E-Commerce Sales, reductions, resale at a loss … The regulations are strict, in traditional E-Commerce as on the Internet. What e-merchants need to know to comply with the law, in five questions.
While the Internet allows Internet users to hunt down good deals and find items at reduced prices compared to physical distribution, online sales promotion does not operate in a legal no man’s land.
The regulatory framework that applies to physical distributors must also be respected by e-merchants.
While C discount was recently singled out for failing to comply with regulations on sales and online advertising, a return to the fundamentals of sales promotion is needed.
1 What regulatory framework applies to e-commerce?
If e-commerce does not have a specific regulatory framework, that does not mean that e-merchants can organize sales promotion as they see fit.
Online merchants must indeed submit to the rules of the Consumer Code, which regulates sales very precisely. It must therefore be extended to online stores.
In the same way, the regulation of sales and the prohibition of resale at a loss specified in the Commercial Code apply to e-merchants.
2 What are the rules governing sales?
The sales are based on an accelerated flow of goods in stock, for end-of-season or end-of-collection products.
Items on sale must have been offered for sale for at least one month from the start date of the sale period, and therefore must not be replenished during and after the fixed periods.
These, determined in each department by the prefects, are limited to two per year, and their duration does not exceed six weeks each.
Sales start at the same time for everyone Sales must be preceded or accompanied by advertisements, and in physical stores as well as on e-commerce sites, the distinction between sale and open items must be made clear to consumers.
For a breach of the information obligations on the balances, the merchant incurs a fine of 1,500 euros.
“It is also important to be careful not to put too much emphasis on the fact that the products are for example offered at -50%, if this discount only applies to a few products.
The advertisement must remain consistent with respect to the product. the proportion of items offered on sale.
This reduction must apply to at least one third or even half of the products on sale,
3 Sales, promotions, discounts … what are the differences?
Unlike sales, e-merchants can carry out promotions whenever they want. However, the price reduction must also be limited in time.
The e-merchant must therefore, like other merchants, specify the start and end dates of these promotional operations.
On the other hand, the price reduction must be made in relation to a reference price, ie the lowest price practiced during the 30 days preceding the start of the operation.
In terms of display, the products affected by these reductions must show the old crossed-out reference price and the new price.
However, if the e-merchant chooses to offer a single tk maxx discount code rate, this double marking is not mandatory. On the other hand, the merchant is asked to clearly display this rate.
An obligation to provide the products offered in promotion Another difference with the sales: for the articles offered in promotion, the merchant is required to provide the product to the customers during all the duration over which the promotion is offered.
The e-merchant must therefore be able to offer the cyber archer the possibility of ordering the product even if it is no longer in stock, and to carry out a restocking with his supplier.
“The merchant must register your order during the period of validity of the price reduction operation, and you must obtain the same item or an item equivalent to the price promised by the advertisement”, specifies the DGCCRF on its website.
A particular point on which the Consumer Affairs Department is particularly vigilant, because it allows it to ensure that promotions and discount code are not in reality illicit sales.
If promotions carried out by a merchant turn out to be sales, carried out outside the fixed dates, the online merchant incurs a fine of 15,000 euros.
Likewise, the terms and conditions for announcing promotions are also very strict: these advertisements must specify the period during which the promotion is carried out, the products or the category of products concerned, as well as the size of the reduction (either in absolute value, or in percentage).
“Various convictions for breach of the rules of advertising during promotional operations have already been carried out against e-merchants.
4 How to calculate the threshold for resale at a loss?
For all distributors, apart from items resulting from liquidation, end of seasons, technical obsolescence, or perishable products threatened with rapid deterioration, traders cannot charge prices lower than the price of actual purchase.
“Originally, this legal provision was aimed at preserving the small supermarket business, which, by its purchasing power, could lower prices below a threshold that the small store could not support
The calculation of the resale at a loss threshold differs for e-merchants / E-Commerce The law governing resale at a loss is specified in Articles L 442-2, L 442-3, and L 442-4 of the Commercial Code.
Breaches of these provisions are punishable by fines of 75,000 euros for the natural person and 375,000 euros for the legal person.
Since the law of August 2, 2005, the threshold for resale at a loss has however become more vague: previously, it was determined on the basis of the actual purchase price increased by certain costs (such as the cost of transport and taxes) and reduced by discounts on invoices.
Henceforth, the calculation also makes it possible to subtract other “financial advantages”, a relatively vague concept also including rear margins, that is to say from commercial operations or services offered to suppliers. “Since January 1, 2006,
Beyond these new provisions, another vagueness surrounds the calculation of the resale threshold at a loss for e-merchants, in particular with regard to the increase in “specific taxes relating to the resale of products”: unlike physical merchants, commercial leases and other taxes are not included in the calculation, which could therefore lead online distributors to calculate a lower resale threshold than that of physical distributors.
5 What about private sale and destocking sites?
If the provisions of the Consumer and Commercial Code apply to online merchants, a question arises for event sales sites, whose operating principle consists of only offering products on promotion.
For the DGCCRF, a private sale or destocking site has no legal definition other than that of a commercial site.
However, the sites which base their offer on event sales cannot determine reference prices, and do not offer in their model the possibility for online shoppers to order during the entire promotion period.
Between permanent promotion, liquidation and limited stocks, it seems that a certain legal vagueness hangs over these increasingly popular sites.