticking a box when visiting a website, choosing technical settings for information society services or signing a consent statement.

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.

As a rule, Polish competition law mirrors EU legislation. The general approach is that, in principle, every distributor must be allowed to use the internet to sell products and must not be restricted in doing so, unless there are compelling reasons, e.g. health and safety concerns assessed always on a case-by-case basis. However, manufacturers are permitted to impose quality standards for online distribution in certain justified circumstances of selective distribution systems. In addition, as in other distribution channels, suppliers are not permitted to control resale prices.

What is important is that the current Polish rules covering the vertical aspect of online sales (supplier-distributor) are based on the EU legislative framework from 2010. The market has significantly changed in the last decade, in particular due to the growth in online sales, new market players such as online platforms, increased price transparency and automated pricing software. The EC is currently evaluating the EU framework, and this will most probably also impact the corresponding Polish legislation.

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.

Generally, regular e-commerce stores do not fall under financial services regulations. However, the processing of customer payments constitutes a regulated activity. While there are several providers of such services operating on the Polish market, when using the same provider as one operating in other European Union jurisdictions, passporting the providers’ services is required in accordance with Directive (EU) 2015/2366 (Payment Services Directive 2).

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.

In Poland, no authority is specialised in e-commerce only. As in the case of brick-and-mortal sales, the key actor in the consumer protection system is the President of the Office for Competition and Consumer Protection (the “OCCP”), who is the most important authority responsible for the enforcement of consumer rights. The OCCP challenges and penalises: (i) infringements of collective consumer interests; and (ii) the use of abusive clauses in consumer contracts and T&Cs. The OCCP also plays a significant role in the product safety system by carrying out the general product surveillance.

The Trade Inspectorate is the body responsible for consumer protection and product safety, with a focus on retail activity. It acts mainly on day-to-day issues such as packaging, labelling, general product quality or consumer communication and information.

Regarding personal data protection issues, the President of the Polish Data Protection Office is the only authority entitled to provide expert advice and issue opinions on data protection, as well as to enforce and issue fines for non-compliance with data protection law.

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

In Poland, consumers can seek to enforce their rights before a civil court, either individually or by a class action. The latter was made possible in 2010 but has only recently gained increased popularity. Poland adopted an opt-in model, where a group of at least ten members can collectively pursue consumer rights.

In terms of alternative dispute resolution (ADR) in Poland, the out-of-court settlement of consumer disputes related to sales requires the consent of both parties to the dispute: the consumer and the business entity. If the seller rejects the consumer’s complaint, it must inform the consumer that it does not consent to ADR. The absence of a declaration from the trader is treated as consent to participate in such proceedings. In addition, all online traders must provide a link on their websites to the Online Dispute Resolution platform, regardless of whether they intend to use the platform or not.

In Poland, a significant role in the private enforcement of consumer rights is played by consumer organisations and consumer ombudsmen which, in general terms, support consumers in asserting their rights. The most active consumer organisations in Poland are the Association of Polish Consumers, the European Consumer Centre, and the Consumer Federation. They provide consumers with free legal advice and undertake various educational and information campaigns

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.

Legal developments relevant to e-commerce business in Poland derive mostly from changes at the EU level. There are several such EU initiatives that concern digital business, and are thus relevant to online traders. For example:

  • Omnibus Directive: An EU Act introducing several amendments to consumer-related EU Directives. For example, it provides for new rules concerning price reductions, and restricts the marketing of “dual quality” products (items marketed as being identical, where in fact their quality is different between the respective Member States). The Member States must implement the Directive by November 2021 (enforceable by May 2022). There is no draft bill in Poland yet.
  • Digital Services Act and Digital Markets Act: EU initiatives which will provide new rules concerning online platforms. Work on these Acts is ongoing.
  • Revision of VBER (the regulation providing for a competition framework on vertical aspects of trade, including online trade): The EC is currently evaluating the EU framework, which will be revised to meet the requirements and challenges of the rapidly growing and changing trading landscape. The outcome will most likely be reflected in the corresponding Polish legislation as well.

In addition, work is ongoing in Poland on amendments to the Polish Act on Competition and Consumer Protection, which will give more powers to the Polish Consumer Protection Authority, in particular to carry out searches (dawn raids) in consumer matters, and to block the websites of entities which infringe consumer laws. In addition, the authority’s powers concerning “mystery shopping” will be extended, e.g. to use sound and video recording devices without informing the inspected entity of such recording. The draft amendment is connected with the transposition of EU Regulation 2017/2394. There is also another draft bill concerning the amendment of this Act, which is connected with the transposition of EU Directive (EU) 2019/1 (the so-called “ECN+” Directive). 

Further, work is ongoing on the implementation of EU Directive 2019/770 concerning contracts for the supply of digital content and digital services; and EU Directive 2019/771 concerning contracts for the sale of goods. Legislation procedure in all these cases is still pending.

Portrait of Srđan Janković
Srđan Janković
Attorney-at-Law
Belgrade
Portrait of Małgorzata Urbańska
Małgorzata Urbańska
Partner
Warsaw
Portrait of Izabela Biernat - Sadlak
Izabela Biernat - Sadlak
Senior Associate
Warsaw
Jan Zarzycki