10-15 Douglas is a perfume shop that has branches in many European countries. Go to their European website (www.douglas.eu) and choose a country. Now choose a perfume and look at the online Douglas shops in other European countries. Is there a price difference? Would you buy your perfume in the online shop of another country? What problems might you experience?

10-15 You are thinking of opening an online shon in the Netherlands. Would you include iDEAL as a payment option? What factors would you take into consideration before takino decision?

10-15 The world is, of course, bigger than the European Union. Does the legislation of the European Union give the same rights to those who buy online from within the European Union as opposed to those who live in the European Union but buy online from. let's say, a shop in China?
Transcribed Image Text:An iDEAL Solution to the Single Online EU Market CASE STUDY varit alons arts anime 1 bag blow noy, doj n January 2020, Eurostat, the statistical agency of the European Union, published some interest- ing data on Internet use and online shopping, and one of the findings was that the European Union is very diverse in terms of behavior. In Romania, for instance, only 19 percent of the respondents had purchased a product online in the 12 months lead- ing up to the date of the research. In Denmark, this percentage was much higher, at 86 percent. The re- search also found that online shopping has been in- creasing steadily, mostly among younger consumers (the 16-24 and 25-54 age groups). The most popular category of products purchased online were clothes and sports goods, followed by travel and holiday accommodation.rism and develop new marks The location of the IP address was the most im- portant factor determining price differences between bookings. Consumer websites often give readers cial advice to make sure that travel companies will not increase prices: Book flights during the evening, as prices go down at that time; and avoid looking at the same travel itinerary several times while using the same computer, as that gives the impression that the reader is really interested in buying tickets. However, for the according to VPNgids, none of that advice is really But is the European Union one market online too? hus useful- the only thing that results in real savings is Eurostat found that the percentage of people buying goods from other EU states is not very high-just 35lothing Another problem for prospective shoppers across percent. This percentage has been increasing since 1 oth borders is customer care. An online store in Bulgaria, 2012, when it was 25 percent, but as these statistics show, it has not done so very rapidly. So what's stand-for ing in the way? s spe- changing one's IP address. for instance, may want to sell goods to people in mp One serious issue is that some companies just do not want to sell their goods to customers in other in EU countries. A good example is the travel industry. Companies that sell flight tickets like to segment their markets by country. The reason is commercial. And then there is, of course, the issue of fraud. In A Dutch consumer organization, for instance, found many countries, customers have to use their credit that flight tickets are cheaper in Germany than incards to pay for their purchases, and sometimes, more the United Kingdom, but if there is a problem, they need people who can answer questions in English. Customers may also be resistant to buying goods from other EU countries for another reason: if they don't like the product, they can send it back, but they would have to pay for the shipment costs. the Netherlands even if the passenger flies through Schiphol Airport. money is deducted from the account than was agreed on. To counter such abuse, many banks advise custom- ers to open a special account for potentially "problem- atic" purchases, specifying a limit to the amount of money that can be deducted. Financial companies like PayPal also have procedures in place for customers to dispute payments. The extent to which the European market for travel products is still segmented was investigated by the Dutch website VPNgids. The website's staff twice booked the same trip online-a return ticket from New York to Kuala Lumpur with an airline from the Middle East and 15 nights in a hotel in Kuala Lumpur. The first time, the staff used a Dutch IP address; the second time, a Romanian one. To make sure that the time of booking did not play a role in determining the result, the bookings were made with just a five-minute gap between them. The Netherlands has been very successful in devel- oping a safe and reliable payment system for online shopping in the form of the iDEAL system. The name of this payment system, which was created in 2005, is intended to be interpreted in many ways; one could read it as a "deal" made on the Internet (ideal), "I deal" in English, and idéal (meaning ideal) in French. While opinion is divided in the Netherlands about whether the system really is "ideal," it is certainly easy. When buying online, customers in the Netherlands have The price differences were staggering. The hotel was €172 cheaper when using a Romanian IP address than when it was using a Dutch one-€1033 instead of €1205. The difference in price turned out to be even bigger with regard to the flight ticket; the Romanian ticket was €935, whereas the Dutch one was an aston- ishing €3914.48. By using a Romanian IP address, the staff of the website noted, savings of over €3000 were achievable.
Transcribed Image Text:on iDEAL as an optional payment method; they can click it and then choose their bank, upon which they are immediately directed to its website. If they agree to a payment, they need to confirm it on the website by using a code that is sent to their mobile phone. When this code is verified, the bank deducts the amount from the checking account of the customer and sends a message to the online shop that the payment has been made. There were several reasons why the iDEAL system was devised. One was that Dutch consumers are very cautious, and online retailers and banks felt that they would only shop online if a safe and easy payment system was provided. Another problem was that in the Netherlands (unlike, for instance, the United States) people do not use credit cards very often; they rely on debit cards instead, and this is what iDEAL is linked with. A third reason for the creation of the system is the large number of banks in the Netherlands- if every bank had created its own payment system, it would have made it very difficult to shop online. iDEAL has been a big success in the first ten years of its existence, growing from 4 million total transac- tions in 2006, the year it launched, to over 650 million in 2019-an astounding figure given that the popula- tion of the Netherlands is around 17 million-and the average amount per transaction that year was around €82. During the COVID-19 crisis, iDEAL proved its vitality; in August 2020, the number of payments through the payment system was 35 percent higher than that in August 2019. The iDEAL system has proven so successful that websites outside the Netherlands that are frequented by Dutch customers (like Amazon.de and websites in Belgium) offer iDEAL as a payment method. Critics, however, see significant disadvantages. Consumers may feel more secure when they use iDEAL, but in practice they are less protected while using it than they would be if they used a credit card instead. Additionally, payment through iDEAL is more or less definitive; consumers can't approach their banks to claim their money back. (Compare this to some credit cards, which automatically insure pur- chases made for 120 days and immediately return the money to the consumer if there is a problem). Another downside that is especially relevant for online shops is that the system is expensive: every transaction through iDEAL costs 40-50 eurocents, and it takes sev- eral days before they receive the actual payment. Chapter 10 E-commerce: Digital Markets, Digital Goods 445 Will the Dutch iDEAL system become a prototype in the development of Europe-wide payment systems? The Dutch are not the only people who use debit rather than credit cards; in Germany, the most popu- lous country in the European Union, only 34 percent of consumers regularly use credit cards while shop- ping. Will a European iDEAL system develop, or will payment systems like PayPal become more and more important? The European Commission would certainly like to transform Europe into one market, and the Internet is a major part of this endeavor. The fact that many coun- tries in the European Union use the same currency should be a powerful impetus to online shopping. To make online shopping more reliable, the European Union adopted the European directive "Buying Online" in 2014, and several basic rights were given Europe- wide validity to make things easier for European consumers. Products must now be delivered within 30 days. Every consumer now has the right to send a product back to the online store within two weeks and have their money refunded within 30 days. For its part, the online shop is also obliged by the directive to provide the customer with detailed information about, for instance, the price of the product and how delivery will take place. As part of its Digital Single Market Strategy, new rules were implemented across the European Union in December 2018 to end unjustified geoblocking prac- ticed by online sellers. Geoblocking involves restric- tions based on the place of residence of the consumer, such as being re-routed back to a country-specific web- site or having to use a specific mode of payment (debit or credit card) when purchasing products from a cer- tain country. The new rules ensure that online sellers treat all EU consumers equally, irrespective of their nationality. The rules have also addressed the issue of cross-border parcel delivery prices, which are usually about three to five times higher than domestic delivery prices. Delivery prices have not been capped, but busi- nesses are now required to disclose their prices for the consumers to compare. The European Commission's website is also expected to have a webpage dedicated to standard parcel delivery prices, which consumers may consult before making a purchase. Sources: "IDEAL," www.adyen.com, accessed January 4, 2021; Raynor de Best, "Number of Payments with iDeal in the Netherlands 2006-2019, Statista.com, November 17, 2020; "New EU Rules on E-commerce," ec.europa.eu, accessed October 27, 2020; Eurostat, "E-commerce Statistics for Individuals," ec.europa. eu, January, 2020; Research and Markets, "2019 Study on the Alternative Payment Solution: iDEAL," BusinessWire.com, March

Question

10-15 Douglas is a perfume shop that has branches in many European countries. Go to their European website (www.douglas.eu) and choose a country. Now choose a perfume and look at the online Douglas shops in other European countries. Is there a price difference? Would you buy your perfume in the online shop of another country? What problems might you experience?

10-15 You are thinking of opening an online shon in the Netherlands. Would you include iDEAL as a payment option? What factors would you take into consideration before takino decision?

10-15 The world is, of course, bigger than the European Union. Does the legislation of the European Union give the same rights to those who buy online from within the European Union as opposed to those who live in the European Union but buy online from. let's say, a shop in China?

An iDEAL Solution to the Single Online EU Market
CASE STUDY
varit alons arts anime
1 bag blow noy, doj
n January 2020, Eurostat, the statistical agency
of the European Union, published some interest-
ing data on Internet use and online shopping, and
one of the findings was that the European Union is
very diverse in terms of behavior. In Romania, for
instance, only 19 percent of the respondents had
purchased a product online in the 12 months lead-
ing up to the date of the research. In Denmark, this
percentage was much higher, at 86 percent. The re-
search also found that online shopping has been in-
creasing steadily, mostly among younger consumers
(the 16-24 and 25-54 age groups). The most popular
category of products purchased online were clothes
and sports goods, followed by travel and holiday
accommodation.rism and develop new marks
The location of the IP address was the most im-
portant factor determining price differences between
bookings. Consumer websites often give readers
cial advice to make sure that travel companies will
not increase prices: Book flights during the evening,
as prices go down at that time; and avoid looking at
the same travel itinerary several times while using the
same computer, as that gives the impression that the
reader is really interested in buying tickets. However,
for the according to VPNgids, none of that advice is really
But is the European Union one market online too? hus useful- the only thing that results in real savings is
Eurostat found that the percentage of people buying
goods from other EU states is not very high-just 35lothing Another problem for prospective shoppers across
percent. This percentage has been increasing since 1 oth borders is customer care. An online store in Bulgaria,
2012, when it was 25 percent, but as these statistics
show, it has not done so very rapidly. So what's stand-for
ing in the way?
s spe-
changing one's IP address.
for instance, may want to sell goods to people in
mp One serious issue is that some companies just do
not want to sell their goods to customers in other in
EU countries. A good example is the travel industry.
Companies that sell flight tickets like to segment
their markets by country. The reason is commercial. And then there is, of course, the issue of fraud. In
A Dutch consumer organization, for instance, found many countries, customers have to use their credit
that flight tickets are cheaper in Germany than incards to pay for their purchases, and sometimes, more
the United Kingdom, but if there is a problem, they
need people who can answer questions in English.
Customers may also be resistant to buying goods from
other EU countries for another reason: if they don't
like the product, they can send it back, but they would
have to pay for the shipment costs.
the Netherlands even if the passenger flies through
Schiphol Airport.
money is deducted from the account than was agreed
on. To counter such abuse, many banks advise custom-
ers to open a special account for potentially "problem-
atic" purchases, specifying a limit to the amount of
money that can be deducted. Financial companies like
PayPal also have procedures in place for customers to
dispute payments.
The extent to which the European market for
travel products is still segmented was investigated by
the Dutch website VPNgids. The website's staff twice
booked the same trip online-a return ticket from New
York to Kuala Lumpur with an airline from the Middle
East and 15 nights in a hotel in Kuala Lumpur. The
first time, the staff used a Dutch IP address; the second
time, a Romanian one. To make sure that the time of
booking did not play a role in determining the result,
the bookings were made with just a five-minute gap
between them.
The Netherlands has been very successful in devel-
oping a safe and reliable payment system for online
shopping in the form of the iDEAL system. The name
of this payment system, which was created in 2005, is
intended to be interpreted in many ways; one could
read it as a "deal" made on the Internet (ideal), "I deal"
in English, and idéal (meaning ideal) in French. While
opinion is divided in the Netherlands about whether
the system really is "ideal," it is certainly easy. When
buying online, customers in the Netherlands have
The price differences were staggering. The hotel
was €172 cheaper when using a Romanian IP address
than when it was using a Dutch one-€1033 instead of
€1205. The difference in price turned out to be even
bigger with regard to the flight ticket; the Romanian
ticket was €935, whereas the Dutch one was an aston-
ishing €3914.48. By using a Romanian IP address, the
staff of the website noted, savings of over €3000 were
achievable.

on
iDEAL as an optional payment method; they can click
it and then choose their bank, upon which they are
immediately directed to its website. If they agree to a
payment, they need to confirm it on the website by
using a code that is sent to their mobile phone. When
this code is verified, the bank deducts the amount
from the checking account of the customer and sends
a message to the online shop that the payment has
been made.
There were several reasons why the iDEAL system
was devised. One was that Dutch consumers are very
cautious, and online retailers and banks felt that they
would only shop online if a safe and easy payment
system was provided. Another problem was that in the
Netherlands (unlike, for instance, the United States)
people do not use credit cards very often; they rely on
debit cards instead, and this is what iDEAL is linked
with. A third reason for the creation of the system
is the large number of banks in the Netherlands- if
every bank had created its own payment system, it
would have made it very difficult to shop online.
iDEAL has been a big success in the first ten years
of its existence, growing from 4 million total transac-
tions in 2006, the year it launched, to over 650 million
in 2019-an astounding figure given that the popula-
tion of the Netherlands is around 17 million-and the
average amount per transaction that year was around
€82. During the COVID-19 crisis, iDEAL proved its
vitality; in August 2020, the number of payments
through the payment system was 35 percent higher
than that in August 2019.
The iDEAL system has proven so successful that
websites outside the Netherlands that are frequented
by Dutch customers (like Amazon.de and websites in
Belgium) offer iDEAL as a payment method.
Critics, however, see significant disadvantages.
Consumers may feel more secure when they use
iDEAL, but in practice they are less protected while
using it than they would be if they used a credit card
instead. Additionally, payment through iDEAL is more
or less definitive; consumers can't approach their
banks to claim their money back. (Compare this to
some credit cards, which automatically insure pur-
chases made for 120 days and immediately return the
money to the consumer if there is a problem). Another
downside that is especially relevant for online shops
is that the system is expensive: every transaction
through iDEAL costs 40-50 eurocents, and it takes sev-
eral days before they receive the actual payment.
Chapter 10 E-commerce: Digital Markets, Digital Goods
445
Will the Dutch iDEAL system become a prototype
in the development of Europe-wide payment systems?
The Dutch are not the only people who use debit
rather than credit cards; in Germany, the most popu-
lous country in the European Union, only 34 percent
of consumers regularly use credit cards while shop-
ping. Will a European iDEAL system develop, or will
payment systems like PayPal become more and more
important?
The European Commission would certainly like to
transform Europe into one market, and the Internet is
a major part of this endeavor. The fact that many coun-
tries in the European Union use the same currency
should be a powerful impetus to online shopping. To
make online shopping more reliable, the European
Union adopted the European directive "Buying Online"
in 2014, and several basic rights were given Europe-
wide validity to make things easier for European
consumers. Products must now be delivered within
30 days. Every consumer now has the right to send
a product back to the online store within two weeks
and have their money refunded within 30 days. For its
part, the online shop is also obliged by the directive to
provide the customer with detailed information about,
for instance, the price of the product and how delivery
will take place.
As part of its Digital Single Market Strategy, new
rules were implemented across the European Union
in December 2018 to end unjustified geoblocking prac-
ticed by online sellers. Geoblocking involves restric-
tions based on the place of residence of the consumer,
such as being re-routed back to a country-specific web-
site or having to use a specific mode of payment (debit
or credit card) when purchasing products from a cer-
tain country. The new rules ensure that online sellers
treat all EU consumers equally, irrespective of their
nationality. The rules have also addressed the issue of
cross-border parcel delivery prices, which are usually
about three to five times higher than domestic delivery
prices. Delivery prices have not been capped, but busi-
nesses are now required to disclose their prices for the
consumers to compare. The European Commission's
website is also expected to have a webpage dedicated
to standard parcel delivery prices, which consumers
may consult before making a purchase.
Sources: "IDEAL," www.adyen.com, accessed January 4, 2021;
Raynor de Best, "Number of Payments with iDeal in the
Netherlands 2006-2019, Statista.com, November 17, 2020; "New
EU Rules on E-commerce," ec.europa.eu, accessed October 27,
2020; Eurostat, "E-commerce Statistics for Individuals," ec.europa.
eu, January, 2020; Research and Markets, "2019 Study on the
Alternative Payment Solution: iDEAL," BusinessWire.com, March

Accepted Answer

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Ques 1. Is…