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Perhaps the most apt finding of the past year and a half is that the real Chief Digital Transformation Officer was the pandemic. Those companies that previously only treated online sales as an alternative channel, or the digitalization of customer processes, were forced to complete developments and increase the customer experience at breakneck speed. The authorities are prepared to wait for the appearance of new players, and due diligence therefore plays an important role in the competition for the trust of customers.
Periodic store closings, limited opening hours, agile sales and keeping revenues at the same level are driving more and more businesses in the direction of having their online channel at least as strong and stable as the core model.
At the same time, with the rapid development, companies are rushing into an area that is new to them, where the regulatory authorities have been monitoring the proper functioning of the actors for a long time. The Economic Competition Authority (GVH), for example, already
- requiring up to HUF 4 billion in compensation 1 ,
- 2 ending with a HUF 407 million commitment creating a sharp distinction between the online store and the "online shopping service"
decisions were also made. In order to create fair competition, the GVH supervises the fair enforcement of consumers' rights and monitors the legal compliance of the online space with increased attention. As a result, while a significant number of market players are busy with understanding and implementing the legal framework, the GVH goes further than that, for example, examines what kind of data assets online retailers have, what data they collect and organize about purchases and consumers, and how this affects competition 3 .
An unusual situation has therefore arisen where the regulatory authority is ahead of many market players in terms of digital sales.
Companies that started digital transformation not only as a result of the coronavirus epidemic have a competitive advantage.
At the same time, this situation can be turned into an advantage with appropriate legal support, as it is within a known framework
- the image of the website can be created,
- sales support processes can be developed, such as customer service,
- the guidelines for the reorganization of procurement and supply processes and logistics can be reconsidered.
If legal compliance and control are implemented even before enforcement, long-term profitability can be ensured, since resources can be focused on business development.
In this way, not only businesses that are already veterans in the online space, but also new actors in the development and construction of the digital channel can face long-term, flexible and successful sales.
And EY's legal experts support you with their end-to-end service, with customized advice from planning to the first purchase, in particular:
- customer-friendly implementation of mandatory consumer protection information,
- establishing, negotiating and drafting contracts for cooperation with sales partners (e.g. payment providers, freight companies, possibly outsourcing providers),
- the structure and compliance of marketing campaigns,
- efficient handling of possible official inquiries.
Increasing competition
For traditional retailers, online channels were more of an alternative before the "forced" transformation: digital sales accounted for a small percentage of their turnover. As a result, much less resources were typically devoted to the continuous maintenance and development of the interfaces, the few percent increase less encouraged the market players to continuously monitor and review their online platforms and the processes behind them from a legal and tax point of view.
So not only from a business point of view, but also in terms of legal practice shaped by the regulatory authorities, those businesses that sold exclusively digitally as their main activity became dominant: the largest web stores and online marketplaces.
At the same time, strong pressure is turning the market upside down. Many wholesalers and distributors have begun to realize that they can also sell their products directly to consumers. This reorganization not only leads to a wider offer, but results in a competition that is more heated than before, focused in one space - the online channel.
The competition will therefore only intensify even after the pandemic. And in the long run, only those who do not rush developments and prepare in advance with due care can be successful in the competition for consumers' attention.
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Sources
1 See VJ/50/2018. decision closing the case.
2 See VJ/65/2017. decision closing the case.
3 See Online trade in focus: GVH examines the role of data assets - GVH
Summary
The past period has accelerated the digitization efforts of companies. At the same time, only those companies that take due care in legal compliance can gain a real competitive advantage from the developments.
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