New methods of international distribution: e-commerce, marketplace and dropshipping

Luca Davini
Avvocato in Milan and Turin

Having reached the end of our abc on international distribution, we now focus on new forms of international distribution, developed over the years and increased mainly due to the Pandemic of 2020.

The restrictions made on several occasions have in fact determined new challenges for large companies and SMEs, which have reacted by radically changing the way of exporting and developing business models and by increasingly resorting to digital tools and the so-called e-commerce.

In the context of such rapid technological evolution, it is particularly important to know how to use tools such as the so-called marketplace, i.e. intermediation internet sites for the purchase and sale of goods or services, which gather under the same brand the goods of different manufacturers (think of Amazon).

These systems are characterized by the contribution they make to the growth of the international presence of companies (in particular SMEs) thanks to an efficient organization, while requiring very low costs compared, for example, to a proprietary e-commerce.

Once present on the marketplace, it will then be possible for companies to customize their business model based on commercial and marketing strategies, also taking into account company characteristics. This approach, together with a good advertising campaign, makes it possible to reach significant potential sales levels.

In considering what are the “pros” related to the use of marketplaces, however, the “negative” aspects must also be kept in mind. The marketplace, in fact, has a very wide offer, with the consequence that not much space is left for the manufacturer to “customize” the display of their products or to enhance a specific product of the brand.

In addition, large companies or businesses that already have a good online presence are active on the marketplaces. A valid alternative can be the use of the so-called dropshipping, i.e. an e-commerce sales system, according to which a seller (intermediary) supports an e-commerce activity by reselling the products of a manufacturer/wholesaler, forwarding the order to a supplier (dropshipper) in charge of to ship the goods.

In other words, the seller sells a product online without actually having it in a warehouse. The goods, in this sense, are not actually owned by the seller, who assumes the role of intermediary between the online buyer and the supplier.

Dropshipping therefore guarantees an efficient organization of specialized online shops, which allow the seller and supplier to be more sectoral and to reach a more specific target. This allows to better choose the target countries and identify the most distinctive and competitive commercial channels (even for SMEs or for companies that have excellent products, but insufficient resources to be effective online).

Precisely with a view to increasing the use of these forms of online sales and therefore in order to promote fairness and transparency of intermediation services towards commercial users, on 12 July 2020 the EU Regulation 2019/1150 came into force (P2B, i.e. Platform to Business).

The aim of this Regulation is precisely to strengthen the protections of the “business” user, by forcing online platforms to be more transparent in the definition of the terms and conditions for the provision of intermediation services.

By way of example, with the adoption of the EU Regulation, the online platforms of the marketplaces have the specific obligation to inform users of the parameters that determine the positioning of their goods on the marketplace (given its impact on consumer choice).

Furthermore, there is an obligation to adopt a specific internal complaints management system, as well as the possibility of resolving any disputes out of court through mediation, also recognizing the right to take action against violations of the Regulations also to organizations and associations representing business users.

With specific regard to companies that sell products through distribution networks and franchises, online platforms certainly represent an excellent opportunity to reach an ever-increasing number of customers, provided that they operate in compliance with antitrust legislation, for example on the subject of sales prices.

In this sense, therefore, if companies, on the one hand, benefit from Regulation 2019/1150 as regards their protection from incorrect use of online platforms, on the other hand, they are however subject to the stringent rules on antitrust and therefore they cannot limit distributors and franchisees in sales through the platforms.

Consequently, for companies wishing to use online platforms, it is essential to regulate the relationship with distributors/franchisees at a contractual level, in a clear and complete manner, providing, if necessary, a specific clause on the use of these platforms.

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