During the spring of 2022, a new rule has been introduced for how companies must inform about price reductions in campaigns and/or other offers and promotions. The new rule is a result of the EU’s New Deal for Consumers initiative. (Directive (EU) 2019/2161)
This post guides you through what you need to know about the updated law and how to configure your Marketplace accordingly.
Who’s responsibility is it to inform the end customer?
In the Marketplace business model, most of the time, the third-party seller is the merchant of record. This means that the third-party is responsible for the offers and prices on the Marketplace. However, the operator has a responsibility from a customer experience perspective to present the information that is provided from the third-party seller.
The new directive states: “Any announcement of a price reduction must clearly indicate the price previously applied by the trader (prior price). The prior price means the lowest price applied by the trader during a period of time not shorter than 30 days prior to the application of the price reduction.”
Exceptions are made for goods that can deteriorate or with a short expiration date. In practice, this excludes many types of food and beverages that are sold on Marketplaces.
The EU directive also states the following: “The existing requirement for Member States to introduce effective, proportionate and dissuasive penalties for breaches of national rules on price indications has been complemented with a list of criteria for the imposition of penalties.”
Therefore, we strongly advice the operator to investigate what law(s) are applicable for their specific country that the operator is active on, to meet the local regulations.
How to keep track of the discounted products
Many Marketplaces often collect a price on the offer from the seller, the best practice is that the seller first import the price as “offer price” and that the operator keeps track of how long time the offer has been live on the Marketplace. When the seller decides to make a discount on the Marketplace, the operator checks that the requirements are met accordingly and through an automated process approves the discount.
The process is one of the new features in Paragaia’s own application “Marketpilot”. To request a demo of the feature, click here to get in contact with us!
It is important that you review your business and start preparing with reference to the new rules. Update your information on your Marketplace website and your internal routines to meet the necessary requirements.
Here are four action points that can help you as an operator to move forward:
- Define a way for your external sellers to provide price history information
- Make sure to add room in front-end for the information
- Check your national legal requirements
- Form a communication plan towards your sellers