This 5 minute article presents the issues and solutions related to compliance management for online sellers, e-commerce websites and third-party vendors who want to meet their obligations, maintain, and grow their business.
Many companies offer products electronically and use marketplaces to sell their products. However, once sellers sell to a consumer, they typically bill the consumer directly because they are offering or providing the products in a market. They are legally responsible for end of life management of WEEE, waste batteries and possibly packaging waste obligations in each country.
Since 2000, the number of legal environmental requirements has been increasing. As a result, online vendors face enormous complexity in maintaining legal awareness and ensuring compliance.
Sellers and third-party providers must organize compliance for their products in each EU country, especially compliance for waste electrical and electronic equipment (WEEE), waste batteries and waste packaging. Consequently, national authorities organize controls to ensure fair competition.
1: Online sellers activities on the spotlight of EPR authorities
2: France and Germany at the forefront of online seller EPR compliance
3: Obligations for online merchants
4: How to centralize compliance across multiple countries?
- Online sellers activities on the spotlight of EPR authorities
E-commerce actors, third party vendors, online sellers (vendors) and also OEMs sell to consumers through their own means (e-store, distributors...) and may also use a variety of sales and distribution channels such as marketplaces to engage with consumers. For more information, see Article 6 of European Union Regulation 2019/1020 on Market Surveillance and compliance of Products.
Many online sellers, especially those based outside the EU, do not comply with end-of-life and recycling requirements (WEEE, batteries, packaging, furniture, etc.), REACH, RoHS, Value Added Tax (VAT), CE marking, and so on. In fact, there is a large amount of non-compliant and unsafe products that can endanger consumers or distort competition. In such a case, the authorities may suspend the release for free circulation (Articles 26 and 28 of Regulation 2019/1020 cited above).
It is the responsibility of these economic operators and business players to understand their legal obligations when they make available or sell a product in a market (country). Mandatory or voluntary, they must ensure compliance. If they do not, they will face legal action and regulatory sanctions, which may include banning the sale of products, financial penalties and imprisonment.
At the same time, the environmental legal framework is becoming increasingly complex. As a result, companies need to organize compliance accordingly to ensure market access and compliance.
As a matter of consequence, many e-commerce and online retailers have been unable to comply with regulations, causing concern among EU and Member States authorities.
- France and Germany lead the way in EPR compliance by online retailers.
France and Germany have decided to lead the way and now require sellers and e merchants with obligations to establish compliance. When sellers sell on one or more marketplaces, they must provide evidence of compliance to the marketplaces, which then forward it to regulators and compliance organizations. If sellers fail to do so, marketplaces could be required to seek compliance on their own behalf or blacklist non-compliant sellers until they comply.
Later, other EU countries will probably follow and vendors will be required by marketplaces to ensure compliance in order to remain visible to consumers.
- Obligations for online merchants
In particular, Extended Producer Responsibility obligations, such as WEEE, waste batteries and waste packaging, are in the spotlight.
What are the obligations of online sellers in terms of compliance with WEEE, battery and packaging legislation in the European Union?
Online player(s) that makes available a product in a country must determine compliance in the country for each compliance topic.
Under WEEE, battery and packaging legislation, the foreign-based seller is generally a "producer with a distant seller status" in each country once it invoices consumers directly.
Company X is located in Hong Kong. It offers its products on 5 different marketplaces in 10 EU countries. Company X must comply with WEEE, battery and packaging legislations in each of the 10 EU countries.
Company X must provide each marketplace with its national registration number (Unique Identification Number, UIN) according to the WEEE, battery and packaging topic per country.
If the seller sells on different marketplaces (including on its own e-store), it must specify compliance for all volumes or quantities in each country and for each topic.
Of course, such compliance is time-consuming and requires foresight, responsiveness and data management.
In practice, sellers in each country must A) set up compliance and B) report and pay invoices accordingly.A) Set up compliance (register with national authorities, contract with local compliance organization):
- for WEEE: authorized representative (AR), obtain registration number (unique identification number UIN), contract with producer responsibility organization, reporting of quantities and weights
- for batteries: Obtain registration number (unique identification number UIN), contract with producer responsibility organization, report quantities and weights
- for packaging: Obtain the registration number (unique identification number UIN), contract with a producer responsibility organization, report quantities and weights
B) Reporting & payments
Reporting formats and frequency vary from country to country:
- for WEEE: the total number of units sold per country, total weight (excluding packaging and battery weight) of units sold per country, product description, HS codes, brands...
- for batteries: the number of batteries/rechargeable batteries placed on the market or sold per country, (excluding weight of packaging), chemistry of the battery (lithium, alkaline, etc.)
- for packaging: depending on the number of units sold, packaging can be reported by material (kg and quantities per material > plastic, wood, cardboard, glass, paper, polystyrene, aluminum, etc.) or by a simplified reporting format (under a certain quantity of products/sales references planned on the national market/year).
- How online sellers can centralize multiple countries compliance?
It is not possible to organize your compliance with a single contract for the whole of European countries. This means that you have to define registrations, contracts per topic and country, reporting and pay the compliance organization accordingly.
Online sellers, vendors and merchants can hire a European coordinator to take over many tasks:
- Identification and selection of local compliance contractors in the countries,
- registration and contracting
- Reporting formats and frequencies, central tool
- Central payment,
- Consulting (labelling requirements, legal monitoring, etc.), if needed.
We are at your service if you have a question,
The WEEElogic team