Retailers, Wholesalers, And the EU Distance Selling Regulations

The internet, and internet selling, has thrown up as many problems as opportunities for wholesalers. On the one hand, it has opened up new markets and made reaching customers across vast distances far easier. On the other, the comparative ease with which internet businesses can be set up has opened the door to a lot of amateur business people who are unaccustomed to dealing with wholesalers and unfamiliar with what it actually means to be a retailer.

In short, many of these new internet or internet aware businesses that wholesalers find themselves dealing with, expect to be treated as retail consumers rather than the Retailers with a capital 'R' that they actually are.

While small, one or two man eCommerce shops and eBay sellers are still businesses, they quite often demonstrate a lack of knowledge when it comes to their own rights and responsibilities, the most common of which is the EU Distance Selling Regulations, and how they apply to business to business transactions.

The answer, as every business person should know, is that they don't.

The DSR apply to business to consumer sales, not business to business. Any end consumer who purchases a necklace or watch from an internet business has 30 days to change their minds, regardless of what is written or not written in the retailers terms and conditions. A Retailer, buying from a wholesaler, importer, or manufacturer, must abide by the terms and conditions of the company they are doing business with.

The problem that we have noticed over the past couple of years, is that small eCommerce businesses want and expect to be treated as consumers rather than retailers. Yes, they want the cheap prices when sourcing goods that wholesalers offer, but they also want to remove all responsibility for their own businesses and place them on someone else's shoulders.

Let me give you an example from our own experience. We supply Jewellery Retailers across the UK, many of whom have eCommerce shops or order from us online for their Jewellery Party businesses. The other week we got a phone call from a very irate customer, demanding a refund for a single necklace they purchased off us 4 months ago as part of a larger order. They sold the item 1 month ago, and the customer they sold it to returned it to them after a few weeks as the clasp had broken. The retailer purchased the individual item from us for about £1.50, and probably sold it for £7 or so.

Now, back in the old days, when businesses were businesses, this particular retailer would have checked the goods on arrival 4 months ago to ensure they were up to scratch, notified us if there were any problems, and from that point on our responsibility would have ended. When the customer returned to them with a broken clasp or with a stone that had fallen out, they would have retired to a back room, broken out the pliers and what not, and fixed the clasp, or super-glued the stone back in.

Once goods have been retailed, the responsibility lies with the retailer. Once goods have passed the agreed on time limit - 7 days in our case, plenty of time for them to be checked - responsibility lies with the retailer.

The problem is not that the DSR confuse people - they're really very clear and straight forward. The problem, is that too many new businesses refuse to accept any responsibility for their businesses. Starting a business is hard work, fraught with risk and worry, and if it's not, then you're not doing it right. The ease with which it is possible to set up a bare bones eCommerce store, or an eBay shop, has led too many start-up business people to the erroneous conclusion that running a business should be easy.

There is a fix for this problem, of course. Wholesalers could simply increase their prices until they match retail levels, at which point they would be able to offer retail service levels and guarantees.