I had the pleasure of taking part in the webinar on September 21 as part of Satisfly’s #prostodokasy meeting series. The Omnibus Directive’s requirements, which will soon be applicable in Poland, were the topic of the conference.
The directive, as I noted in one of my earlier pieces, brings about significant changes to the eCommerce industry, and its main objective is to better safeguard the interests of online store customers. By the way, even though the deadline for its implementation was May 28, 2022, we still aren’t sure exactly when it will go into effect.
At Brandly360, we regularly discuss with our clients how to monitor and manage prices and promotions. These topics were covered in our webinar segment. Below I present the collected information that I reported during the webinar.
Promotional prices. No more Fake Fridays
Up until this point, the responsibilities of sellers related to communicating prices were limited to indicating the selling price of the product and the price per unit of measurement.
The new provisions of the directive require sellers to display, next to the discounted price, the product’s lowest price that has been in effect in the store for at least the previous 30 days, or, where the product is being sold for a shorter length of time, since the beginning. This is done to prevent price manipulation, such as artificially increasing prices prior to the commencement of a promotion (noticed by customers mainly before Black Friday or Cyber Monday).
It appears simple, but there are a number of questions and exceptions, as with most laws. Consequently, a little additional information regarding who it applies to, in what circumstances, what items it does not apply to, and how this directive provision is to be applied is provided.
WHO IS AFFECTED?
Entrepreneurs that sell their products directly to consumers, i.e., those who are involved in a direct seller-buyer relationship, are required to publicize the lowest previous price. Therefore, it does not apply to platforms like marketplaces and price comparison websites. They merely give sellers a place to post their bids. But keep in mind that platforms ought to offer features that let merchants fulfill this duty. Of course, there are instances in which platforms serve as vendors by selling goods on behalf of their customers.
When the seller is a part of a franchise network, questions could also surface in this situation. The franchisor’s or franchisee’s accountability in this case is determined by the network’s pricing policy.
The fact that the Omnibus Directive’s provisions apply to sellers outside the EU as well if they sell goods to EU customers may be significant for multinational business owners.
WHEN IS IT NECESSARY AND WHEN NOT?
For all communicated price reductions, whether of a specific amount or percentage, as well as general ones that are not defined, such as those associated with Black Friday, the need to publish the lowest prior price applies.
The operative phrase here is “communication,” since unannounced price adjustments, such as those made to price lists or catalogs, are exempt from the obligation.
Additionally, you are not required to provide information in the case of marketing statements relating to competitors’ offers (such as, for example, the lowest prices in the town), in which we do not expressly mention any price reductions or imply that we have implemented any such reductions.
This obligation also does not apply to promotions that do not directly relate to a price reduction for a specific product, such as “4 products for the price of 3” or a percentage discount for purchases above a certain amount.
Loyalty schemes, where the consumer, for instance, may obtain a discount on shop goods while accumulating a particular number of points for purchases, are another sort of promotion that does not apply to the obligation. Similar rules apply to coupons and discount codes, provided that they are given to certain people and are not made available to everyone visiting the retailer’s website.
WHAT OTHER PRICES CAN BE COMMUNICATED
The possibility of announcing additional prices that the discount applies to is not restricted by Omnibus. The buyer must not be misled by such pricing, and they must not detract from the required lowest price over the previous 30 days. This means that, for instance, a seller who applied discounts more frequently than once every 30 days may include information that the given product is cheaper by a specific percentage than the regular price, applicable outside promotions, or, for example, from the price that was in effect before the first promotion started, the price within a clearly defined period of time, etc., in addition to the lowest previous price.
The reference to the previous promotional price also does not apply to cascading promotions where there is a gradual reduction in prices. It is important, however, that such reductions must occur in one campaign!
EXCEPTIONS – WHICH PRODUCTS?
The following items are exempt from the obligation:
- which spoil quickly or have a short expiration date
- some seasonal items, such as swimwear, that lose their commercial value if not sold within a certain time frame, though there are questions about items like ski equipment that returns to the market at the start of each season
- goods sold for less than 30 days
How prices should be presented
The Directive does not specify how to present the lowest previous pricing. It only states that the customer must be given this information in an unambiguous manner and be able to compare prices.
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WHERE DO WE POST THE INFORMATION?
In stationery stores, such information should be placed on the price tag on the shelf or product tag, but also in other messages relating to the discount, e.g. TV commercials.
Additionally, it must appear on banners or informational pages on the online store’s website. The information’s dimensions and even whether it should be displayed right away on the store’s website or in another format, like a button that says “check the previous price,” have not yet been decided.
Information on individual price adjustment – what will the new responsibility consist of?
The pricing of the offer can be tailored to a specific buyer using contemporary internet sales technologies. It is a style of price management that is gaining popularity. Based on algorithms profiling the client’s behavior, a specific proposition is made based on an evaluation of the client’s purchasing power and willingness to pay a specific amount.
Of course, the amended price may be higher or cheaper than the original.
The merchant is required under the directive to disclose to the customer that the price being offered to him has been specifically tailored for him. The laws do not, however, stipulate how thorough this information must be. This problem will undoubtedly be resolved in practice, as with previous general clauses.
As you are aware, when you enter a word or phrase into the online store’s search bar, a list of products that meet your search criteria appears. However, it does important in what sequence they are presented. Products with a considerably higher likelihood of being bought are those that appear on the first page of results, or even in the top 10. Customers looking for items anticipate results that are natural or organic. In reality, top product placement is frequently based on payments paid by outside parties. It’s regarded as a covert kind of advertisement.
The Omnibus Directive mandates that before any Internet sale transaction or offer for a customer is made, the customer must be informed about the key factors affecting the ranking of offers displayed as search results on an online trading platform, even though the provision’s primary goal is to inform about paid results.
The general platform parameters should be included in such information, but they don’t have to be displayed for every search.
GET READY
When adjusting to the new restrictions, especially in the context of providing information about prior pricing, there are a number of factors to take into account:
- the channels we want to sell on; the techniques of providing information about prices;
- the target audience.
- do we belong to a franchise network or a capital group…?
Making a sales strategy will benefit from all of this information. It is important to think about whether utilizing different advertising strategies or putting in place a loyalty scheme will be simpler, more practical, and more profitable for us than presenting the previous prices each time.
The preparation of the strategy and detailed actions should be carried out carefully because we must remember that they can also be assessed against the UCPD!
Miłosz manages sales at Brandly360. For many years works on projects involving the implementation of software for businesses. On a daily basis, he works with trading companies, providing tools and services that improve work and follow the most recent market trends. Driven by a passion for data analysis, modern management systems, and process improvement.
