Internet shopping is in chaos: is it the end of online retail?

Internet shopping is in a right old mess at the moment. Online retailers are being battered by conflicting information and a stunning court decision made today which could see the very existence of many Internet shops threatened.

This week, retailers were warming to the news that people were planning to spend more online this year than ever before. According to the study by Logan Tod, ebusiness consultants, around two-thirds of consumers are planning to spend more online in 2009 than in previous years. In spite of the credit crunch, it seems, we are willing to part with yet more cash on the Internet.

The problem is, this report comes only a month after a previous study which shows consumers are planning to spend less in 2009.

So which report can you believe on Internet shopping? Well, one was based on UK consumers and the other used USA consumers, so there is a difference. The Americans plan to spend much less this year, whereas the Brits plan to spend more. That’s interesting in itself, considering the British “conservative” approach to online shopping.

However, in spite of the potential boom in online shopping in Britain, it probably will not happen. That’s because lack of trust is raising it’s head again – today saw a report showing that online fraud has doubled in the past year. In a major turn of events, the main kind of credit card fraud is now “card not present” transactions, such as those on the phone and via the Internet. In previous years, fraud was more frequently caused by other methods, such as card cloning.

Shoppers are now facing two simultaneous threats when they use their credit card online. Firstly, they are raising their debt during harsh economic times, threatening their financial security. Secondly, there is now an increased risk of online fraud. In spite of the evidence that people are planning to spend more online this year, these two problems could combine to see the end to that.

And, there’s another problem which will make many online retailers think twice about what they do online. In an exceedingly strange ruling, the European Courts have decided today that consumers are entitled to a refund on items they have bought online regardless of how long ago they bought it.

Normally, people have around 30 days in which to change their mind and ask for their money back. This new ruling means you could sell an ebook today and the customer could ask for their money back – without needing to give a reason – in 10, 20 or 50 years time. In other words, the European Courts in one decision have transferred all the risk of selling anything to the provider of the item. If you sell anything online in Europe, you risk being asked for all the money back in years to come.

So, the credit crunch, the fraudsters, nervous shoppers and the European legal system could all now combine in one huge crash to bring and end to many online retailers dreams and send shoppers running back to the High Street. Or was that their plan all along?

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