e-Commerce in the Western Balkans: How well is our data protected when shopping online?
e-Commerce refers to the process of selling items or services online. Doing business online has become a preferred option for many, especially during the recent years as a result of the COVID-19 pandemic. The pandemic has enabled a rise in e-Commerce activities not only from the perspective of sellers (business owners/service providers), but has also seen an increased demand among the customers willing to purchase almost everything online. In order to purchase an item or service, as a buyer you are requested to provide your personal data such as card information, and the shipping address which usually consists of your home-address. As e-Commerce has provided benefits to both sellers and buyers, how well does it actually benefit and secure the buyers regarding their personal data? This article will aim to shed some light upon the data protection of online buyers in the Western Balkan (WB) countries, more specifically in: Albania, Kosovo, Montenegro, North Macedonia, and Serbia.
Preconditions to eCommerce: the Internet
In order to conduct any online activity, you need access to the Internet. This precondition among the WB countries is quite highly fulfilled. In Kosovo, it is widely reported that the Internet penetration and connectivity among its citizens is above 95%. According to the most recent Digital Agenda Observatory report for 2022, households in Kosovo are reported to have a higher mobile connection than in the previous years by 8.3%. Meanwhile, the similar research conducted for North Macedonia reports Internet connectivity among the households at 83.7%; for Montenegro it reports 83%; for Serbia at 85% in urban and 75% in rural area, and for Albania it is generally reported at 75.2% as of 2020.
How much do the citizens in these countries use the Internet for online shopping?
With an overall high Internet connectivity present among the WB countries, there is a general belief that a lot of online shopping takes place among their citizens. However there is no clear cut data to support this assumption accurately. In Kosovo, through a national sample of individuals, results of respondents have marked an 8% use of the Internet for online shopping for the year 2021. A somewhat low percentage is reported through another survey from the 2020 Balkan Business Barometer, regarding the other WB countries. Results of this survey for Montenegro report that 26% of respondents are active online shoppers, meanwhile the lowest score in this survey regarding this question resulted among Albania with 15%. According to bne IntelliNews, “40.1% of individuals with internet access in North Macedonia had made online orders and purchases in the 12 months to early 2020”. Although the reported numbers of online-shoppers across the region are not concise, the emergence of e-Commerce during the last two years is inevitable. For example, in 2020 (the year of the pandemic and the lockdown), e-Commerce in Serbia at least doubled, with 3.3. million online shoppers who have spent approximately 395 million EUR.
How much is e-Commerce present in these countries?
In addition to the reported data regarding the number of online shoppers among the region, it is important to note the acceleration of e-Commerce as an economic activity among the WB countries.
Since 2016, Kosovo has gained more opportunities for its e-Commerce sector when two of the largest e-Commerce companies like Amazon and AliExpress made their market available in the country. ICT outsourcing companies in Kosovo through their research have estimated that 35% of local retailers use online shopping platforms and by 2022 this percentage is expected to scale up by 16%.
According to statista, in Albania the e-Commerce market is expected to reach 475.4 million USD with an annual growth rate of 11.%, and around 1 million e-Commerce users, with its penetration expected to be at 36.6% in 2022 which can reach over 40% in the next five years.
As for Montenegro according to the same source, revenues of 165.7 million USD regarding their e-Commerce market are projected for 2022, with an annual growth rate of 16.1%, with projected users by 2025 to 0.3 million. User penetration in this country according to this source is at 43.8% for 2022, projected to reach 48.5% by 2025.
Accordingly, for North Macedonia revenues are reported to reach 482.70 million USD in 2022, with a growth rate of 16.69%, and projected users by 2025 to 0.9 million. Projected user penetration for 2022 is at 41.8% and expected to reach 44.6% by 2025.
The same source for Serbia reports revenues of 944 million USD for 2022, with a growth rate of 21.9%, and projected user penetration by 2025 is expected to amount to 4.2 million. User penetration for 2022 is considered to be 56.6% expected to increase to 61.5% by 2025.
As projected and estimated, Serbia is the leading country in the region regarding the market share in terms of e-Commerce. Meanwhile e-Commerce as an activity is expected to surge in the upcoming years, the WB countries are still seen as cash economies.
Local e-Commerce Sales Rules & Regulations
All of the targeted WB countries have regulated e-Commerce in their legislation and have assigned a responsible body for its implementation in their country. As such, in North Macedonia, the institution responsible for overseeing e-Commerce is the Ministry of Economy. This area is regulated by the Law on e-Commerce (2007, last change 2020). Supervision over the implementation of this law is carried out by the Ministry of economy, the Ministry in charge of affairs in the field of electronic communications and the Agency for Electronic Communications in accordance with their competences established by law. Inspection supervision over the implementation of certain provisions of this law is implemented by the State Market Inspectorate through competent inspectors in accordance with the provisions of the Law on State Market Inspectorate and this law.
E-Commerce in Kosovo is regulated by the 2012 laws on Information Society Services and Consumer Protection. Additionally, as the rest of the WB countries, Kosovo also follows similar standards from the EU regarding e-Commerce and Consumer protection. The Department of Trade within the Ministry of Industry, Entrepreneurship, and Trade is responsible for foreseeing the trade activities in Kosovo.
In Serbia, the Ministry of Trade, Tourism and Telecommunications, through its Department for Electronic Communications and Postal Transport and inspection authorities oversees the e-Commerce area. This area is regulated by Law on e-Commerce (2019). The Ministry of Trade, Tourism and Telecommunications also has the Department for Consumer Protection, which oversees consumer protection online and in general.
In Montenegro, the legal framework includes the E-commerce Law (2004), Electronic Document Law (2008) and the Electronic Signature Law (2005).
In Albania, the legal framework for e-Commerce includes: e-Commerce Law 10128, the Electronic Signatures Law 9880, as well as the law on Consumer Protection 9902 comprise the legal framework regulating the e-Commerce activities in Albania. In Albania it is noted that a license is not necessary in order to conduct e-Commerce activities.
E-Commerce and Consumer Protection
As mentioned previously, on top of the legal framework for conducting e-Commerce activities in the region, a great importance falls upon the Consumer protection. With the increase of e-Commerce activities, unfair trading and violation of customer rights have been noted as well. Many of the unfair trading practices take place because the consumers/buyers are not aware of their rights, which are officially protected through the legal framework in these countries, as mentioned above.
An EU-funded survey conducted in 2020 in Kosovo, confirmed that 42% of respondents were not aware of the Law on Consumer Protection. In Kosovo, especially during the pandemic, many scam sellers have operated online, which have managed to scam the online buyers in different ways. There have been reported cases of deliveries not shipped, after the respective payments were able to be conducted online. Or in other cases, many of the deliveries ordered online were paid in cash, with no further means to track a scam seller who intentionally brought the wrong order.
There are two important indicators which should be taken into account when e-Commerce occurs: 1. Consumer protection, and 2. Data privacy. As for the first part, the authorities in each of the countries are responsible to implement and oversee the Consumer protection law as indicated in their legal frameworks. In Kosovo, as well as in the rest of the WB countries, it is reported that the respective agencies for Consumer protection are in place. In Kosovo, within the Ministry of Industry, Entrepreneurship, and Trade, the Department of Consumer Protection has started operating from the end of 2012. According to their official website data, from January 1st, 2022, over 1,977 complaints have been received, from which 440 have been resolved, and over 1239 are still in process. Another institutional authority in Kosovo for protecting consumers rights is the Regulatory Authority of Electronic and Postal Communications (ARKEP).
In order to motivate the local consumers in reporting their cases when encountering scam retailers, other non-governmental initiatives have taken place. With the support of the EU, as well as the Institute for Development Policy (INDEP), a platform has been created aiming to be the watchdog of the implementation of the Law on Consumer Rights in Kosovo, named “Mbrojtësit e Konsumatorëve“. The platform through infographics aims to explain the law in simple terms, and urge the citizens to stand up to their rights in the respective authorities. Such infographics and other burning issues related to the rights of consumers are shared on their Facebook page too, aiming to reach the audience through social media.
Problems encountered when online shopping in your countries: Lack of Data Protection
Skepticism towards the safety of online shopping in regard to data protection, remains an issue in the region. A number of citizens still do not have the appropriate digital literacy level or cards for online payment, and largely remain as cash economies. In cases when online activities take place, for many data breaching becomes a problem. One of the main problems is that citizens generally do not think that e-Commerce and online payments are safe. Generally, there is a very low protection of personal data when it comes to e-Commerce in the region.
Safety rules regarding personal data should be applied in each of the WB countries. The respective legislation should emphasize the importance of data protection in all cases, including e-Commerce. As the European Union already has its privacy law on data protection known as GDPR (General Data Protection Regulation), the WB countries should continue to amend and align its legislation with the GDPR. GDPR aims to protect the data and information of individuals from both internal and external threats, by foreseeing the risks of fraud, compromise and corruption.
First e-Commerce regional platform
As for the e-Commerce initiatives in the region, in each of the countries there are many companies providing Internet services. Recently, an EU-funded project launched the first e-Commerce regional platform “ecommerce4all.eu“. The platform aims to be beneficial for the online retailers in the WB countries, and the involved organizations in finding important data and facts related to the e-Commerce market in the region. It is designed to help the local retailers to expand their businesses beyond their own market. The platform also aims to increase the cross-cooperation between the retailers within the region.
Since the preconditions for practicing E-Commerce in the region are in place, and this activity is set to expand by large in the near future, consumer protection as well as data privacy should be at the center of attention when it comes to the legislation of each of the WB countries. Amending and aligning this legislation to the GDBR is a step which all the WB countries should take, and most importantly for these regulations to be enforced accordingly, in order to have a higher data privacy for the citizens of this region.
The project “Increasing Civic Engagement in the Digital Agenda – ICEDA” is co-funded by the European Union and implemented by the Metamorphosis Foundation, Open Data Kosovo (ODK), e-Government Academy (eGA), Partners for Democratic Change Serbia, Lëvizja MJAFT, and CSO 35 MM.
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