Ecommerce Study Serbia

COOPERATION FOR GROWTH PROJECT (CFG) STRENGHTENING E-COMMERCE IN THE REPUBLIC OF SERBIA FINAL REPORT

Approved Date: TBD

Contract Number: 72016918C00001

Project Start Date and End Date: January 18, 2018 to January 17, 2022

Implemented by: Cardno Emerging Markets USA, Ltd.

EXECUTIVE SUMMARY

During the project “Strengthening e-commerce in Republic of Serbia” a comprehensive diagnosis of e- commerce state was performed, in which the following research was conducted:

• Desk research (scientific articles, books, e-commerce studies, development strategies, collection and analysis of existing statistical data) • Regulatory framework analysis (Law on Electronic Commerce, Law on Trade, Law on Consumer Protection etc.) • 22 In-depth interviews and four workshops with key stakeholders: • Enterprises engaged in e-commerce in Serbia (mainly MSMEs, has to include enterprises ran by women)-inputs for survey. • Government representatives (MTTT, Ministry of Finance, Customs, National Bank of Serbia, Tax administration etc.) • Representatives of sectors enabling e-commerce (logistics, online platforms, payment systems etc.) • Other stakeholders • Surveying 1000 individuals who actively use Internet in Serbia (total of 434 e-commerce shoppers): • Surveying enterprises that are engaged in e-commerce in Serbia (150 enterprises), as well as businesses without e-commerce (59 enterprises) • Benchmarking – Best practice analysis

Recommendations related to legal issues were summed in the first part of the executive summary, and results related to other fundamental segments of functioning and strengthening e-commerce in the second part.

Analysis of this regulatory framework includes benchmark legal analysis, an analysis of the positive regulations of our country that directly or indirectly affect e-commerce in the Republic of Serbia, as well as a detailed analysis of the legal barriers identified in practice that impede the development of e- commerce. Ultimately, the Final Report includes the analysis of the provisions of the new Trade Act, as well as, the analysis of the provisions of the Act on amendments and supplements to the E-Trade Act, all in order to create a positive environment for the promotion of e-commerce.

Based on the benchmark legal analysis, we have come to the conclusion that the surrounding countries are aware of the legal institutes that have been introduced into our legal system by the new Trade Act, i.e. the Act on amendments and supplements to the E-Trade Act (as mystery shopper, dropship, trust mark). On the other hand, we have determined that there are certain legal institutes which should be implemented in the future, but only after creation of the adequate environment (blockchain, smart contracts, online dispute resolution platforms).

Regarding the analysis of the positive regulations that we have carried out, it should be related to the conducted research. Namely, we have come to the conclusion that the biggest barrier to major market holders (both on the supply-side and the demand-side), and therefore the biggest barrier related to the development of e-commerce, is actually the lack of confidence. Precisely, the currently applicable provisions of the relevant laws are not the reason why e-commerce is not sufficiently developed. Therefore, the biggest task is to influence the confidence of all participants at the market and create an environment that will contribute to the development of e-commerce.

Additionally, we have analyzed relevant regulations and e-commerce practice in the EU and other countries in order to determine the most appropriate mechanisms for legislative barriers overcome.

We have suggested to implement the blockchain technology and smart contracts, but such suggestions had not been adopted. Namely, we saw the opportunity to promote the introduction of two backbones of the new digital era – blockchain technology and smart contracts. Blockchain technology offers vast possibilities for business, government, and consumers. Blockchain can be used in many ways, including, among others: facilitating trade finance; supply chain management; securities recordkeeping and governance; healthcare management; insurance recordkeeping; energy distribution; digital identity solutions; consumer banking; international payments; facilitating institutional custody; and voting. On the other side, the smart contracts help to realize the many possibilities of distributed ledger technology (DLT). The certainty of the outcome, automation of performance, and efficiencies in the streamlining of processes are reasons enough for smart contracts to be fundamental to the uptake of DLT. Anyway, we have come to the conclusion that these institutes will be introduced in our legal system but only after creation of the adequate environment.

Ultimately, taking into account the Final Report in its entirety and all the provisions of the new Trade Act and the Act on amendments and supplements to the E-Trade Act, it is evident that the main problems have been identified, and that the solutions, which will bring the Republic of Serbia closer to all other EU countries where e-commerce has a big role in the economy, have been implemented.

In order to show the readiness of countries for e-commerce, the United Nations Conference on Trade and Development (UNCTAD) developed composite B2C E-commerce Index, based on four indicators: Internet use, number of secure servers, credit card penetration and postal delivery services (UNCTAD, 2018), and the value of the index is positively correlated to the percentage of the online shoppers. By this research, Serbia is ranked 41st out of 151 countries.

As reported by the web portal Statista, when it comes to e-commerce revenue, it amounted 289 million EUR in 2018, and it is predicted that will reach 328 million EUR in 2019. Revenue is expected to show an annual growth rate of 8.9%, resulting in a market volume of €461m by 2023. The number of Internet users in Serbia (active paying customers or accounts) was 4 million and it is expected to amount to 4.4 million by 2023. The average revenue per user in the e-commerce market amounts 72,2 EUR which is 10 times less than in EU (2018), as shown on the graph below

Average B2C revenue per Internet user, 2018 and forecast Source: Statista, October 2018

In the set of conducted primary research, 22 in-depth interviews and four workshops have been very informative and useful for establishing a diagnosis and formulating recommendations in the action plan. They also provided an input for formulating a questionnaire dedicated for businesses and internet users.

Suppression of gray economy is the most important for those who already have the developed electronic trade. For those who don`t trade online, the most important is Guide for e-commerce. Just as important is additional education of potential customers because their mistrust which has roots in having insufficient information has been recognized as the main obstacle for further development of e-commerce. E-traders also don`t run away from self-education, which is certainly commendable, so this activity is also on the top of stimuli list. Introducing official quality certification for E-trade, state financial subsidies, and determining clear rules and obligations for courier offices would also create positive changes. What should be emphasized is that all the proposed measures were finely accepted and received high marks.

Which of these measures could persuade you to think about starting the online sale? (Respondents whose companies don`t have online sale, N=58)

Making the Guide for e-trade 10

Technology help (making of websites, 9 corresponding platform etc.)

Financial subsidiaries for e-traders 7

Business strategy definition help 3 Additional education and better 3 informing of potential customers… Existence of call centre supported by 3 Ministry where people would be able… Introducing official quality (reliability) 3 certification for e-trade Precise law regulations in term of 2 suppression of gray economy in e-… Planning to start up the online trade 12

Other 10

Nothing from listed 53

Question about importance of certain means of this type of trade makes clear and expected difference between smaller and bigger e-traders. The bigger the company the more expressed opinion of website efficiency is. On the other hand, social networks are far more significant for smaller companies and individual sellers.

Unlike existing e-traders who are not only aware of significance and benefits that new technology brings, but recognize the progress of their status and business from year to year, those who don`t implement e- commerce are dominantly uninterested for its development. Stating that they don`t have needs for e- trade as their main argument would probably be the consequence of imminence the e-trade advantages, so putting an effort in their education should be a right choice.

Main suggestions of marketers’ research

• Financial incentives for e-traders • Help with technology and strategy • Initiating a call center for e-commerce • Raising the visibility of e-traders certification • Defining clear rules for those who supply support activities • Enclosing e-commerce to the part of business community which does not deal with it, introducing with the process, education about its significance and advantages Number of internet users among Serbian citizens increases day by day. This is not surprising given the fact that smartphones are nowadays almost considered by default and when the barriers for its usage as financial as technical are almost disappeared.

Research of internet users yielded significant results for improving e-commerce in Serbia. If we have in mind that more than two fifths (43%) of people bought something via internet in the last 6 months, then the number of online buyers in our country is not insignificant. Time saving and practical aspects of simple and efficient comparing of different offers motivate us on first place to shop online. Although social networks are unmatched by being interested, informing about products and services and their purchase are mostly done via websites.

What could be the main reasons why you shop online? Is there any other reason? I will read you some reasons why people shop online. Do you recognize yours among them?

Time saving 30 64 84

It`s practical - I can compare different 19 45 75 offers in short time

Delivery on demanded address 8 35 73

Bigger choice of products and services 15 40 65

Does not require physical effort 6 28 62

Money saving 16 37 49

I could easily obtain products from 6 18 41 abroad which are not available in Serbia Listed with reminding

Anonymity 1 8 Other spontaneously mentioned First mentioned Other 4

5 done via social networks, whether they are trademarks` profiles or individual traders, these sellers are not considered much reliable.

An average online buyer in Serbia hasn`t had any significant bad experience so far, and although he/she has some concerns, primarily regarding the delivery of the wrong product and quality of goods, he/she is ready to set aside a decent amount of money for one online purchase (RSD 10334). He/she admits that they are not informed enough about their rights when online shopping. What would stimulate him/her to shop online more often are possibilities of exchanging the product in the nearest trader`s store as well as positive experience of their close friends and possibility to see the product before the payment is done. In this segment better online supply and lower delivery costs are also listed.

Factors which could influence more and often online shopping. Scale from 1 to 5, where 1 means it would not influence at all, and 5 means it would influence a lot. Average

Goods could be returned in the trader`s nearest store 12 8 21 66 1

Positive experience of close friends 21 7 31 59 1

Possibility to see the product before the payment is done, or the possibilitu of returning the reserved funds (paying 2 3 10 29 55 1 by cards)

Better supply 24 12 33 49

Smaller delivery costs 7 3 11 21 58

Precise law regulation about online sellers`/E-traders` 2 5 15 31 47 obligations

Better internet supply of classical traders (which already 2 4 16 32 44 1 have retail objects)

That you can read a review about the product/trader 3 3 15 36 41 2 given by other buyers

Wouldn`t inluence at all It wouldn`t inluence mostly Would (not) inluence It would influence mostly Would influence a lot Doesn`t know/rejects to answer

Figure 1. Factors influencing the higher frequency of e-shopping

Trust is what the majority of the population who do not buy online lacks. Despite the small number of those who know for unpleasant experience in this process and although they would be motivated to a certain point to consider this option with the same factors which would stimulate online buyers to increase the extent of their shopping, there exist small chances that fears and changing of habits among people who

6 don`t prefer e-commerce could fall apart without additional education. What is very interesting is that 85% of those who purchased online have no complaints on online shopping.

Main recommendations of internet users research

• Education of customers and potential online customers, as well as promotion programs designed for them should be focused on the key benefits that e-commerce brings: time saving, easy comparison of different offers, bigger choice, no physical effort nor costs of getting to the point of sale. • Education of customers and promotion should be intensively included in elimination of online shopping fears, such as: receiving non-adequate products fear, or not to receive the product at all, reclamation procedure ignorance, general mistrust to e-commerce etc. • Above mentioned e-commerce benefits and its potential deficiencies, as well as traders` rights and obligations and customers` rights should be represented to Serbian population in the right way and through adequate media. • Technological literacy of people should be intensively improved • Conducting a set of measures which will secure more qualitative and cheaper delivery • Creating an online offer of classical and online traders which will be in accordance with the needs of Serbian customers

During the development of e-commerce diagnosis in the Republic of Serbia, key areas have been identified that represent barriers to stronger development of electronic marketing channels. The key weaknesses and dangers that e-commerce in Serbia faces are identified, alongside the good sides of e-commerce development, as well as the chances that await us in the future. The analysis was performed from the perspective of demand ie. e-commerce buyers, perspective of supply ie. e-merchants, as well as from the perspective of e-commerce enablers (logistics, payments, technology platforms, etc.), with a parallel analysis of legislation. The proposal for measures to strengthen e-commerce was made in accordance with the outlined framework.

First measure is strengthening e-shopper trust. This includes seven activities. Demographic, socio-economic and cognitive-behavioral barriers have been identified on the demand side, but most of them can be summed up in customers' mistrust in e-commerce and their unwillingness to get involved. Highlighting the benefits of e-commerce, eliminating prejudice against e-commerce and lowering the risk perception of customers towards this type of trading are the focus of measures to strengthen e-commerce in Serbia on the demand side.

Summary of activities for strengthening consumer trust in e-commerce

Activity Verification Activity Responsible bodies Partners Deadline indicator source The Ministry of 1. Development of Education, Science and the citizens' digital Technological External 2020. skills in the area Development; Ministry partners of online shopping of Trade, Tourism, and Telecommunications 2. The improvement of the MTTT e- Ministry of Trade, External Improved End of commerce Tourism, and partners portal 2019. information portal Telecommunications

3. Media campaign to promote e- commerce (professional TV shows, short Ministry of Trade, RTS and other 2019. and promotional Tourism, and external 2020. videos, guest Telecommunications partners appearances by the e-commerce experts in the media, etc.)

4. Creating a concise guide for the e- Ministry of Trade, External Created End of commerce Tourism, and partner guide 2019. customers Telecommunications (USAID)

5. Trustmark – new approach and the External level of the Ministry of Trade, significantly higher partners confidence Tourism, and recognition by the (Ecommerce in the trust End of Telecommunications; customers and Association or mark (%), 2020. The organization that other relevant survey type acceptance by the will issue the trust mark traders institution) data

The number

6. Training for of journalists on Ministry of Trade, External journalists electronic Tourism, and partner 2019. who have commerce Telecommunications (USAID) been educated

Ministry of Trade,

7. An online dispute Tourism, and resolution External Functional End of Telecommunications platform partners platform 2020. (Consumer Protection Sector)

Second measure is related to strengthening e-traders position on the market of Republic of Serbia

It includes eight activities. E-commerce business model is one of the most common ones in start-ups. What is important to understand is that entrepreneurial business endeavours often suffer from serious organizational omissions and insufficiencies, as well as the lack of expertise in certain areas, mainly technological business aspects. Large business systems are also not immune to problems related to the lack of expertise in digital technologies and organizational repercussions originating from partial transition from the entrepreneurship to corporate phase. Within overcoming e-commerce supply-side barriers, it is necessary to provide strong support for strengthening e-traders position on the market of Republic of Serbia.

Summary of activities for strengthening the position of e-traders

Responsible Activity Verification Activity Partners Deadline bodies indicator source

1. Creating Ecommerce External Guides (Shorter and MTTT partner Created guide June 2020. Longer Version) (USAID)

2. Setting up a Call Ecommerce Association or Functional Center for the MTTT June 2020. support of e-traders other relevant Call center institution 3. Incentives to startups and existing MMS businesses in e- External commerce (financial MTTT 2020. support, mentoring partners support ... analyze different options)

4. Tax incentives for MTTT, Ministry electronic traders 2020. of Finance 5. A project to support women's External Donation entrepreneurship in MTTT 2020. partners needed one district in Serbia

External Number of partners; An educated eminent 6. E-commerce merchants: educational development training 100; MTTT institution, 2020. courses for the e- dynamics: traders Ecommerce once in week, Association or a two months other relevant course institution MTTT, E- Commerce 7. Organizing contest for Association, the e-trader of the Serbian 2019. and

Year Chamber of 2020. Commerce or other relevant institution 8. Development of electronic retail at classic local and regional offline External MTTT 2020. retailers in Serbia - partners Multi-channel approach

Third measure reflects developing and improving logistic flows in e-commerce. Logistic flows are often crucial for e-commerce success in a certain area. In accordance with this, a set of measures is suggested, with the goal of creating better logistic environment in Serbia, from the perspective of e- traders.

Summary of activities for developing and improving logistic flows in e-commerce

Responsible Activity Verification Activity Partners Deadline bodies indicator source 1. Setting up 24/7 External End of 2020. pickup locations in partners This activity will MTTT, City big cities (postal take longer, administration? („paketomati“) service perhaps the first operators) phase in 2020. 2. Standardization of business procedures External MTTT 2020. of courier services partners

3. Subsidizing part of the shipping costs which electronic MTTT 2019. or 2020. merchants have

4. Educational programs for courier External MTTT 2020. employees partners

5. Enabling electronic Customs payment of customs 2020. duties Administration

6. Acceptance of the electronic Customs After 2020. documentation in Administration customs procedures

Fourth measure is aimed at questions regarding improvement financial structure relevant for e-commerce in Serbia. Financial infrastructure is very important for the development of e- commerce and its normal functioning. In further text we provide a set of measures for improving financial infrastructure.

Summary of activities for improving financial structure in e-commerce

Responsible Activity Verification Activity Partners Deadline bodies indicator source Banks, 1. Promotion of card payments credit card 2019. and and electronic banking MTTT, NBS companies, 2020. etc. MTTT, Office Banks, 2. Popularization of paying bills for IT and credit card electronically June 2020 eGovernment, companies, NBS etc. 3. Introduction of the possibility that the seller receives 2019. and Banks, NBS payments from foreign buyers 2020. in a foreign currency

4. Increasing the security for the customer - the possibility that End of MTTT, NBS Banks etc. payments are made only after 2020. the buyer confirms that

he/she has received adequate good/service (banks should enable and offer this service, and a trader can decide to use it if he/she has a desire and a business interest to use it)

5. Encouraging banks to provide Banks, The support for starting or MTTT, NBS association 2020. developing an online business of Banks

Fifth measure is dedicated to strengthening the capacities of inspection authorities responsible for supervision in the area of e-commerce. E-commerce is very sensitive to questions of security. Therefore, it is very important to ensure adequate behavior of bisuness participants in the electronic market game. Further text provides a set of measures for strengthening the capacities of inspection authorities responsible for supervision in the area of e-commerce

Summary of activities for strengthening the capacities of inspection authorities responsible for supervision in the area of e-commerce

Responsible Activity Verification Activity Partners Deadline bodies indicator source 1. Revision and modification of External e-commerce checklists, End of taking into account the MTTT partners 2019. specifics of e-retail (USAID)

2. Creating a guide, for market inspection, for the External implementation of regulations MTTT partners June 2020. in the field of e-commerce (USAID)

3. Educational program on External electronic commerce for the MTTT partners 2020. market inspection (USAID)

4. Formation of e-commerce unit of market inspection MTTT 2020.

Sixth measure is aimed at improving cooperation between the key stakeholders – public institutions, economy and academic community, with the aim of developing e-commerce in Republic of Serbia. This measure involves three activities. Cooperation between stakeholders is very

12 important for e-commerce development. It is also very important that e-commerce receives an adequate spot in our educational system.

Summary of activities for improving cooperation between key stakeholders

Responsible Activity Verification Activity Partners Deadline bodies indicator source

1. Supporting international and Ecommerce national conferences Continuous MTTT Association, on electronic activity Faculties commerce

2. Analysis of existing academic programs Universities, The in order to Ministry of introduce e- Education, Science MTTT 2020. commerce into study and Technological programs Development

Universities, The

3. Inclusion of e- Ministry of commerce in the 2020. and Education, Science MTTT university programs further and Technological Development

When applied, underlined measures should provide synergetical effects on the development of e- commerce in Serbia, as well as overcoming key barriers.

TABLE OF CONTENT

INTRODUCTORY METHODOLOGICAL CONSIDERATIONS ...... 22

I RESEARCH PROBLEM ...... 23 II PRIMARY AND SECONDARY RESEARCH DESIGN...... 24 III PROJECT SCOPE ...... 25

FIRST PART: DIAGNOSIS OF E-COMMERCE DEVELOPMENT IN SERBIA ...... 28

I ANALYSIS OF PRESENT E-COMMERCE REGULATORY FRAMEWORK IN SERBIA ...... 29 1. BENCHMARK LEGAL ANALYSIS ...... 29 2. ANALYSIS OF THE REGULATORY FRAMEWORK OF THE REPUBLIC OF SERBIA WITH RESPECT TO ELECTRONIC TRADE ...... 50 3. RESULTS OF QUANTITATIVE RESEARCH ON THE EXISTENCE OF LEGAL BARRIERS...... 58 4. CREATION OF CAPACITIES FOR CIVIL SERVANTS FROM DIFFERENT MINISTRIES AND OTHER INSTITUTIONS RESPONSIBLE FOR IMPLEMENTING ACT ON TRADE AND THE ACT ON ELECTRONIC COMMERCE ...... 60 5. CONCLUSION ...... 61 II LEVEL OF E-COMMERCE ACTIVITY IN SERBIA ...... 63 III KEY BARRIERS TO E-COMMERCE DEVELOPMENT IN SERBIA (INCLUDING FOREIGN E- COMMERCE) ...... 77 1. DEMAND-RELATED E-COMMERCE DEVELOPMENT BARRIERS IN SERBIA ...... 78 2. SUPPLY-RELATED BARRIERS TO E-COMMERCE DEVELOPMENT IN SERBIA ...... 87 3. E-COMMERCE-ENABLERS-RELATED E-COMMERCE DEVELOPMENT BARRIERS IN SERBIA .... 93 IV SWOT ANALYSIS OF E-COMMERCE IN SERBIA ...... 98 1. STREANGTHS: ...... 99 2. WEAKNESSES: ...... 99 3. OPPORTUNITIES: ...... 100 4. THREATS: ...... 101 V BENCHMARK ANALYSIS OF E-COMMERCE ...... 103 1. E-COMMERCE IN EU ...... 103 2. CROATIA ...... 109 3. ESTONIA ...... 122

SECOND PART: ANALYSIS OF THE RESULTS OF E-COMMERCE RESEARCH IN SERBIA ...... 135

I IN-DEPTH INTERVIEW WORKSHOPS – KEY RESULTS ...... 136 1. DEVELOPMENT LEVEL AND MAIN PARTICIPANTS IN THE ELECTRONIC COMMERCE IN SERBIA ...... 137

2. MAIN BARRIERS TO DEVELOPMENT OF ELECTRONIC TRADE IN SERBIA ...... 138 3. STRENGTHENING MEASURES FOR E-COMMERCE IN SERBIA ...... 142 II ANALYSIS OF QUANTITATIVE RESEARCH RESULTS...... 146 1. RESEARCH OF E-COMMERCE BUSINESSES ...... 146 2. ANALYSIS OF BUSINESS RESEARCH RESULTS ...... 153 3. INTERNET USERS RESEARCH ...... 180 4. ANALYSIS OF INTERNET USERS RESEARCH RESULTS ...... 186

THIRD PART: ACTION PLAN FOR STRENGTHENING E-COMMERCE IN SERBIA AND REMOVING EXISTING BARRIERS ...... 243

I PROPOSALS FOR STRAIGHTENING E-COMMERCE IN THE REPUBLIC OF SERBIA – THE LEGAL PERSPECTIVE ...... 244 1. ONLINE DISPUTE RESOLUTION (ODR) MECHANISMS ...... 245 2. BLOCKCHAIN TECHNOLOGY AND SMART CONTRACTS ...... 246 II MEASURE 1. STRENGTHENING CONSUMER TRUST IN E-COMMERCE ...... 248 1. DEVELOPMENT OF THE DIGITAL SKILLS OF THE RESIDENTS OF SERBIA ...... 250 2. CREATING E-COMMERCE INFORMATION PORTAL (E-COMMERCE PROMOTIONAL WEBSITES IN SERBIA, MOBILE APPLICATION, SOCIAL NETWORKS AND RELATED CONTENT) ...... 252 3. MEDIA CAMPAIGN FOR E-COMMERCE PROMOTION (PROFESSIONAL TV SHOWS, SHORT PROMOTIONAL VIDEOS, GUEST APPEARANCES BY E-COMMERCE EXPERTS IN THE MEDIA, ETC.) 254 4. CREATING A CONCISE GUIDE FOR THE E-COMMERCE BUYERS ...... 255 5. TRUST MARK - A NEW APPROACH AND A SIGNIFICANTLY GREATER CUSTOMER RECOGNITION, AND ACCEPTANCE BY THE MERCHANTS ...... 257 6. TRAINING OF JOURNALISTS ON THE ELECTRONIC COMMERCE ...... 258 7. AN ONLINE DISPUTE RESOLUTION PLATFORM ...... 258 III MEASURE 2. STRENGTHENING THE POSITION OF ELECTRONIC TRADERS IN THE MARKET OF THE REPUBLIC OF SERBIA ...... 260 1. CREATING ECOMMERCE GUIDES (SHORTER AND LONGER VERSIONS) ...... 261 2. CREATING A CALL CENTER ...... 263 3. INCENTIVES TO STARTUPS AND TO EXISTING MMS E-COMMERCE ENTITIES ...... 264 4. E-COMMERCE TAX BREAKS ...... 265 5. A PROJECT FOR SUPPORTING WOMEN'S ENTREPRENEURSHIP IN ONE DISTRICT IN SERBIA 265 6. DEVELOPMENTAL TRAINING PROGRAMS FOR ELECTRONIC TRADERS...... 267 7. ORGANIZING THE COMPETITION FOR THE E-TRADER OF THE YEAR ...... 267 8. DEVELOPMENT OF THE ELECTRONIC RETAIL AT CLASSIC LOCAL AND REGIONAL RETAILERS IN SERBIA - MULTI-CHANNEL APPROACH ...... 268 IV MEASURE 3. DEVELOPMENT AND IMPROVEMENT OF THE LOGISTIC FLOWS IN THE ELECTRONIC TRADE ...... 270

1. SETTING UP 24/7 PICKUP LOCATIONS IN LARGE CITIES (PACKAGE MACHINES) (THIS HAS TO BE WORKED OUT WITH THE POSTAL SERVICE OPERATORS) ...... 271 2. STANDARDIZATION OF BUSINESS PROCEDURES OF COURIER SERVICES ...... 271 3. SUBSIDIZING PART OF THE SHIPPING COSTS WHICH ELECTRONIC MERCHANTS HAVE .... 272 4. EDUCATIONAL PROGRAMS FOR COURIER EMPLOYEES ...... 272 5. ENABLING ELECTRONIC PAYMENT OF CUSTOMS DUTIES ...... 273 6. ACCEPTANCE OF THE ELECTRONIC DOCUMENTATION IN CUSTOMS PROCEDURES ...... 273 V MEASURE 4. IMPROVEMENT OF FINANCIAL INFRASTRUCTURE IN THE ELECTRONIC TRADE OF SERBIA ...... 275 1. PROMOTION OF CARD PAYMENTS AND ELECTRONIC BANKING ...... 276 2. POPULARIZATION OF PAYING BILLS ELECTRONICALLY ...... 276 3. INTRODUCTION OF THE POSSIBILITY THAT THE SELLER RECEIVES PAYMENTS FROM FOREIGN BUYERS IN A FOREIGN CURRENCY ...... 276 4. INCREASING THE SECURITY FOR THE CUSTOMER - THE POSSIBILITY THAT PAYMENTS ARE MADE ONLY AFTER THE BUYER CONFIRMS THAT HE/SHE HAS RECEIVED ADEQUATE GOOD/SERVICE ...... 277 5. ENCOURAGING BANKS TO PROVIDE SUPPORT FOR STARTING OR DEVELOPING AN ONLINE BUSINESS ...... 277 VI MEASURE 5. STRENGTHENING THE CAPACITIES OF INSPECTION AUTHORITIES RESPONSIBLE FOR SUPERVISION IN THE AREA OF ELECTRONIC COMMERCE ...... 279 1. REVISION AND MODIFICATION OF E-COMMERCE CHECKLISTS, TAKING INTO ACCOUNT THE SPECIFICS OF E-RETAIL ...... 280 2. CREATING A GUIDE, FOR MARKET INSPECTION, FOR THE IMPLEMENTATION OF REGULATIONS IN THE FIELD OF E-COMMERCE ...... 280 3. EDUCATIONAL PROGRAM ON ELECTRONIC COMMERCE FOR THE MARKET INSPECTION . 281 4. FORMATION OF E-COMMERCE UNIT OF MARKET INSPECTION ...... 281 VII MEASURE 6. IMPROVEMENT OF COOPERATION BETWEEN THE KEY STAKEHOLDERS - STATE INSTITUTIONS, ECONOMY AND ACADEMIA, WITH THE AIM OF DEVELOPING E- COMMERCE IN REPUBLIC OF SERBIA ...... 282 1. SUPPORTING INTERNATIONAL AND NATIONAL CONFERENCES ON ELECTRONIC COMMERCE ...... 282 2. ANALYSIS OF EXISTING ACADEMIC PROGRAMS IN ORDER TO INTRODUCE E-COMMERCE INTO STUDY PROGRAMS ...... 283 3. INCLUSION OF E-COMMERCE IN THE UNIVERSITY PROGRAMS ...... 283

REFERENCES ...... 284

I INTERNET SOURCES ...... 285 II INTERNET SOURCES ...... 287

APENDIX ...... 289

I APENDIX A – QUESTIONNAIRE FOR GENERAL POPULATION: ONLINE COMMERCE IN SERBIA ...... 290 II APENDIX B – QUESTIONNAIRE FOR BUSINESS RESEARCH: ONLINE COMMERCE IN SERBIA ...... 319

LIST OF TABLES

TABLE 1. PAYMENT TRANSACTIONS OF THE PURCHASE OF GOODS AND SERVICES VIA THE INTERNET, BY USING PAYMENT CARDS ...... 66 TABLE 2. PAYMENT TRANSACTIONS OF THE PURCHASE OF GOODS AND SERVICES VIA THE INTERNET, BY USING E-MONEY ...... 67 TABLE 3. E-COMMERCE REVENUE BY SEGMENT, 2018 ...... 71 TABLE 4. SUMMARY OF ACTIVITIES FOR STRENGTHENING CONSUMER TRUST IN E- COMMERCE ...... 249 TABLE 5. SUMMARY OF ACTIVITIES FOR STRENGTHENING THE POSITION OF E-TRADERS .... 260 TABLE 6. SUMMARY OF ACTIVITIES FOR DEVELOPING AND IMPROVING LOGISTIC FLOWS IN E- COMMERCE ...... 270 TABLE 7. SUMMARY OF ACTIVITIES FOR IMPROVING FINANCIAL STRUCTURE IN E-COMMERCE ...... 275 TABLE 8. SUMMARY OF ACTIVITIES FOR STRENGTHENING THE CAPACITIES OF INSPECTION AUTHORITIES RESPONSIBLE FOR SUPERVISION IN THE AREA OF E-COMMERCE ...... 279 TABLE 9. SUMMARY OF ACTIVITIES FOR IMPROVING COOPERATION BETWEEN KEY STAKEHOLDERS ...... 282

LIST OF FIGURES

FIGURE 1 BROADBAND INTERNET CONNECTION IN HOUSEHOLDS ...... 64 FIGURE 2 INDIVIDUALS WHO ORDERED GOODS OR SERVICES OVER THE INTERNET FOR PRIVATE USE IN THE 12 MONTHS PRIOR TO THE SURVEY ...... 65 FIGURE 3. NUMBER OF TIMES A PERSON HAS BOUGHT/ORDERED GOODS OR SERVICES (2015- 2018) ...... 66 FIGURE 4. PAYMENT TYPES IN PERCENT 2018 AND FORECAST SOURCE: STATISTA, OCTOBER 2018 ...... 68 FIGURE 5. PREVIOUSLY PURCHASED GOODS BOUGHT ONLINE, BY CATEGORIES ...... 69 FIGURE 6. ONLINE PURCHASES: MONEY ESTIMATION SOURCE: GEMIUSADHOC STUDY, OCTOBER 2017 ...... 70 FIGURE 7. B2C E-COMMERCE REVENUE, 2018 AND FORECAST SOURCE: STATISTA, OCTOBER 2018 ...... 70 FIGURE 8. AVERAGE REVENUE PER USER, 2018 AND FORECAST SOURCE: STATISTA, OCTOBER 2018 ...... 72 FIGURE 9. BROADBAND INTERNET CONNECTION IN ENTERPRISES IN SERBIA 2009-2018 (% OF ENTERPRISES) SOURCE: SORS, 2018, PP. 79 ...... 72 FIGURE 10. ENTERPRISES WHICH HAVE THEIR OWN WEBISTE SOURCE: SORS, PP. 81 ...... 73 FIGURE 11. ENTERPRISES ORDERING GOODS/SERVICES OVER THE INTERNET ...... 74 FIGURE 12. PERCENTAGE OF THE TOTAL TURNOVER OVER THE YEARS RESULTING FROM ORDERS RECEIVED OVER THE INTERNET ...... 75 FIGURE 13. MODEL FOR ANALYZING THE LEVEL OF NATIONAL E-COMMERCE USAGE ...... 77 FIGURE 14. NUMBER OF DIGITAL COMMERCE AND MOBILE POS PAYMENT USERS IN SERBIA, EXCLUDING B2B TRANSACTIONS (2018) ...... 78 FIGURE 15. PENETRATION DATA RELATED TO DIGITAL COMMERCE AND POS MOBILE PAYMENTS, EXCLUDING B2B TRANSACTIONS (2018) ...... 79 FIGURE 16. DAILY INTERNET USAGE RATE BY AGE GROUPS IN SERBIA (2016) ...... 82 FIGURE 17. OVERALL SHARE OF INTERNET (TOP LEFT), MOBILE PHONE (BOTTOM RIGHT) AND COMPUTER (BOTTOM LEFT) USAGE BY AGE GROUP AND GENDER (2018) ...... 82 FIGURE 18. SHARE OF HOUSEHOLDS OWNING A COMPUTER (TOP GRAPH) AND HAVING AN INTERNET CONNECTION (BOTTOM GRAPH) DEPENDING ON THE AVERAGE MONTHLY HOUSEHOLD INCOME ...... 84 FIGURE 19. MEANS OF PAYMENT FOR E-COMMERCE TRANSACTIONS IN SERBIA WITH PROJECTIONS FOR 2019-2023 PERIOD, EXCLUDING B2B TRANSACTIONS (2018) ...... 86 FIGURE 20. TOTAL DIGITAL AD SPENDING IN SERBIA WITH PROJECTIONS ACCORDING TO THE TYPE OF ADVERTISING, EXCLUDING EMAIL MARKETING AND INFLUENCER SPONSORSHIPS (2018)...... 89 FIGURE 21. MEASURES FOR STIMULATING E-COMMERCE DEVELOPMENT ...... 150 FIGURE 22. MEASURES FOR E-COMMERCE IMPLEMENTATION CONSIDERATION ...... 151 FIGURE 23. E-COMMERCE PRODUCT AND SERVICES OFFER ...... 153 FIGURE 24. POSESSION OF STORES ...... 154 FIGURE 25. REASONS FOR NOT OFFERING E-COMMERCE ...... 155 FIGURE 26. MEASURES FOR CONSIDERING E-COMMERCE INTRODUCTION ...... 157 FIGURE 27. PERCEPTION OF E-COMMERCE RELEVANCE IN SERBIA ...... 158 FIGURE 28. SATISFACTION WITH INTERNAL E-COMMERCE ACTIVITIES ...... 159

FIGURE 29. DURATION OF E-COMMERCE IMPLEMENTATINON ...... 160 FIGURE 30. E-SALES SHARE IN TOTAL SALES ...... 161 FIGURE 31. E-SALES SHARE BY TYPE ...... 162 FIGURE 32. SUPPLY SIDE BARRIERS TO E-COMMERCE DEVELOPMENT ...... 164 FIGURE 33. BIGGEST SUPPLY SIDE BARRIER TO E-COMMERCE DEVELOPMENT ...... 166 FIGURE 34. E-COMMERCE ENABLERS BARRIERS TO E-COMMERCE DEVELOPMENT ...... 168 FIGURE 35. MEASURES FOR FURTHER E-COMMERCE DEVELOPMENT IN SERBIA ...... 170 FIGURE 36. PERCEPTION OF MEASURES FOR FURTHER E-COMMERCE DEVELOPMENT IN SERBIA ...... 172 FIGURE 37. REGULATORY BARRIERS WHOSE RESOLUTION WOULD IMPROVE E-COMMERCE IN SERBIA ...... 173 FIGURE 38. FAMILIARITY WITH BLOCKCHAIN TECHNOLOGY ...... 174 FIGURE 39. LEVEL OF BLOCKCHAIN TECHNOLOGY UNDERSTANDING ...... 175 FIGURE 40. FAMILIARITY WITH SMART CONTRACTS ...... 176 FIGURE 41. COMPARISSON OF E-TRADERS’ SITUATION IN THE LAST THREE YEARS...... 177 FIGURE 42. ANNUAL CORPORATE INCOME ...... 178 FIGURE 43. PREDOMINANT BUSINESS ACTIVITY (INDUSTRY) ...... 178 FIGURE 44. DATA ON THE NUMBER OF EMPLOYEES, INTERVIEWEES' POSITION, YEARS OF EXISTANCE, REGION, SHARE OF WOMEN OWNERSHIP AND PREDOMINANT BUSINESS ACTIVITY ...... 179 FIGURE 45. QUOTAS CROSSED BY STATISTICAL REGION AND SETTLEMENT TYPE ...... 180 FIGURE 46. QUOTAS CROSSED BY STATISTICAL REGION, GENDER AND AGE ...... 181 FIGURE 47. MAIN REASONS FOR INTERNET SHOPPING ...... 183 FIGURE 48. FACTORS INFLUENCING THE HIGHER FREQUENCY OF E-SHOPPING ...... 184 FIGURE 49. FREQUENCY OF INTERNET USAGE ...... 187 FIGURE 50. DEVICES USED FOR INTERNET ACCESS ...... 189 FIGURE 51. FREQUENCY OF VISITING CERTAIN ONLINE CONTENTS ...... 191 FIGURE 52. INTERNET PURCHASE IN THE LAST SIX MONTHS ...... 193 FIGURE 53. FREQUENCY OF PERFORMING CERTAIN ONLINE ACTIVITIES ...... 195 FIGURE 54. ONLINE PLACE OF PRODUCT/SERVICE PURCHASE ...... 196 FIGURE 55. WHERE SHOPPERS SEARCH FOR INFORMATION ONLINE ...... 197 FIGURE 56. FAMILIARITY WITH BLOCKCHAIN TECHNOLOGY ...... 198 FIGURE 57. LEVEL OF BLOCKCHAIN TECHNOLOGY UNDERSTANDING ...... 199 FIGURE 58. FAMILIARITY WITH SMART CONTRACTS ...... 200 FIGURE 59. ONLINE SHOPPING FREQUENCY ...... 201 FIGURE 60. MOST FREQUENT ONLINE PURCHASES ...... 203 FIGURE 61. WEBSITES MOST COMMONLY USED FOR ONLINE PURCHASES ...... 205 FIGURE 62. LEVEL OF CONFIDENCE IN DIFFERENT CATEGORIES OF ONLINE SELLERS ...... 207 FIGURE 63. REASONS FOR INTERNET SHOPPING ...... 210 FIGURE 64. MAXIMUM AMOUNT PER SINGLE ONLINE PURCHASE WHICH THE CUSTOMERS ARE WILLING TO PAY ...... 211 FIGURE 65. WORRIES OR DISLIKINGS OF ONLINE SHOPPERS REGARDING E-COMMERCE ...... 212 FIGURE 66. ASPECTS OF E-COMMERCE WHICH ONLINE SHOPPERS FIND WORRYING/DISLIKEFUL ...... 214 FIGURE 67. EXISTANCE OF BAD EXPERIENCE RELATED TO E-COMMERCE ...... 215 FIGURE 68. REASONS FOR BAD E-SHOPPING EXPERIENCE ...... 217 FIGURE 69. INFLUENCE OF CERTAIN FACTORS ON E-SHOPPING FREQUENCY ...... 220 FIGURE 70. SHOPPER FAMILIARITY WITH COSTUMER RIGHTS IN E-COMMERCE ...... 222

FIGURE 71. REGULATORY BARRIERS WHOSE RESOLUTION WOULD IMPROVE E-COMMERCE223 FIGURE 72. LEVEL OF ONLINE SHOPPING TRUST ...... 224 FIGURE 73. CERTAIN ATTRIBUTES OF ONLINE SHOPPERS ...... 226 FIGURE 74. ONLINE SHOPPING ...... 227 FIGURE 75. REASONS FOR RARELY/NOT SHOPPING ONLINE ...... 231 FIGURE 76. GIVING UP ON POTENTIAL ONLINE PURCHASE ...... 232 FIGURE 77. EXPERIENCE OF PEOPLE AROUND YOU (FAMILY, COLLEAGUES, FRIENDS) RELATED TO E-COMMERCE ...... 233 FIGURE 78. INFLUENCE OF CERTAIN FACTORS ON BEGINNING TO PURCHASE ONLINE ...... 236 FIGURE 79. LIKELIHOOD OF PURCHASING ONLINE IN THE FUTURE ...... 238 FIGURE 80. PERSONALLY SOLD SOMETHING ONLINE ...... 239 FIGURE 81. INTERVIEWEES’ INCOME ...... 240 FIGURE 82. SETTLEMENT SIZE OF THE INTERVIEWEES...... 241 FIGURE 83. EMPLOYMENT STATUS OF THE INTERVIEWEES ...... 241 FIGURE 84. DATA ON INTERVIEWEES’ GENDER, AGE, REGION, PROFESSIONAL QUALIFICATIONS AND HOUSEHOLD SIZE ...... 242

INTRODUCTORY METHODOLOGICAL CONSIDERATIONS

I RESEARCH PROBLEM

Despite the steady growth of e-commerce in Serbia, significant challenges and problems to higher e- commerce adoption and usage remain. The state of e-commerce, main shortcomings and biggest barriers to e-commerce in Serbia, can be evaluated by investigating enterprises, consumers and policy makers and other stakeholders as well as performing desk research. However, it should point out that there are no adequate data concerning Serbian e-commerce.

Bearing in mind previously said, the goals of the conducted research were to exam the current level of e- commerce development in Serbia, what are the key barriers to the development of e-commerce, and how to overcome those barriers successfully and strengthen e-commerce especially MSMEs and female related e-commerce.

There are two types of research methodologies that were used: qualitative and quantitative research. For the purposes of this research, a diverse methodology was used: obtaining data from primary research and secondary sources, as well as processing them by using statistical methods. In addition, qualitative methods of data collection and processing were used as well.

Firstly, a detailed desk research was conducted. Already published researches on e-commerce, by academics, government and non-governmental institutions, as well as the private sector, were carefully reviewed and used as per need.

Primary research was conducted through both customer survey and companies’ survey. In addition, in- depth interviews with key stakeholders from various industries, Ministries and state institutions were conducted in order to get a deeper insight into the problem and the current state of e-commerce in Serbia. The obtained data from primary sources was processed using the IBM SPSS statistical program, in order to perform all the necessary analyzes.

One of the selected methods for collecting data from e-commerce customers is survey, and the used technique was the questionnaire. The questionnaire included relevant questions concerning above mentioned e-commerce topics. Prior to data collection, the validity of the content of the questionnaire was tested: a certain number of respondents will be asked to fill in the questionnaire and leave a comment, or criticize the questionnaire from the angle of ambiguity, clarity, and filling time. The goal of the survey was to determine their online shopping habits, attitudes and suggestions for e-commerce experience improvement. There was a part of the questionnaire intended for Internet users who do not buy electronically in order to identify the main reasons why they are not shopping online (whether it is distrust, payment problems, rights and consumer protection, etc.). Similar questionnaire were made for the enterprises to fill out, in order to find out what are the main barriers, what their motivation is, etc.

The use of qualitative research, such as in-depth interview is suitable in e-commerce research because the strength of the qualitative approach is based in an ability to investigate human subject motivation and actions within a research study.

In in-depth interviews the aim is to obtain a more detailed, rich understanding of the e-commerce topic. In in-depth interviews the participant’s experience, behavior, feelings, and/or attitudes were probed deeply to identify underlying concepts that we want to analyze in order to generate a theory surrounding the research topic. The role of the government is extremely important in the area of legislation and the creation of positive ambient for e-commerce development i.e. supportive legal and regulatory environment. In order to successfully implement e-commerce strategy, the state and its financial system should provide various e-payment systems and mechanisms. This is why it is important to speak with the representatives of commercial banks and National Bank of Serbia; the representatives of the Ministry of Trade, Tourism and Telecommunications about e-commerce state, other Government representatives; Customs, Tax administration; Serbian Chamber of Commerce, Postal service etc. In addition, other stakeholders were interviewed as well.

II PRIMARY AND SECONDARY RESEARCH DESIGN

a) Desk research (scientific articles, books, e-commerce studies, development strategies, collection and analysis of existing statistical data)

b) Regulatory framework analysis (Law on Electronic Commerce, Law on Trade, Law on Consumer Protection etc.)

c) In-depth interviews and four workshops with key stakeholders:

• Enterprises engaged in e-commerce in Serbia (mainly MSMEs, has to include enterprises ran by women)-inputs for survey.

• Government representatives (MTTT, Ministry of Finance, Customs, National Bank of Serbia, Tax administration etc.)

• Representatives of sectors enabling e-commerce (logistics, online platforms, payment systems etc.)

• Other stakeholders

d) Surveying 1000 individuals who actively use Internet in Serbia (at least 300 e-commerce shoppers):

• Sample determination

• Questionnaire development

• Questionnaire testing

• Conducting research

• Analysis of research results

e) Surveying enterprises that are engaged in e-commerce in Serbia (150 enterprises)

• Sample determination

• Questionnaire development

• Questionnaire testing

• Conducting research

• Analysis of research results

f) Benchmarking – Best practice analysis

III PROJECT SCOPE

a) Diagnostics of e-commerce progress in the Republic of Serbia

• Diagnostics of existing regulatory framework for e-commerce in Serbia

• Level of activity in the area of e-commerce in Serbia

• SWOT analysis of e-commerce in Serbia

• Key stakeholder analysis

- Enterprises engaged in e-commerce in Serbia

- Customers engaged in e-commerce transactions

- Government (MTTT, Ministry of Finance, Customs, National Bank of Serbia, Tax administration etc.)

- E-commerce enablers (logistics companies, financial infrastructure, online platforms etc.)

• Key barriers to e-commerce development in Serbia (including foreign e- commerce)

- Regulatory barriers to e-commerce development

- Supply-related barriers to e-commerce development (barriers that enterprises engaged in e-commerce face)

- Demand-related barriers to e-commerce development

- Barriers related to e-commerce enablers (government bodies, logistics, payment systems, online platforms etc.)

b) Action plan for improvement of e-commerce in Serbia and removal of existing barriers

• Guidelines for working group regarding goals, results and action plan priorities

• Importance of improvement of MSMEs and female entrepreneurship in the area of e-commerce

• Suggesting measures and activities for removal of regulatory barriers and improvement of regulatory framework

• Suggesting measures and activities for removal of supply-related barriers to e- commerce development

• Suggesting measures and activities for removal of demand-related barriers to e- commerce development

• Suggesting measures and activities for removal of barriers related to e-commerce enablers (logistics, payment systems, online platforms etc.)

• Prioritization of measures and activities for strengthening of e-commerce in Serbia

• Development of action plan implementation monitoring system.

c) Action plan implementation

• Assisting MTTT in the process of implementation of suggested measures and activities

• Development of three programs in order to support development of e-commerce in accordance with good practice of EU, EEA and EFTA, with focus on MSMEs

• Support program for development of female entrepreneurship in the area of e- commerce.

Organization and implementation of capacity building for public servants from various ministries and institutions who are responsible for Law on Trade and Law on electronic commerce enforcement.

Planning, implementation and coordination of all activities were established in line with the purpose of the Project and will be based on the level of seniority and specialization of the key personnel. Every specialized expert covered the respective fields of activities with their in-depth expertise.

In order to establish a smooth Project implementation, we relied on a number of fundamental principles based on our experience with similar projects, that we believe contributed to success of the Project:

- No ‘’one-size-fits-all’’ approach. No transfer of the other EU models, but rather the selection of the most appropriate solutions and best practices to meet the specific needs of the beneficiaries.

- Highly qualified expert team with excellent skills to foster good cooperation within the team. Periodical meeting will be held, combined with permanent e-mail and telephone communication in order to coordinate the process of drafting the required deliverables.

- Combining theory and practice. We will introduce theoretical background knowledge where necessary our focus will be on practical implication of regulatory changes on the existing market in Serbia.

FIRST PART: DIAGNOSIS OF E-COMMERCE DEVELOPMENT IN SERBIA

I ANALYSIS OF PRESENT E-COMMERCE REGULATORY FRAMEWORK IN SERBIA

This analysis presents a legal comparative analysis (benchmark analysis) of the legislative framework in the field of electronic commerce at the level of European Union, as well as in two Member States: Estonia and Croatia and countries of the Western Balkans. Estonia is one of the most digitally developed Member States of the European Union, while Croatia is a Member State that last acceded to the European Union (in 2013).

In addition, the present legal regulations of the Republic of Serbia governing e-commerce were analyzed, as well as regulations that do not directly regulate e-commerce, but which solutions may indirectly affect the development of e-commerce in Serbia.

The aim of this legal analysis is the detection of the prospective legal barriers that may prevent the further development of e-commerce in the Republic of Serbia.

1. BENCHMARK LEGAL ANALYSIS

In this part of the text, a legal analysis of comparable legislative solutions in the field of e-commerce is made. The analysis is made in order to determine the compliance of legislative solutions of the Republic of Serbia with the legislative solutions of the European Union, ie Member States. The legislative solutions of two EU Member States are analyzed bellow: Estonia and Croatia.

Estonia is one of the leading Member States of the European Union in the field of digitalization. There are around 6,000 e-shops in Estonia offering books, publications, tools, household items, software and hardware, flowers and multimedia products. In Estonia, more than 58% of citizens use the Internet for shopping. According to data from 2017, 85% of people who use e-commerce purchase goods from sellers in Estonia, 45% from EU and 41% from other countries. In 2017, e-commerce increased by 37% over the previous year (total retail sales: 6%). Online sales of goods amounted to EUR 239.4 million (total retail sales: EUR 6.32 billion). In this regard, the share of online retail in total retail was 3.6% (2017). Furthermore, statistics show that Estonia ranks 9th in the digital economy index (based on European Commission data). Estonia was a leader in providing online services in the public sector and so made it possible for its citizens to improve their digital skills and use of Internet. Estonia also introduced a novelty of smart lockers (receiving a shipment at a location specified by the consumer, by placing the shipment in a locker; the consumer receives the unlock code for the locker after ordering). 86% of online shoppers

29 use smart lockers for delivering ordered goods. On the other hand, 46% of online shoppers choose delivery to be made by courier.1

On the other hand, electronic commerce in Croatia is much less developed than in Estonia. Since Croatia acceded to the European Union, the level of e-commerce has been constantly increasing. According to 2017 data, approximately 45% of Croatian citizens purchase goods online. About 20% of traders offer their goods and services online. About 40% of online shoppers purchase only domestic goods, 40% purchase goods from the other Member States and 40% purchase goods from other countries. Although Croatia acceded to the EU in 2013, a lot of online traders from the European Union still do not deliver their goods to Croatia2. However, bearing in mind that Croatia is a country in the region, and that was the last state to access to the European Union, we have analyzed the Croatian legislative solutions.

1.1. EUROPEAN UNION

At the level of the European Union ( "EU"), e-commerce is primarily regulated by Directive on certain legal aspects of information society services in the internal market, in particular, e-commerce 2000/31/EC (the "E-commerce Directive")3. The E-commerce Directive stipulates the minimum standards that each EU Member State must implement in its legislation, in order to harmonize national laws, facilitate the effective functioning of the internal market and enable the free movement of information society services between the Member States.

DEFINITION OF INFORMATION SOCIETY SERVICE AND INFORMATION SOCIETY SERVICE PROVIDERS

Information society service is defined as a service provided remotely, by electronic equipment at the request of the service user. As a rule, it is provided for compensation. A service provider is any legal or natural person that provides information society services.

The E-commerce Directive stipulates an obligation for each EU Member State to ensure by their regulations that all information society service providers from the other Member States may freely provide

1 HTTPS://WWW.EXPORT.GOV/ARTICLE?ID=ESTONIA-E-COMMERCE 2 HTTPS://WWW.EXPORT.GOV/ARTICLE?ID=CROATIA-ECOMMERCE 3 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (HTTPS://EUR-LEX.EUROPA.EU/LEGAL- CONTENT/EN/ALL/?URI=CELEX%3A32000L0031)

30 their services in every Member State. Exceptionally, the E-commerce Directive allows the Member States to exclude this obligation if the public interest requires that.

As a benchmark for determining whether an information society service provider is from a Member State, the E-commerce Directive establishes a standard of a business residence. An information society service provider with a business residence is a provider who performs his business activity in a permanent location for an indefinite period of time. Business residence is not determined by the location of the technical resources and equipment for the performing of activity, but by the location from which the service provider effectively performs its activity.

E-commerce Directive explicitly prohibits the Member States from constraining start-ups of information society services by requesting prior authorization.

INFORMATION THAT THE INFORMATION SOCIETY SERVICE PROVIDER IS REQUIRED TO MAKE AVAILABLE

The E-commerce Directive stipulates an obligation for EU Member States to ensure by their regulations that the information society service provider is obliged to provide users of services and competent authorities with direct and permanent access to information about a service provider, in particular: (i) name of the service provider; (ii) business residence of the service provider; (iii) information about the service provider that allows users of services to easily contact provider, in particular, the e-mail address; (iv) information on the relevant register of legal entities or other similar register, if the service provider is registered in such register; (v) information on the competent supervisory authority, if the service provider performs an activity requiring special autorization; (vi) information on the professional bodies or similar institutions with which the service provider is registered, information on the title and the Member State in which it was acquired and information on the applicable professional rules of the Member State and the manner these rules can be accessed, if the service provider performs an activity which is specifically regulated; and (vii) the tax identification number, if the service provider is subject to VAT. In addition, Member States are required to ensure by their regulations that the providers of information society services are obliged to clearly indicate their prices if they are listed. Prices must include information on whether they include taxes and shipping costs.

COMMERCIAL MESSAGES

Commercial messages are any form of communication made in order to promote goods, services or business reputation of a legal or natural person performing the registered activity. It is not considered a commercial message, if information is provided (i) to enable direct access to legal or natural person

31 performing a registered activity, especially an email address or domain name; and (ii) relating to the goods, services or business reputation of a legal or natural person performing the registered activity, which were collected independently and free of charge.

E-commerce Directive stipulates an obligation for the Member States to ensure by their regulations that commercial messages which, in whole or in part constitute an information society service, must fulfill the following conditions: (i) the commercial message as such is clearly identifiable; (ii) the information about the legal or natural person on whose behalf the commercial message is sent is clearly identifiable; (iii) promotional offers such as discounts, prizes and gifts, can be clearly identified as such and that the conditions for the realization of benefits from promotional offers are easily accessible and clearly stated, if they are permitted in the Member State in which the service provider has a business residence; and (iv) prize competitions or games are clearly identifiable as such and the conditions for participation are easily accessible and clearly stated, if they are allowed in the Member State in which the service provider has a business residence. The obligation to submit this information does not apply to contracts concluded by e- mail or other similar ways.

If EU Member State allows sending of commercial messages via electronic e-mail without the prior consent of the recipient of the commercial message, the Member State is required to ensure by its regulations that the recipients of such messages are made aware that it is a commercial message at the time they receive it. In addition, Member States are required to ensure by their regulations that information society service providers who send commercial messages by e-mail without the prior consent of the recipient, must regularly check and comply with the rules regarding the unsubscription of such messages.

If a commercial message, that in whole or in part, constitutes an information society service, is sent by the information society service provider who performs an activity that is specifically regulated, Member States are required to ensure by their regulations that such commercial messages must comply with all the rules and standards of the profession and be in accordance with the codes which have been established at EU level.

CONCLUSION OF CONTRACTS IN ELECTRONIC FORM

E-commerce Directive stipulates that each EU Member State is required to ensure by its regulations that a contract concluded in electronic form has a legal effect (except real estate contracts, contracts which are required to be concluded before the competent authorities, surety agreements and securities contracts used as pledge, issued by a person acting outside the scope of its core activities), and that all relevant information regarding the conclusion of the contract is provided to users of information society services, on (i) the procedure applicable to the conclusion of the contract; (ii) archiving the contract; (iii) technical solutions which are used for detecting and correcting errors before submitting orders; and (iv) languages in which the contract may be concluded. In addition, the general terms and conditions applicable

32 to the contract concluded in electronic form must be provided to the user in a manner that allows the storage and reproduction.

In the event that the service user orders the goods or services online, EU Member States are required to ensure by their regulations, that the information society service provider is obliged to confirm online such an order without delay. It will be considered that the order or order confirmation is received at the moment when such messages can be accessed by the provider or user of the service. Exceptionally, if the user of the service is not a consumer, this obligation of the information society service provider may be excluded by contract. The obligation to confirm receipt of an order does not apply to contracts concluded by e-mail or other similar ways.

RESPONSIBILITY OF INFORMATION SOCIETY SERVICE PROVIDERS

If the information society service is consisted of transmitting data or providing access to such data through a communication network, Member States must ensure by their regulations that the information society service provider is not responsible for the transmitted data, if the service provider (i) did not initiate the transmission; (ii) did not select the data or documents being transmitted; (iii) did not select or modified the content of the transmitted data. Data transmission, ie access to data involves automatic, immediate and temporary storage of data, under the condition that the data is stored solely for the purpose of transmission, only as long as it is reasonably necessary for further transmission.

If the information society service consists of the transmission of data provided by the service users through a communication network, Member States must ensure by their regulations that the information society service provider is not responsible for the automatic, immediate and temporary storage of such data done solely for the purpose of efficient further transmission to service users at their request, if service provider (i) does not change such information; (ii) respects the conditions for the access to such data; (iii) follows the rules for updating data in the usual manner, in accordance with the rules of the profession; (iv) does not interfere with the use of technology in a permissible manner, which is usual and in accordance with the rules of the profession, for the purpose of obtaining information on the use of such data; and (v) remove or disable access to the stored data, immediately after finding out that such data has been removed from the transmission through the network or that the access to them is denied, as well as when the court or other competent authority ordered their removal or denial of access.

If the information society service consists of the permanent storage of data provided by the service users, Member States are required to ensure by their regulations that the information society service provider is not responsible for the storage of data at the request of the service users, if the information society service provider: (i) has no knowledge of illegality activity or data, and if it is unaware of the facts or circumstances on the basis of which the illegality of the activity or data could be determined, with respect to claims for damages; and (ii) immediately after finding out for the illegality of an activity or data, remove or disable such data. The responsibility of the information society service provider cannot be excluded if

33 the action of the service user is under the competences or control of the information society service provider.

Member States cannot stipulate by their regulations the obligation of the information society service provider to control the data transmitted or stored, nor the obligation to determine the occurrence of illegality activities while providing information society services related to data transmission, temporary or permanent storage. On the other hand, Member States may stipulate by their regulations the obligation of the information society service provider to notify competent authorities about any illegal activities or data provided by the service users. Also, Member States may stipulate the obligation of the information society service providers to provide the competent authorities, at their request, with all the information on the basis of which the identity of the service users, with which the data storage agreement has been concluded, can be ascertained.

E-commerce Directive encourages EU Member States to support the development of „codes of conduct“ covering all aspects of e-commerce, as well as the obligation for Member States to ensure the effective cooperation of their competent national authorities with the competent authorities of EU and the other Member States.

DISPUTE RESOLUTION

In addition, the E-Commerce Directive stipulates an obligation for the Member States to provide by their regulations the possibility of initiating proceedings related to the activities of information society service providers, as well as to ensure effective measures (including provisional measures) which would prevent possible misconduct and to ensure protection of the interests of all parties. In addition, the E-Commerce Directive stipulates an obligation for the Member States to provide by their regulations the possibility of resolving any disputes arising between providers and users of information society services in extrajudicial manner, including extrajudicial dispute resolution online. Also Member States should encourage extrajudicial dispute resolution bodies to work in a manner that ensures effective litigation, especially in consumer disputes.

Also, bearing in mind that more and more individuals, as consumers, purchase goods online, Directive 2013/11 / EU on alternative consumer dispute resolution and amending Regulation (EC) No 2006/2004 and Directive 2009/22 / EC4 stipulates for an obligation for the Member States to enable consumers to resolve disputes with information society service providers online, through online dispute resolution platforms.

4 Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (HTTPS://EUR- LEX.EUROPA.EU/LEGAL-CONTENT/EN/TXT/?URI=CELEX%3A32013L0011)

The European Commission, in accordance with Regulation (EU) No 1093/2010, 524/2013 on online consumer dispute resolution and amending Regulation (EC) No. 2006/2004 and Directive 2009/22 / EC ("ODR Regulation") established an online dispute resolution platform (ODR)5 between consumers and information society service providers, who concluded contracts online. In addition, the ODR Regulation stipulates for an obligation for each Member State to establish its own national online platform for resolving disputes arising from contracts concluded online between providers and users of information society services.

TRUSTMARK

As a further measure to remove barriers to cross-border e-commerce, Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market (E- Trustmark Regulation)6 was adopted and repealed Directive 19993/93 / EC. This regulation stipulates that each EU Member State is required to ensure basic requirements for bodies issuing Trustmark to e- traders. In addition, the competent authorities of each Member State are required to ensure that all bodies issuing such Trustmark fulfill the conditions stipulated by E-Trustmark Regulation. Member States are also required to make a list of reliable Trustmark issuers.

1.2. ESTONIA

The provisions of the E-commerce Directive have been fully implemented in the legislative framework of Estonia by Act on Information Society Service Providers (Infoühiskonna teenuse seadus).7

DEFINITION OF INFORMATION SOCIETY SERVICE AND INFORMATION SOCIETY SERVICE PROVIDERS

5 HTTPS://EC.EUROPA.EU/CONSUMERS/ODR/MAIN/INDEX.CFM?EVENT=MAIN.HOME2.SHOW&LNG=EN 6 Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC (HTTPS://EUR- LEX.EUROPA.EU/LEGAL-CONTENT/EN/TXT/?URI=URISERV:OJ.L_.2014.257.01.0073.01.ENG) 7 Information Society Services Act (HTTPS://WWW.RIIGITEATAJA.EE/EN/ELI/504112013008/CONSOLIDE)

Act on Information Society Service Providers stipulates that its provisions apply to providers of information society services that have a business residence in Estonia, while providers of information society services that have a business residence in the other Member States may freely provide their services to persons in Estonia. This right may be excluded if the public interest requires that, only in clearly defined examples.

Act on Information Society Service Providers defines an information society service as a service provided in the form of economic activity or activity on the basis of which economic benefit is obtained, at the request of the service user, without the need for the parties to be present in the same place at the same time. Information society service includes the processing, storage or transmission of data online for the purposes of digital processing and storage of data. The information society service must be fully provided, delivered and received online. Services provided by fax, telephone, television or radio are not considered to be information society services.

INFORMATION THAT THE INFORMATION SOCIETY SERVICE PROVIDER IS REQUIRED TO MAKE AVAILABLE

In accordance with the Estonian Act on Information Society Service Providers the information society service provider is obliged to provide service users with direct and permanent access to following information (i) the name of the service provider, the registration number and the name of the competent registry with which the service provider is registered, the address and other contact information, including the e-mail address; (ii) the registration number of the authorization or license and information on the competent supervisory authority, if the service provider performs an activity that requires a special authorization; and (iii), information on whether the prices include taxes and shipping costs, if prices are indicated. If the service provider performs an activity which is specifically regulated, it shall also make available information on the professional bodies or similar institutions with which the service provider is registered, information on the title and the Member State in which it was acquired and information on the applicable rules of the profession of the Member State and manner in which those rules can be accessed.

COMMERCIAL MESSAGES

While sending commercial messages, information society service providers are required to ensure that the commercial message fulfills the following conditions, in a clear and unambiguous manner: (i) the commercial message as such is clearly identifiable; (ii) the information on the person on whose behalf the commercial message is sent is clearly identifiable; (iii) promotional offers such as discounts, prizes, and gifts, as well as offers related to sweepstakes and games, can be clearly identified as such and (iv) the terms

36 of the commercial message benefit are readily available and clearly stated. There are not considered commercial messages (i) messages containing data that allow direct access to data on the legal or natural person performing the registered activity, especially e-mail address or domain name; (ii) information regarding a person's goods, services or business reputation.

CONCLUSION OF CONTRACT IN ELECTRONIC FORM

The conclusion of contracts in electronic form in Estonia is regulated by Act on Contracts and Torts. (Võlaõigusseadus).8 The Estonian Act on Contracts and Torts stipulates that a trader who concludes a contract in electronic form is obliged to provide to the other contracting party adequate and efficient access to the technical solutions which are used for detecting and correcting errors before submitting orders. Before sending such orders, the trader is obliged to inform the other party about (i) steps that need to be taken in the process of concluding the contract; (ii) whether the trader will keep the contract after the conclusion and whether the contract will be made available to the other contracting party; (iii) technical resources by which errors can be identified and corrected; (iv) languages in which the contract may be concluded; (v) rules under which the information society service provider acts and the manner in which such rules can be accessed. General terms of business must be delivered to the other contracting party, in a manner that allows their storage and playback.

The trader is obliged to immediately confirm the receipt of orders made online.

A contract concluded by e-mail or another similar way is not considered as a contract concluded in electronic form.

RESPONSIBILITY OF INFORMATION SOCIETY SERVICE PROVIDER

If the information society service is consisted of transmitting data or providing access to such data, provided by the service users through a public communications network, the information society service provider is not responsible for transmitting such data if: (i) did not initiate the transfer; (ii) did not select the data or documents being transferred; and (iii) did not select or modify the content of the transmitted data. Data transfer, ie access to data involves automatic, immediate and temporary storage of data, provided that the information is stored solely for the purpose of transmission and only as long as it is reasonably necessary for further transmission.

8 Law of Obligations Act (HTTPS://WWW.RIIGITEATAJA.EE/EN/ELI/EE/RIIGIKOGU/ACT/507032019001/CONSOLIDE)

If the information society service consists of the transmission of data provided by the service users through a communication network, the information society service provider is not responsible for the automatic, immediate and temporary storage of such data done solely for the purpose of efficient further transmission of such data to service users at their request, if (i) does not change such data; (ii) respect the conditions for access to such data; (iii) follows the rules for updating data in the usual manner in accordance with the rules of the profession; (iv) does not interfere with the use of technology in a permissible manner, which is usual and in accordance with the rules of the profession, for the purpose of obtaining information on the use of such data; and (v) remove or disable access to the stored data, immediately after finding out that such data has been removed from the transmission through the network or that the access to them is denied, as well as when the court or other competent authority ordered their removal or denial of access.

If the information society service consists of the permanent storage of data provided by the service users, the information society service provider is not responsible for such storage of data, if the information society service provider: (i) has no knowledge of illegal activity or data, and if it is unaware of the facts or circumstances on the basis of which the illegality of the activity or data could be determined, with respect to claims for damages; and (ii) immediately after finding out for the illegality of an activity or data, remove or disable such data. The responsibility of the information society service provider cannot be excluded if the service user is the subsidiary of the information society service provider.

While providing services related to the transmission, temporary or permanent storage of data, the information society service provider is not obliged to constantly monitor the circumstances that might indicate the illegality of the actions of the service users.

SUPERVISION

The implementation of the Act on Information Society Service Providers is supervised by the Technical Supervisory Authority. (Tehnilise Järelevalve Amet). Providers of information society services are obliged to immediately inform the supervisory authority of the illegal actions of service users and the illegal content of the data they transmit, as well as to provide supervisory authority with all the necessary information for identification of the service provider with whom service provider has a data storage agreement. The information society service provider is obliged to provide the competent prosecutor with all information necessary for initiating misdemeanor and criminal proceedings against the service user.

Providers of information society services are obliged, on the basis of a court or administrative act, to provide the required information to the competent authorities, necessary for detecting criminal offenses or protecting the rights of third parties.

DISPUTE RESOLUTION

Although the Act on Information Society Service Providers does not explicitly provide for the possibility of litigation against the providers of information society services, it can be assumed that such a possibility exists in accordance with the legal system of Estonia.

In addition, the Estonian Consumer Protection Act (Tarbijakaitseseadus) 9 provides for the possibility of extrajudicial settlement of disputes, if the contract with the consumer is concluded in electronic form. In addition, information society service providers are required to inform consumers, with whom they conclude contracts in electronic form, about their right to settle any dispute extrajudicial, through electronic dispute resolution platforms. Consumers from Estonia can initiate an online dispute resolution process through the ODR platform and before the Technical Supervisory Authority, before which Estonia has established its national online dispute resolution platform.

TRUSTMARK

Estonian Act on Electronic Identification and Trustmarks for electronic transactions (E-identimise ja e- tehingute usaldusteenuste seadus)10 stipulate that persons issuing trust mark must fulfill all the requirements of the E-Trustmark Regulation for electronic transactions. In addition, the Technical Supervisory Authority is obliged to make and regularly update a list of reliable Trustmark issuers.

1.3. CROATIA

9 Consumer Protection Act (HTTPS://WWW.RIIGITEATAJA.EE/EN/ELI/521012014011/CONSOLIDE) 10 Electronic Identification and Trust Services for Electronic Transactions Act (HTTPS://WWW.RIIGITEATAJA.EE/EN/ELI/527102016001/CONSOLIDE)

The provisions of the E-commerce Directive are fully implemented in the legislative framework of the Republic of Croatia by Act on Electronic Commerce11. The Act on Electronic Commerce stipulates only the minimum conditions from the E-commerce Directive, without significantly tightening the conditions for the business activities of information society service providers.

DEFINITION OF INFORMATION SOCIETY SERVICE AND INFORMATION SOCIETY SERVICE PROVIDERS

Act on Electronic Commerce stipulates that its provisions apply to providers of information society services that have a business residence in Croatia, while providers of information society services that have a business residence in the other Member States may freely provide their services to persons in Croatia. This right may be excluded only if the public interest requires that, in clearly defined examples.

Act on Electronic Commerce explicitly stipulates that the provision of information society services is free and that persons providing information society services do not have to obtain prior authorization to perform such activities. In addition, the legal entity that is registered for the services of the information society in the competent registry of business entities of the Republic of Croatian must have a registered business under the name - information society services. If the activity performed by the information society provider is specifically regulated, the information society service provider is obliged to comply with the rules of the profession, and the information related to that must be accessible to users of information society services. The general terms of business of an information society service provider must not be discriminatory and must be in accordance with the public interest.

Act on Electronic Commerce defines an information society service as a service that is provided online, at the personal request of the service user, for compensation. In particular, it consists of the sale of goods online, the provision of data on the Internet, online advertising, electronic searches, as well as the possibility of searching data and services transmitted by the electronic network, mediation in network access and storage of customer information.

INFORMATION THAT THE INFORMATION SOCIETY SERVICE PROVIDER IS REQUIRED TO MAKE AVAILABLE

The information society service provider is obliged to make the following information available to service users, in a manner that provides immediate and permanent access to that information: (i) the name of the

11 Zakon o elekroničnoj trgovini („Narodne novine“ 173/03, 67/08, 36/09, 130/11, 30/14, 32/2019)

40 service provider; (ii) the business residence of a service provider; (iii) information about the service provider that allows the service provider to be easily contacted by the users, especially the e-mail address; (iv) information on the relevant register of companies or other similar register, if the service provider is registered in such register; (v) information on the competent supervisory authority, if the service provider performs an activity requiring special authorization; (vi) information on the professional bodies or similar institutions with which the service provider is registered, information on the title and the Member State in which it was acquired and information on the applicable professional rules of the Member State and the manner in which these rules can be accessed, if the service provider performs an activity which is specifically regulated; and (vii) the tax identification number, if the service provider is subject to VAT. In addition, providers of information society services must clearly indicate their prices, if they are listed. Prices must include information on whether they include taxes and shipping costs

COMMERCIAL MESSAGES

While sending commercial messages, which in whole or in part constitute a service of the information society, information society service providers are required to ensure that the commercial message fulfills the following conditions, in a clear and unambiguous manner: (i) the commercial message as such is clearly identifiable; (ii) the information on the person on whose behalf the commercial message is sent is clearly identifiable; (iii) promotional offers such as discounts, rewards and gifts can be clearly identified as such and (iv) the terms of the commercial message benefit are easily accessible and clearly stated.

Act on Electronic Commerce prohibits the sending (undesired i.e. unsolicited) commercial messages without the prior consent of the receiver of such a message.

CONCLUSION OF CONTRACT IN ELECTRONIC FORM

The conclusion of contracts in electronic form is allowed and they have legal effect, in accordance with the Act on Electronic Commerce. The offer and the acceptance of the offer on the basis of which the contract is concluded in electronic form must be submitted online. Also, the Act on Electronic Commerce stipulates that its provisions do not apply to the following contracts: (i) property contracts, premarital or marital contracts and other contracts regulated by Croatian law governing family relations (Family Act); (ii) contracts related to the property disposal, which require the approval of the competent authority for social work; (iii) contracts related to the property disposal in a lifetime, lifetime maintenance contracts and other inheritance contracts, renunciation of heirship, contract on assignment of heirship, as well as other issues regulated by the law governing inheritance relations (Act on Inheritance); (iv) gift contracts; (v) real estate contracts, except the lease agreement; (vi) other contracts that are required to be

41 concluded in notarized form; (vii) surety agreements, if the surety acts outside the scope of his predominant activity. In addition, the Act on Electronic Commerce stipulates that the provisions of the Act on Contracts and Torts and other laws governing contractual relations will be applied to contracts concluded in electronic form unless otherwise stipulated.

In case the validity of the contract requires the signature of the contracting parties, such contract may be signed by electronic signature, in accordance with the act governing electronic signature. (Electronic Signature Act).

Prior to the conclusion of the contract in electronic form, the information society service provider shall make available to the service user in a clear and unambiguous manner the following information on (i) steps that need to be taken in the process of concluding the contract; (ii) the content of the contract; (iii) the general terms of business applicable to the contract; (iv) languages in which the contract may be concluded; (v) rules under which the information society service provider acts and the manner in which such rules can be accessed. The information society service provider is obliged, before concluding the contract, to provide the service user with the technical solutions which are used for detecting and correcting errors before submitting orders. The obligation to provide this information does not apply to contracts concluded by e-mail or in other similar ways. General terms of business must be delivered to the other contracting party, in a manner that allows their storage and playback.

In accordance with the Act on Electronic Commerce, the information society service provider is obliged to confirm the receipt of an electronic message containing the offer or acceptance of the offer for the conclusion of the contract without delay, online, by special electronic message. Exceptionally, if the user of the service is not a consumer, this obligation of the information society service provider may be excluded by contract. The obligation to confirm receipt of an order does not apply to contracts concluded by email or in other similar ways.

The contract in electronic form shall be considered concluded at the moment when the bidder receives a message confirming the receipt of the offer and accepting the offer. The offer and the acceptance of the offer shall be deemed to have been received at the moment when the recipient can access them.

RESPONSIBILITY OF INFORMATION SOCIETY SERVICE PROVIDERS

The Act on Electronic Commerce stipulates that the provider of the information society service transmitting the electronic message is not responsible for the content of the electronic message provided by the user of the service and its sending, if: (i) did not initiate the transmission; (ii) did not select the data or documents being transmitted; (iii) did not select or modify the content of the transmitted data ; and (iv) did not choose the recipient of the message. Data transmission and access to data mean that the information is stored solely for the purpose of transmission and only as long as it is reasonably necessary for further transmission.

The information society service provider is not responsible for the automatic, immediate and temporary storage of data for the purpose of efficient further transmission of such data to other service users at their request, under the condition that service provider (i) does not change such data; (ii) respect the conditions for access to such data; (iii) follows the rules for updating data; (iv) uses technology to store data in a permissible manner; and (v) remove or disable access to the stored data, immediately after finding out that such data has been removed from the transmission through the network or that the access to them is denied, as well as when the court or other competent authority ordered their removal or denial of access.

If the information society service consists of the transmission of data provided by the service users, the information society service provider is not responsible for the automatic, immediate and temporary storage of such data done solely for the purpose of efficient further transmission of such data to service users at their request, if (i) does not change such data; (ii) respect the conditions for access to such data; (iii) follows the rules for updating data; (iv) does not interfere with the use of technology in a permissible manner; and (v) remove or disable access to the stored data, immediately after finding out that such data has been removed from the transmission through the network or that the access to them is denied, as well as when the court or other competent authority ordered their removal or denial of access.

If the information society service consists of the permanent storage of data provided by the service users, the information society service provider is not responsible for the storage of data, if the information society service provider: (i) has no knowledge of illegal activity or data, and if he did not know or could not have been aware of the court proceedings regarding compensation for damages resulting from the illegal conduct of the service user or the illegal content of the data, nor was he or could be aware of the facts and circumstances that would have made the illegal act apparent; and (ii) immediately upon finding out of the illegality of an activity or data, such data is removed or disabled. The responsibility of the information society service provider cannot be excluded if the information society service user is a related party to the information society service provider.

The Act on Electronic Commerce stipulates that an information society service provider that enables third parties to access certain data is not responsible for such data if (i) did not know or could not have been aware of the illegality of an activity of the service users or the illegal content of such data; and (ii) immediately upon finding out of the illegality of an activity or data, such data is removed or disabled.

SUPERVISION

Supervision of the implementation of the Act on Electronic Commerce is in the competencies of the market inspection. Providers of information society services are obliged to immediately inform the market

43 inspectorate of the existence of a reasonable suspicion that, by using its services, users take illegal actions and provide data with illegal content.

DISPUTE RESOLUTION

The Act on Electronic Commerce guarantees court protection to all persons in the event that information society service providers violate their right. Any person who believes that the provider of information society services violated his rights may submit a request to the competent court for an interim measure: (i) prohibition of activity or actions that may lead to a violation of rights or a continuation of a violation already committed; (ii) removing or disabling data access. Also, information society service providers and service users may settle any dispute extrajudicial.

In addition, Act on Alternative Consumer Dispute Resolution 12 provides for the possibility for Croatian consumers to settle all possible disputes arising from their relationship with information society service providers online, either before the ODR or before the European Consumer Center of the Republic of Croatia.

TRUSTMARK

The E-Trustmark Regulation has been implemented in Croatian legislation by the Act of Enforcement of Regulation (EU) no. 910/2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93 / EC 13. In this sense, this Act stipulates the conditions that the issuers of the Trustmark must fulfill, as well as the obligation of the competent state authority to make and regularly update the list of reliable Trustmark issuers

12 Zakon o alternativnom rješavanju potrošačkih sporova (“Narodne novine”, br. 121/2016, 32/2019) 13 Zakon o sprovedbi Uredbe (EU) br. 910/2014 Europskog parlamenta i Vijeća od 23. srpnja 2014. o elektroničkoj identifikaciji i uslugama povjerenja za elektroničke transakcije na unutarnjem tržištu i stavljanju izvan snage Direktive 1999/93/EZ (“Narodne novine”, br. 62/2017)

1.4. SERBIA

As can be concluded from the above, Croatia and Estonia, as the Member States whose legislative frameworks have been analyzed, have implemented the minimum requirements stipulated by the E- commerce Directive in their legislation and their Acts contain the provisions provided by the E-commerce Directive. In this regard, after the adoption of the Draft Act on Amendments to the Act on Electronic Commerce, published on the website of the Ministry of Trade, Tourism and Telecommunications 14 the provisions of the E-commerce Directive will be almost completely implemented in the Serbian legislative framework, and the legislative framework of the Republic of Serbia in this area will be arranged in a similar manner to that done in Estonia and Croatia.

DEFINITION OF INFORMATION SOCIETY SERVICE AND INFORMATION SOCIETY SERVICE PROVIDERS

The Draft Act on Amendments to the Act on Electronic Commerce stipulates that its provisions apply to providers of information society service that have a business residence in the Republic of Serbia. The application of the provisions relating to the freedom of providers of information society services with a business residence in the EU Member States has been postponed until the date of Serbia's accession to the EU.

The Draft Act on Amendments to the Act on Electronic Commerce defines information society service as a service which is provided remotely, by electronic equipment for processing and storing of data, at the personal request of service users, as a rule for a compensation. In particular, information society service presents internet commerce, data provision, and online advertising, electronic search engines, as well as facilitating the search for data and services transmitted through the electronic network, providing access to the network, or storing data for service users.

INFORMATION THAT THE INFORMATION SOCIETY SERVICE PROVIDER IS REQUIRED TO MAKE AVAILABLE

The service provider is obliged to provide the users of the services and the competent state administration authorities, with the following information in a form and in a manner that is immediately and permanently

14HTTP://MTT.GOV.RS/VESTI/JAVNA-RASPRAVA-O-NACRTU-ZAKONA-O-IZMENAMA-I-DOPUNAMA-ZAKONA-O-ELEKTRONSKOJ- TRGOVONI/

45 available: (i) name or surname of the service provider; (ii) business residence of service provider; (iii) other information about the service provider on the basis of which the service user can communicate with the provider quickly and without interruption, including e-mail address; (iv) data on entry in the Register of Business Entities, or other public register; (v) details of the competent authority, if the activity of the service provider is subject to official supervision; (vi) in respect of specially regulated activities, ie professions: professional or similar professional association with which the service provider is registered; the professional name and the country which approved it; instructions on professional rules in the country where the activity is performing and where they are available; and (vii) tax identification number (PIB), as well as the number of taxpayers of value added tax, from the certificate of registration for value added tax issued by the competent tax authority, if the service provider is a payer of value added tax. If the provider lists prices, they must be clearly and unambiguously indicated and must include information whether they include shipping costs, taxes or other costs that affect may them.

COMMERCIAL MESSAGES

A commercial message that in whole or in part constitute an information society service, must fulfill the following conditions: (i) the commercial message as such is clearly identifiable; (ii) the information on the person on whose behalf the commercial message is sent is clearly identifiable; (iii) any promotional invitation or bid from a commercial message (including discounts and gifts) must be clearly identified as such and (iv) the conditions that must be fulfilled for placing an offer from a commercial message must be readily available and presented in a clear and unambiguous manner.

The sending of a commercial message online is permitted only with the prior consent of the recipient of that message. In addition, the information society service provider is obliged to regularly check and accept the unsubscription request made by a person who does not wish to receive such commercial messages.

CONCLUSION OF CONTRACT IN ELECTRONIC FORM

The Draft Act on Amendments to the Act on Electronic Commerce explicitly stipulates that the contract concluded in electronic form has legal effect and that the offer and the acceptance of the offer must be submitted online. Also, the draft Act on Amendments to the Act on Electronic Commerce stipulates that the provisions relating to the validity of contracts concluded in electronic form do not apply to contracts for which is prohibited to be concluded in electronic form by a special act, to contracts for which is required to be concluded in the form of verification of signatures or notary public documents by a special act, as well as surety agreements and securities contracts used as collateral, issued by persons acting outside the scope of their occupation, business or profession.

Prior to the conclusion of the contract in electronic form, the information society service provider shall make available to the service user in a clear and unambiguous manner the following information on (i) the procedure of concluding the contract; (ii) contractual provisions; (iii) general terms of business, if they are an integral part of the contract; (iv) languages in which the contract may be concluded; (v) codes of conduct under which information society service providers acts and how those codes can be accessed online. The information society service provider is obliged, prior to concluding the contract, to provide the service user with the technical solutions of identifying and correcting incorrect data input in a message, before transmitting or sending it

The information society service provider is obliged to ensure that the text of the contract and the provisions of the general terms of business, which are an integral part of the contracts concluded in electronic form, are accessible to the users of the services in a manner that enables them to be stored, reused and reproduced.

The information society service provider is obliged to confirm online without delay, by special electronic message, the receipt of an electronic message containing the offer or acceptance of the offer for the conclusion of the contract. The offer and the acceptance of the offer shall be considered to have been received at the moment when the recipient can access them. The contract in electronic form shall be considered concluded at the moment when the bidder receives a message confirming the receipt of the offer and accepting the offer.

RESPONSIBILITY OF INFORMATION SOCIETY PROVIDER

The provider of an information society transmitting an electronic message is not responsible for the content of the electronic message provided by the service user and its initiation, if: (i) did not initiate the transfer; (ii) did not select the data or documents being transferred; (iii) did not select or modify the content of the transmitted data ; and (iv) did not select the recipient of the message. Such transmission of messages and the provision of access to messages must be published in such a manner that allows the automatic, intermediate and temporary storage of the transmitted messages and the information contained therein. Messages must be only temporarily stored for the period of time necessary for further transmission.

An information society service provider transmitting data provided by a service user through a communication network, is not responsible for automatic, intermediary and temporary storage which only serves to more effectively form the transmission of data requested by other service users, if: (i) does not change such data; (ii) respect the conditions for access to such data; (iii) follows the rules for updating data; (iv) operates in accordance with a permitted application of technology for data collection; and (v) remove or disable access to the stored data, immediately after finding out that such data has been removed

47 from the transmission through the network or that the access to them is denied, as well as when the court or other competent authority ordered their removal or denial of access.

An information society service provider storing data provided by service users, at the request of service users, is not responsible for the content of the stored data, if: (i) did not know or could know about the illegal activity of the service user or the content of the data; and (ii) immediately upon finding out of the illegality of an activity or data, such information is removed or disabled. The responsibility of the information society service provider for the stored data cannot be excluded if the service user is a person depending in any way on the service provider (related companies within the meaning of the law governing companies).

An information society service provider providing electronic access to data from another service provider is not responsible for that data if: (i) did not know or could not know about the illegality of activity of the service users or about the content of the data; and (ii) immediately after finding out that it is an illegal act or data, remove or disable access to the data.

While providing information society services, the information society service provider shall not be obliged to review the stored, transferred or information that is made available, or to examine circumstances that would indicate illegal action by users of the services.

SUPERVISION

Supervision of the implementation of the Act on Electronic Commerce is in the competence of the market inspection. The information society service provider must inform the market inspectorate if reasonably suspects that: (i) using its service, the service user performs illegal activities; (ii) the user of his service has provided illegal information.

DISPUTE RESOLUTION

The legislative framework of the Republic of Serbia provides for the possibility to all persons whose rights have been violated by the information society service providers to protect their rights in court. The Act on Mediation in Dispute Resolution provides for the possibility of extrajudicial dispute resolution.

On the other hand, the Serbian legislative framework does not yet provide for the settlement of disputes online, and there is no platform to enable consumers to resolve disputes online. Bearing in mind that this type of dispute resolution is more efficient, faster and cheaper, it would be desirable to provide for the

48 establishment of such an extrajudicial dispute settlement mechanism by the relevant regulations of the Republic of Serbia.

TRUSTMARK

The draft Act on Trade15 in Article 31 establishes a Trustmark. In accordance with the Draft Act on Trade, a Trustmark can be issued by a legal entity that does not trade in goods or services, as well as by a state authority. In that sense, it can be expected that once the Draft Act on Trade is adopted, a certain legal entity or state authority will issue a Trustmark to the traders who provide their services online. However, the Draft Act does not stipulate the obligation of the competent authority to make and regularly update the list of reliable issuers of Trustmark. It would be desirable to provide for such an obligation, so that consumers may have confidence in the issued Trustmark.

15 https://www.paragraf.rs/dnevne-vesti/050219/050219-vest16.html

2. ANALYSIS OF THE REGULATORY FRAMEWORK OF THE REPUBLIC OF SERBIA WITH RESPECT TO ELECTRONIC TRADE

2.1. CONSUMER PROTECTION ACT ("OFFICIAL GAZETTE OF RS", NO. 62/2014, 6/2016 - ACT AND 44/2018 - ACT)

Act on Consumer Protection regulates the issue of consumer protection when shopping online. First of all, the Consumer Protection Act defines the obligations of the sellers and the rights of the buyers in case of establishing a contractual relationship out of business premises.

Among the obligations of the seller is the obligation of pre-contractual notification to the consumer, which notice contains specific elements (address at which the seller operates, the sale price, which includes the total costs, conditions, time and procedure for exercising the right to cancel the contract, the existence of his contractual relationship with the postal operator through whom the consumer may, in the event of a malpractice complaint, send the goods at the trader's expense, etc.). Also, the Act on Consumer Protection stipulates that the seller is obliged to inform the buyer, before concluding the long-term contract, about other stated information. In this way, the legislator protects the consumer in any case, taking into account the fact that the consumer does not come into direct contact with the goods subject to the contractual relationship with the seller in the distance contract.

Further, the Act on Consumer Protection defines a special consumer right called the right to cancel a contract. This right of the Consumer, that is, the obligation of the seller, is present exclusively in electronic commerce (in ordinary trade, the right of withdrawal represents the exclusive right of the seller, so the seller is legally authorized to recognize it to the consumer or not).

The right to withdraw from the contract authorizes the consumer to terminate the contractual relationship with the seller for any reason (justified by the legislator, or the seller, or not). More precisely, the consumer can exercise the aforementioned right to withdraw from the contract, even if the goods are in all accordance with what the consumer has sought and expected. More specifically, the buyer does not have to invoke the defectiveness of the goods or other defects in order to exercise this legal right. It is sufficient only to inform the seller of the cancellation of the contract in a timely and appropriate manner.

In the case that the right of withdrawal is exercised, the seller is obliged to return the money received in the name of the purchase price to the consumer, together with the cost of delivery. Also, the seller is required to use the same means of payment that the consumer used in the original transaction when refunding. By prescribing this obligation of the seller, the legislator wanted to enable the consumer to return the money in the same way as he paid the purchase price, since the consumer, in choosing the method of payment of the purchase price, generally chooses the method which he most trusts and should be provided with a refund using an identical method.

Further, with regard to the right of withdrawal, the legislator obliges the seller to inform the consumer in a clear and conspicuous manner about that right, and in the absence of such notice on the seller’s website or otherwise, this does not mean that the consumer does not have it.

Moreover, the seller is "punished" for such treatment by being obliged to return the full amount of money received, even if the consumer used the goods inappropriately from the moment of receipt of the goods until the moment of return. We assume that the intention of the legislator was to "force" sellers to inform consumers about their legal rights, all with the aim of strengthening confidence in the conclusion of distance contracts.

By giving this right to the consumer, it is obvious that the consumer enjoys a greater degree of entitlement than in the case of in-store purchases. Namely, in ordinary trade, the seller is not obliged to concede this right to the consumer, but he or she may decide whether or not the consumer will be able to exercise the right of withdrawal. In addition, the legislature did not grant this right to the consumer indefinitely and in all circumstances. The legislature limited the time to exercise this right (14 days from the date of establishment of the state of the goods), while on the other hand, it protected the sellers by prescribing cases in which this right could not be used (deliveries of goods made according to specific consumer requirements or clearly personalized, delivery of sealed goods that cannot be returned for health or hygiene reasons, delivery of newspapers, periodicals or magazines, etc.). In addition, the legislator protected the sellers in such a way that the sellers could reduce the amount of the purchase price received in the event of return, if the goods were used improperly during that period of time (from the date of receipt of the goods until the date of return for the termination of the contract). However, for the sake of reminders, unless the seller has adequately informed the consumer of this right, the consumer will not bear any costs even in the case of improper use of the goods during that period.

For all of the above, it is obvious that a balance has been struck between consumer rights and seller rights. Namely, the intention of the legislator was to improve e-commerce and to increase the level of trust in it, while on the other hand, the seller was encouraged to inform the consumer in the timely and legal manner that he was entitled to withdraw from the contract within 14 days of the establishment otherwise, there is no possibility for the seller to invoke his legal authority to reduce the price he is obliged to return if the consumer has used the goods in an improper manner.

Having in mind the provisions of the Consumer Protection Act that we did not want to quote here, it is obvious that the Consumer Protection Act encourages e-commerce and gives the consumer a wide range of rights. Therefore, no more detailed or additional editing is needed, but the goal should be to promote the laws and rights that consumers have. In this way, consumer confidence in e-commerce will increase and the process of promoting this type of commerce in the country will be accelerated. More specifically, we need to promote existing e-commerce trust tools and make consumers aware of them, so that they do not have to fear whether they will be able to exercise their rights at all.

2.2. CUSTOMS ACT ("OFFICIAL GAZETTE OF RS", NO. 95/2018)

This Act shall apply to the movement of goods between the customs territory of the Republic of Serbia and other customs territories. Therefore, it is of the utmost importance when it comes to e-commerce beyond the borders of our country. It is of the utmost importance when it comes to e-commerce the borders of our country.

The provisions of the Customs Act that are relevant to e-commerce are those governing the issue of the incurring of a customs debt, the obligation to pay export duties and the right to remit or recover the export duty paid.

For electronic commerce that takes place outside the territory of the Republic of Serbia, it is of the utmost importance when a customs debt is incurred. The customs debt on exportation is incurred by placing of goods subject to payment of export duties in the export procedure. In this connection, a customs debt arises when goods which are the subject of a contractual relationship reach the customs territory but before exporting them to another country.

Furthermore, the question of importance for e-commerce is what happens to the export duty paid if the goods are returned because they do not comply with the terms of the contract. In this regard, the relevant law provides that the number of export duties shall be repaid or remitted if the defective goods or the goods not in conformity with the terms of the contract are returned to the seller. In this regard, it is obvious that the seller may demand the release or refund of export duties if the goods were not conforming or that there was a deficiency.

In order for the seller to recover or remit the number of export duties, it is necessary to prove that the customs debt notice in respect of the goods refused by the importer because, at the time of release, the goods were defective or did not meet the terms of the contract under which is imported. Such proof should not have any aggravating elements, as the customs debt notice clearly indicates which goods are being exported. Moreover, consumers are also protected in the manner prescribed by the legislature for goods defective to be considered as damaged goods prior to release.

Refund or remission is not granted if:

(a) the goods were placed under a special examination procedure before being released for free circulation unless it is established that during such examination the goods could not normally be detected to be defective or not to fulfill the terms of the contract;

(b) the defects of the goods are taken into account in determining the terms of the contract, in particular the price, before the goods are placed under a customs procedure involving the incurrence of a customs debt; or

(c) the claimant has sold the goods after finding that he has deficiencies or that he does not fulfill the terms of the contract.

Exceptionally, reimbursement or remission shall be granted on condition that the goods have not been used, unless the initial use was necessary to identify deficiencies or not to fulfill the terms of the contract and provided that they were removed from the customs territory of the Republic of Serbia.

The request for reimbursement shall be submitted to the customs authority within one year from the date of notification of the customs debt.

However, it may well be argued whether a refund or remission is made and when the goods are returned to the seller based on the use of his right to cancel the contract. Specifically, this question is logically imposed since the Customs Act exclusively allows the repayment or remission of a customs debt when returning defective goods. When returning the goods due to the buyer's withdrawal from the contract, under the Consumer Protection Act, there is no shortage of goods, but the buyer simply, for some reasons, decided to return the goods. In this connection, the question may be raised as to whether the seller has the right to recover or discharge the customs debt if the consumer exercises his right to cancel the contract.

From the only available practice of the Administrative Court (Judgment of the Administrative Court, 21U 12532/2013 of 9.7.2015), it seems that in case of cancellation of the contract, no repayment or discharge of the customs debt would be made. Namely, the Administrative Court took the following view in the judgment:

"The conditions for the repayment or cancellation of a customs debt are not fulfilled if the imported goods have been returned to a foreign supplier because the demand for that type of goods has decreased in the importing country."

From the practice cited, it is evident that the Administrative Court did not accept the reason for the return, which was not based on the deficiency of the goods, as relevant and relevant for the recovery or discharge of the customs debt. More specifically, taking into account the fact that the Administrative Court took the view that the plaintiff's reason not relating to the lack of goods was not relevant to the recovery of the customs debt, it follows that the Administrative Court would, in any case, take the identical position.

In this regard, when the reason for returning the goods is not malpractice, it seems that the seller would not be able to exercise his legal right to recover or discharged the customs debt.

In this way, it is obvious that sellers are damaged because, on the one hand, consumers are privileged to return the goods without stating any reason within 14 days from the day the country was established on the goods, while on the other hand, sellers are damaged because in that situation they are not entitled to repayment or discharge of customs debt. In order to strike a balance and to establish equality between the contracting parties, we propose to amend the existing provision in such a way that the repayment or

53 discharge of the customs debt also applies to the situation when the consumer exercises his right to cancel a contract defined as such by the Act on Protection Consumers.

2.3. ACT ON ADVERTISING ("OFFICIAL GAZETTE OF RS", NO. 6/2016)

Advertising is the presentation in any form in connection with a business or professional or business activity, in order to encourage the sale of goods and services. In this regard, the said law prescribes what the advertiser can advertise and in what way, without suffering the sanction prescribed by law.

What is relevant from the aspect of e-commerce defined by this law is the advertising of sales incentives. In any case, more detailed details regarding sales incentives and other provisions relevant to e-commerce are provided in the Commerce Act. It is important to note that the legislator in this law takes into account the fact that consumers are not misled and are not deceived.

2.4. ACT ON PERSONAL DATA PROTECTION ("OFFICIAL GAZETTE OF RS", NO. 87/2018)

Pursuant to the provisions of the Act on Personal Data Protection, the controller and the processor are obliged to process the data if there is a legal basis for this. If it is necessary for an e-commerce company to process certain personal data (name and surname, address and city for delivery of the shipment), it follows that there is a legal basis for this (processing is necessary for the execution of the contract concluded with the data subject or to take action, at the request of the data subject, before concluding the contract). Namely, the consumer, by deciding to buy something electronically, required the seller (e- trader) to deliver the ordered goods to him at a certain address. Therefore, in order to fulfill the seller's obligation to deliver the goods, the consumer had to provide him with certain information. Therefore, there is a legitimate basis. This ratio exists for other personal data that e-traders process in order to fulfill their contractual obligations. With respect to the processing of data not required to fulfill contractual obligations (email addresses of customers to send them offers/promotions), e-traders need to obtain the consent of customers for such treatment.

Therefore, it is obvious that the legislature requires a legal basis for processing at all times. Moreover, the legislator requires that the persons whose data are processed have to be aware of it. In addition, e- marketers are required to use such information solely for specific purposes and not to misuse it, otherwise, a fine will ensue. Also, e-traders are obliged to delete their personal data after a certain period of time, thus protecting individuals from keeping their personal data forever. Therefore, it is more than obvious that e-marketers are obliged to fully adapt their business to the law in question, as otherwise a high fine will follow.

Introducing consumers to the new Act on Personal Data Protection and the high penalties that follow those who process data contrary to legal provisions will increase the security of consumers that no one will process their personal data without a legitimate basis and for an unlimited period of time. Therefore, it is necessary to promote the law in question from an online shopping angle, all in order to make consumers feel safe when leaving their information to sellers.

2.5. ACT ON ELECTRONIC COMMERCE ("OFFICIAL GAZETTE OF RS", NO. 41/2009 AND 95/2013) AND THE ACT ON TRADE ("OFFICIAL GAZETTE OF RS", NO. 53/2010, 10/2013 AND 44/2018 - ACT)

The E-Commerce Act and the Commerce Act are laws that explicitly regulate an important part of the issues that are relevant to e-commerce. Of course, we should not neglect the Act on Obligations, which as such represents the legal basis within which the trade is developed and founded. With respect to the Act on E-Commerce, it should be borne in mind that although it bears a name that contains the term e- commerce, the law as such does not regulate in detail and exclusively all aspects of this type of commerce that occur in practice. Perhaps a more appropriate name for the law would be the law on the provision of information society services. However, it is enough to start by noting that the same applies to some other aspects besides e-commerce. In the light of e-commerce, the law in question regulates in detail the ways and conditions for concluding contracts in electronic form. In this way, the door to e-commerce is opened as a modern form of commerce. In this way, it can be said that the Act on Obligations is supplemented from the light of electronic commerce, which speaks in favor of the development of the economy of our country in the direction in which all European countries and their economy develop. However, regardless of the fact that the Act on E-Commerce defines the obligations of service providers regarding notifying users before the conclusion of the contract, it can be concluded that the same law thus follows the Consumer Protection Act, which also speaks of the obligation of pre-contractual information. In this way, users and consumers are protected both from the point of view of the implementation of the Consumer Protection Act and from the angle of the implementation of the Act on Electronic Commerce. On the other hand, the “pressure” on sellers, ie providers of information society services, to respect both the provisions of one law and the provisions of another law has been intensified, since each law prescribes its own sanctions and penalties. Furthermore, the Act on Electronic Commerce cannot be viewed separately from the Act on Trade, because the Act on Electronic Commerce itself defines in its definitions of information society service providers relying on the concept of a trader from the Acton Trade, which indicates that electronic commerce as such is regulated by a wide range of provisions of different laws, all of which aim to protect the user, that is, the consumer. Therefore, it is obvious that the development of this form of trade does not lack legal provisions, that is, regulations, but rather lacks awareness of consumers about their rights, which all the laws mentioned so far speak about. Therefore, the direction of e-commerce development should be determined in order to promote these laws and make consumers as such aware of their rights. Of course, to enjoy such a real prerequisite is to do business with dealers who are registered to carry out their business, which leads to the effect that by promoting consumer

55 rights, they draw attention to the need to buy only from registered dealers, which can lead to the effect of reducing the gray economy.

However, on the other hand, this does not mean that the regulatory environment cannot be supplemented and thus improved. The impetus for such a thing can be found in the regulation of other countries, even in the regulation of states in the region. Therefore, our intention was to propose new solutions to improve e-commerce after benchmarking legislation in EU countries, countries in the region and other countries that boast a high rate of e-commerce development. In this regard, our key proposals were reflected in the following:

ONLINE DISPUTE RESOLUTION (ODR) MECHANISMS

Considering the analyzed regulations of other countries and systems, we think that it would be desirable to introduce the ODR mechanisms in the Serbian regulatory framework. During the analysis of EU practice that we outlined in the benchmark analysis, we came to the conclusion that consumer and e-commerce, trusted e-commerce disputes are most commonly resolved through the ODR platform (online dispute resolution platform).The online dispute resolution platform is a platform provided by the European Commission, enabling consumers and e-traders in the European Union, Norway, Ireland, and Liechtenstein to resolve disputes regarding the online purchase of goods and services without court intervention. The ODR platform is not affiliated with any traders. Consumers can use the platform to submit a complaint to an approved dispute resolution body. Said Dispute Settlement Body is an impartial organization or individual that helps consumers and e-traders resolve emerging disputes. This resolution process is known as an alternative method of dispute resolution, and as such is faster and less expensive than litigation before a court. The ODR platform can only be used by those dispute resolution bodies that have been approved by the competent national authorities and which meet quality standards relating to fairness, transparency, effectiveness, and accessibility.

BLOCKCHAIN TECHNOLOGY AND SMART CONTRACTS

We have proposed the introduction of two institutes that represent the foundations of the new digital era - blockchain technology and smart contracts.

Blockchain technology offers a wide range of opportunities for business advancement, government administration, and consumer protection. This would create an opportunity for exceptional economic growth and cost-effectiveness. The Republic of Serbia should encourage the growth and development of blockchain technology. The first step to this should be the introduction of blockchain into the domestic

56 legal system. So far, there has been no legislative activity in the field of blockchain technology in Serbia, so we have proposed a definition that should fit into the legislative framework.

Countries around the world are taking advantage of blockchain technology (such as Malta, Estonia, France, Italy, Scandinavian countries, etc.), enacting laws and creating a regulatory framework that encourages companies that use blockchain technology to relocate their businesses to those countries. The Republic of Serbia could be one of those countries, and for that reason, it should consider whether there is an interest in it.

Smart contracts have evolved significantly in the short term. They enable the further development of distributed ledger technology (DLT). Security, automation of performance, and efficiency in streamlining processes are sufficient reasons for smart contracts to be fundamental to DLT takeover. The potential of smart contracts is one of the main topics discussed and developed in the financial services, natural sciences, healthcare, technology and telecommunications, transport, energy, infrastructure, mining, and commodity transport sectors. In the financial services sector, for example, it will not be surprising if smart contracts are put into use in the areas of clearing and securities, collateral management, financial derivatives, securities servicing, international payment transactions and more.

We believe that smart contracts are another option for listing the Republic of Serbia among several states that understand and support the prospect and inevitable future development of contract law. This project can be a starting point for introducing and presenting the potential of digital technology, and we have proposed a definition that should be an integral part of the legislative text.

3. RESULTS OF QUANTITATIVE RESEARCH ON THE EXISTENCE OF LEGAL BARRIERS

When asked if there was any regulatory barrier that would solve e-commerce in Serbia, no respondent gave a specific answer, that is, indicating that at this moment there is indeed some regulatory problem due to which e-commerce cannot be improved. Also, no respondent said that the reason for not buying online or not selling online is that something is not regulated by law or is not adequately regulated. Moreover, the reason why e-commerce is not at the level of development in our country as it is in other countries is citing the mistrust that exists primarily on the customer side. In addition, such distrust is fueled by poor marketing, which is more prevalent in our country than good marketing, so more attention is paid to a failed transaction between an unregistered trader and a fraudulent customer than to a transaction between a registered trader and a satisfied consumer.

Furthermore, the respondents who answered the question in the affirmative cited facts as such regulated by domestic regulations, only they were insufficiently informed to know that our country offers a wide range of rights to consumers. Moreover, our citizens are afforded an almost identical spectrum of rights afforded to consumers in other countries. For example, many consumers do not know that they have the right to cancel the contract, that they have the right to claim a refund of the price paid and the cost of delivering the goods, that they can exercise that right even when they are not informed by the trader, that they can return the goods when it is the same malpractice, or moreover, that they may seek replacement or repair of defective goods. Therefore, it is necessary to educate consumers and make them aware that they are protected in e-commerce, perhaps even more than in offline commerce, which should be a reason to gain more confidence in e-commerce and in this type of business. However, they should be reminded that they do not enjoy all these rights when they purchase goods through unregistered entities or most social media marketers, which will also lead to the goal to be achieved - reducing the gray economy that exists everywhere.

Of the 151 respondents, 14% said there was some legal barrier in the field of e-commerce. Mostly the answers were in the light of the existence of the informal economy and unregistered entities, but this is an effect that occurs in some, smaller or larger percentage in every country. Moreover, the transaction between an unregistered seller and a fraudulent consumer will always get more media attention than a transaction between a registered seller and a satisfied consumer, which results in a higher level of mistrust in our country. Therefore, it should be pointed out to consumers that they do not enjoy any rights and legal powers in the case of buying from unregistered traders, but that in other circumstances (buying from registered dealers) the consequences cannot be as characterized by "illegal" transactions. Also, one way to reduce the informal economy, that is, sales by unregistered marketers, is to engage more with market inspections, especially in relation to sellers who appear on social networks. If consumer policy promotion and control policy of marketers that mainly sell on social networks were implemented, we could expect consumer distrust to decrease and the volume of registered e-commerce entities to increase.

Furthermore, the survey also examined those who have purchased something over the past 6 months. About 8% answered that there is a legislative barrier which, as such, is the reason why e-commerce is underdeveloped, more precisely they said that the legal frameworks regarding e-commerce should be more precise or better. The answers received mainly relate to proposals to introduce stricter legal controls on online sellers, in the sense that they more clearly state the prices on their websites and describe their products more accurately. Also, many pointed out that it is necessary for all online traders to register with the Business Registers Agency for this activity (which indicates that these respondents purchased from unregistered entities). However, all these answers are related to what is already prescribed by law, such as the right to cancel the contract, the obligation of the seller to emphasize the price and the obligation of pre-contractual consumer information, the obligation of the traders to register with the Business Registers Agency if they wish to deal any business activity permitted by law, etc. Therefore, it is again concluded that in our country there is a lack of better-informed market participants and an increase in consumer awareness that they are nevertheless protected when making purchases online.

Business entities generally cited the following as legal barriers:

That customs costs should be lower, PayPal should be allowed, a law restricting the informal economy and controlling sales on social networks should be introduced, and its commissions should be reduced. From the foregoing, it is obvious that there is no legislative problem that needs to be addressed to improve e-commerce, but the alleged shortcomings mainly relate to the current high costs (affected by the market, not the regulation) and the gray economy. As such, the gray economy can be solved when consumers are encouraged not to buy from unregistered retailers, and this is when they come to the realization that any right that the Consumer Protection Act allows them cannot exercise in the case of illegal trade. Therefore, it is necessary to promote the regulations in force and to make citizens aware of their rights, but also to become aware of the fact that they lose all these rights when they buy from unregistered entities.

Citizens generally cited the following as legal barriers:

That consumers need to be informed of their rights and obligations, to be aware of the fact that the information they leave on the internet is secure, to enable customers to refuse to pay if the product does not meet their expectations, to enable customers not to pay before the goods arrive at their address, to better inform the consumers about the products on the sellers' websites, to allow free delivery to the consumer's address, to specify the number of customs and postage, etc. In this regard, it is obvious that consumers are not aware of their rights or the legal obligations of sellers. More precisely, it is obvious that they are not aware of the possibility that they can cancel the contract (when they are obliged to return the goods, while the sellers are obliged to return the money), that they can pay them by reimbursement (thus allowing them to pay the goods only after arriving at your home address). On the other hand, since there is a legal obligation for sellers to highlight the price and all product features in a precise and unambiguous manner, it is obvious that sellers do not comply with the law in this light (since buyers complain about such defects), and the reason is that market inspection is not as active and does not penalize them. Therefore, increased involvement of market inspectors is required to penalize those sellers who fail to comply with legal obligations and to punish those who trade illegally. When such a policy

59 is put in place, it will create confidence and better market conditions, which are necessary for e-commerce to evolve as expected.

In terms of blockchain and smart contracts, a large number of respondents have not heard of such technology or knowledge in a simple way to define the institutes in question. Therefore, it is necessary to define them in the law, in order to familiarize citizens with new institutes that are developing rapidly in the world and whose presence is increasing day by day.

4. CREATION OF CAPACITIES FOR CIVIL SERVANTS FROM DIFFERENT MINISTRIES AND OTHER INSTITUTIONS RESPONSIBLE FOR IMPLEMENTING ACT ON TRADE AND THE ACT ON ELECTRONIC COMMERCE

Based on the conducted research, it can be concluded that the main reason why e-commerce is not developed as in other countries is that there is a high degree of distrust of e-commerce customers and consumers. The reason for the distrust is that consumers are not even aware of their rights, which leads to the consequence that they think that they are not protected when shopping online. Sellers, on the other hand, complain about the growing presence of the informal economy, that is, sales conducted by unregistered sellers, and the reason for such a shortcoming is that market inspections do not carry out full control.

Specifically, there is an increasing presence of sales on social networks and this type of sales is most often conducted by unregistered entities. In order to reduce their number, we believe that more frequent market inspection activities are required, in such a way that they require such unregistered entities to register and conduct their business in a lawful manner, otherwise they will be sanctioned. Moreover, we believe that gray sales will decrease as a result of the introduction of new e-commerce inspectors' authority, which is reflected in the fact that inspectors will be able to conduct mistery purchases, which will lead them to find out that dealers engage in such business illegally. In this way, inspectors will be able to influence a large number of unregistered entities (reducing their number by making them registered), which in turn will reduce the number of transactions in which consumers are mostly harmed because unregistered entities do not provide them the scope of the rights conferred upon them by virtue of legal provisions. Therefore, it is obvious that market inspection activities can lead to a twofold objective: 1) reducing the number of unregistered e-commerce entities by increasing the number of registered traders, and 2) increasing the degree of customer confidence in e-commerce, as it will increase the number of transactions between registered traders and satisfied customers. Consequently, the role of market inspectors in this field is of great importance and their powers should be promoted in such a way that the inspectors themselves are made aware of the fact that they can improve the situation in e-commerce through their activities. In addition, they should be advised that their activities should not be in the light

60 of eliminating unregistered traders from the market, but rather that they are required to register and thus operate business in accordance with the law.

A way for government authorities, or officials, to become aware of all aspects of e-commerce and problems that may arise that they can eliminate through their actions, is to organize training for market inspectors to participate. The subject training should be conducted in such a way as to indicate to market inspectors problems that arise in practice, especially bearing in mind that market inspectors may not even be aware of some problems that occur in practice, and what we have learned from the conducted interviews and research. Therefore, after familiarizing market inspectors with all the circumstances that buyers face, we can expect them to understand what are the barriers to practice that keep e-commerce growth from developing at the expected pace. It should also be pointed out to inspectors that their objective of action should be to influence unregistered dealers to register, as this will only relieve pressure from inspectors. The way to implement such a policy of action is to use powers such as covert trade. We are aware of the fact that there are a large number of traders on the social networks who trade illegally, but these same traders make big profits. Therefore, such a situation should be exploited in such a way as to show them that they can enjoy the same benefits and if they pursue their activities as a registered entity, moreover, they will relieve the pressure they feel on the inspector. For all these reasons, we propose to organize training for inspectors on the basis of which they will be informed about the problems accompanying this type of trade, and on the other hand, it will be indicated to them that by their actions they can positively influence the development of e-commerce. Moreover, they should be shown that such actions can influence the development of healthy competition in the market of the Republic of Serbia, which can have only positive effects on trade.

5. CONCLUSION

As stated above, the legislative framework of the Republic of Serbia in the field of electronic commerce will be harmonized with the relevant regulations of the European Union after the adoption of the Draft Act on Amendments to the Act on Electronic Commerce and the Draft Act on Trade. In this sense, it can be concluded that, at the moment, they are not legislative barriers that prevent the further development of e-commerce in Serbia.

Also, it is obvious that the current regulations of the Republic of Serbia that have an impact on e- commerce are not oriented so as to prevent the development of e-commerce. Moreover, the current regulations of the Republic of Serbia are such that they keep up with the time and increasing need of consumers to buy online, while on the other hand, they prescribe as many instruments as possible, which as such will increase consumer confidence in e-commerce. For this reason, it is necessary to promote and advertise the applicable regulations in such a way that consumers are shown what rights they have and what protection they are given. When consumers are familiar with the overall legal framework, we can expect that confidence in e-commerce will increase and that e-commerce as a form of trade will improve

61 and occupy an important place in the economy of the Republic of Serbia. In this way, we will reduce the biggest barrier on the demand side.

II LEVEL OF E-COMMERCE ACTIVITY IN SERBIA

As stated in the Trade Development Strategy by 2020 e-commerce is lagging behind other forms of trade and it is in the initial stage of the development in the Republic of Serbia (Ministry of Trade, Tourism and Telecommunications, 2017). E-commerce is becoming more intensive, under the influence of lower prices of devices, growing availability of the Internet and growing competition among companies. Serbia must generate and exploit new economic opportunities through the adoption of e-commerce practices in order to promote economic growth and social development, to enhance business efficiency and productivity and to enable domestic companies’ easier re-integration to European and world market.

When it comes to e-commerce in Republic of Serbia data, there are no precise data regarding the volume of e-commerce. Nevertheless, every year since 2006, the Statistical Office of the Republic of Serbia (SORS) has been conducting a survey on the usage of Information and Communication Technologies (ICT) in Serbia. In this survey, data are collected from individuals and companies across Serbia on the application of ICT in enterprises, on the use of computers, Internet usage, characteristics of the information system in enterprises and electronic business of the company. According to the survey, there is an increase in ICT usage by individuals/in households and in companies. The sample include 2800 individuals, 2800 households and 1781 enterprises and findings are as follows.

The existence, as well as the quality, of Internet access is the prerequisite for the e-commerce. The survey shows that the Internet access in the Republic of Serbia has been improved - 72.9% of households have an Internet connection, which is an increase of 4.9% and 8.2%, when compared to 2017 and 2016, respectively (SORS, 2018, pp. 14). Internet access has been relatively advanced in Serbia, but the quality of this approach is still not satisfactory. It is no longer sufficient that there is a high degree of Internet penetration. What is important is the quality of the Internet connections.

Slow Internet connection greatly limits the successful development of e-commerce, reducing the potential of the multichannel marketing strategies as well. Broadband Internet connection does not only enable access to faster Internet connection, but it also changes the whole way in which the Internet is used in a way that it enables data download at a much greater speed than traditional dial-up connection. In accordance with that, starting from 2005, one of the most basic indicators of ICT use development in EU is a proportion of households that possess this type of Internet access. Today, in Serbia, 72.5% of households has a broadband Internet connection, which represents an increase of 10.6% compared to 2017, and increase of 14.7% compared to 2016 (Figure 1). Presence of this type of Internet connection is the greatest in Belgrade where 82.1% of the households possess such connection, in Vojvodina with a

63 figure of 70.3%. This figure is the lowest in central Serbia, where only 68.8% of households have this type of connection (SORS, 2018, pp. 17).

Figure 2 Broadband Internet connection in households Source: SORS, 2018, pp. 17

The use of modern technology in Serbian trade is not at a satisfactory level. One of the structural problems in Serbian trade is the inadequate development of all forms of electronic commerce, which is in disharmony with the relatively high rate of acceptance of computers, mobile phones and the Internet in Serbia. In the Republic of Serbia, 73.4% of persons have used the Internet in the last three months, 1.2% of respondents used the Internet more than 3 months ago, and 1.2% more than one year ago (SORS, 2018, pp.23). There were 24.2% of respondents that had never used the Internet. In the last three months the respondents of the survey have used the Internet mostly for finding information about goods or services (76.8%), as well as for participating in social networks such as Facebook and Twitter (70.3%) (SORS, 2018, pp.26).

As regard the period when Internet users have bought/ordered goods or services via the Internet, 30.9% of users have bought/ordered goods/services in the last three months, 14.6% did it more than three months ago, and 9.1% more than a year ago. 45.4% of Internet users have never bought/ordered goods or services over the Internet (SORS, 2018, pp.29).

As it can be seen in the Figure 2 (Eurostat 2018, SORS 2018 pp.29), although e-commerce development in Serbia, represented by the percentage of individuals shopping online (2018: 45,5%), shows a steady growth over the previous years, it still significantly lags behind EU average (2018: 60%).

70 60 60 57 53 55 50 50 45.5 41.3 40 38.3 % 33.3 30 31.8 EU (%) 20 Serbia (%) 10 0 2014 2015 2016 2017 2018 Years

Figure 3 Individuals who ordered goods or services over the internet for private use in the 12 months prior to the survey Source: Eurostat 2018, SORS 2018 pp.29

Number of individuals that shop online is growing on an annual level. In 2018 there have been 1,800,000 individuals who shopped for goods or services online. Since 2014, number of individuals who shop online has grown at an annual rate of 9.37%.

Most online shopping refers to buying clothes and sport goods (55,5%), as well as household appliances (22,6%) and electronic equipment (18,3%). During previous years (2013-2018) there was a similar proportion of types of goods and services ordered over the Internet (in some years a percentage of household appliances ordered over the internet is bigger than electronic equipment, and during other years individuals were ordering more electronic equipment than household appliances). In 2012, people were ordering over the internet books, magazines and newspapers more often than electronic equipment. In 2011, most of Internet users bought/ordered household goods (29.2%), electronic equipment (23.8%) and clothes and sports goods (21.2%), which is a shift from 2010, when most users bought / ordered over the internet books, magazines and newspapers (23.9%), clothing, sports products (19.8%) and household goods (19%).

In the period of last three months prior the ICT survey (SORS, 2018), 57% of individuals has bought/ordered goods or services over the Internet, for private purposes 1 or 2 times; 27,2% of individuals has bought/ordered goods or services over the Internet 3 to 5 times; 10,2% of individuals 6-10 times; and 5,6% of individuals has bought/ordered goods or services over the Internet more than 10 times. Over the years (during which this question exists in the IST survey), these percentages have not changed significantly, as seen in Figure 3.

80 69.5 70 57.7 60 55.8 57 50 2015 % 40 33 31.6 2016 30 27.2 21.2 2017 20 10.2 2018 6.7 10 5.1 4.5 5.6 4.2 5.1 5.6 0 1-2 3-5 6-10 10+ Shopping frequency

Figure 4. Number of times a person has bought/ordered goods or services (2015-2018) Source: SORS 2018

Over 55% of transactions have value lower than 50 EUR. Having in mind that small parcels, with value of less than 50 EUR are not a subject of customs, this fact is not surprising, although VAT is still charged on those transactions as well.

National Bank of Serbia publishes data regarding Payment transactions of funds transfer performed in the Republic of Serbia by cards and e-money issued in the Republic of Serbia. In 2018 there were 148.648.964 payment transactions of funds transfer using cards and e-money in total, with total value of 262.4 billion RSD.

National Bank of Serbia also publishes data regarding e-money and card payments (using regular or internet payment cards) for goods and services online and classifies those payments by currencies. In 2018, the total number of transactions made by using payment card was 7.333.929, which represents an increase of 166% compared to 2015, when there were 2.757.790 such transactions (Table 1). Data in Table 1 shows that over 38% of transactions were related to domestic websites (RSD), which represents an improvement compared to 2015, when the proportion of domestic website related transactions was 26%.

Table 1. Payment transactions of the purchase of goods and services via the internet, by using payment cards

Currency Total number of transactions Total value of transactions Year 2018 2015 2018 2015 RSD 2.813.939 740.647 9.267.804.195 3.321.714.917.43 Card use EUR 2.438.872 996.771 114.342.080 55.335.868.51

USD 1.910.003 927.165 54.256.309 24.982.761.32 GBP 160.755 88.370 9.062.990 4.448.279.11 CHF 10.360 4.837 1.017.933 711.676.99 Total 7,333,929 2,757,790 … …

Source: National Bank of Serbia

The total number of transactions made by using e-money, in 2018, was 331.988 (Table 2).

Table 2. Payment transactions of the purchase of goods and services via the internet, by using e- money

Year 2018 Currency Total number of transactions Total value of transactions RSD 33.276 57.797.809 EUR 136.335 2.048.737 E-money USD 160.755 1.444.675 use GBP 1,532 56.713 CHF 90 1.717 Total 331.988 …

Source: National Bank of Serbia

According to the web portal Statistista.com16, the most common method of payment via the Internet is still payment by cash on delivery (32%), followed by bank transfer (30%) and payment cards (15%). It is anticipated that in 2019, 62% of total e-commerce purchases will be paid by bank transfer and cash on delivery equaly, and that the payment by cash on delivery will decreasing evenly in the coming years (Figure 4)17.

16 Statista is an online statistic, market research and business intelligence portal. It provides access to data from market and opinion research institutions, as well as from business organizations and government institutions. 17 The Payment Type shows the forecast of e-commerce customers’ payment preferences and refers to the payment method share of the total gross merchandise volume per year.

100% 14% 15% 90% 15% 14% 16% 17% 17% 7% 80% 5% 8% 9% 10% 11% 11% 70% 37% 21% 16% 15% 60% 35% 31% 29% 50% 18% 19% 19% 40% 15% 15% 16% 16% 30%

20% 37% 37% 30% 30% 31% 32% 35% 10% 0% 2017 2018 2019 2020 2021 2022 2023

Bankovni transferi Kartice Plaćanje pouzećem E-novčanik Ostalo

Figure 5. Payment types in percent 2018 and forecast Source: Statista, October 2018

In October 2017, an international research and technology company operating on the markets of Europe, Africa and Asia, called Gemius18, conducted a survey about online shoppers in Serbia. Sample consisted of 1050 individuals out of which 93,7% use internet every day, mostly for searching for and purchasing products/services from domestic sites. 6 of 10 internet-audience (60,8%) who have shopped online use Web Stores, while at the same time 4 of 10 of internet audience (39,4%) who shopped on line uses Price Comparison Websites. Foreign websites are the most popular ones - top five favorite e-commerce websites within analyzed audience are:

1. aliexpress.com (5th in 2016) – 14,3%

2. kupujemprodajem.com (the same position) – 10,6%

3. ebay.com (6th in 2016) – 9,3 %

4. limundo.com (1st in 2016) – 8,7%

5. amazon.com (8th in 2016) – 5,7%

18 The company offers research on the behavior of Internet users on websites, the socio-demographic profile of network users and the effectiveness of online advertising campaigns.

Respondents says they like buying online because it is easier to compare all offers, there is convenient home delivery, there is no need to travel to the store, usually prices are better than in traditional stores and they can buy any time they want. Although almost third of respondents claim that they never had a problem while shopping on-line, those who did have a problem say that they encountered following obstacles: product doesn’t match expectations; misleading information; delivery costs too much; lack of basic information; problems with warranty, etc.

Most online shopping refers to buying clothes and accessories, technical devices, sports equipment etc. which coincides with the survey conducted by SORS (Figure 5).

Figure 6. Previously purchased goods bought online, by categories Source: gemiusAdHoc study, October 2017

59% respondents on an average spend 1001-5000 RSD when shopping online. For 15,3% respondents an average online “shopping cart” costs in range between 5.001-10.000 RSD, and 12,1% of respondents spend on their average shopping cart more than 10.000 RSD. For almost half of respondents’ yearly costs for online shopping are 10.001-50.000RSD. For 29,6% the sum is lower - it’s up to 10.000 RSD, and for 22,4% the sum is higher – 50.001 RSD and more (Figure 6).

Figure 7. Online purchases: money estimation Source: gemiusAdHoc study, October 2017

According to the same research, five most often used types of payments are: payment in person upon parcel receivement (still most popular method of paying, however it is decreasing, while at the same time following payment methods are becoming more and more used); debit/credit cards; online bank account transfer; online payment service; and by cash at the store. Compared to previous year, proportion of payment in person upon parcel receivement is decreasing, while the proportion of card and bank transfer payments is increasing (same finding as Statista).

Figure 8. B2C E-commerce revenue, 2018 and forecast Source: Statista, October 2018

The highest revenue comes from the segment Electronics & Media: €164m in 2018 (Figure 8).

Table 3. E-commerce revenue by segment, 2018

Source: Statista, October 2018

The number of Internet users in Serbia (active paying customers or accounts) was 4 millions and it is expected to amount to 4.4 millions by 2023. The average revenue per user in the e-commerce market amounts 72,2 EUR which is 10 times less than in EU (2018), as shown in Figure 8.

Figure 9. Average revenue per Internet user, 2018 and forecast Source: Statista, October 2018

In annual survey on ICT usage conducted by SORS, data are collected not only from individuals, but also from companies across Serbia about the use of computers, Internet usage, characteristics of the information system in enterprises and electronic business of the company.

Of the total number of enterprises having an Internet connection, 98.8% have broadband Internet connection (Figure 9). Therefore, companies in Serbia are able to use all the advantages of the fast Internet, including faster accessibility to information, downloading of various Internet content, possibility of communication among employees, possibility of communication with external persons, e-business and more.

Figure 10. Broadband Internet connection in enterprises in Serbia 2009-2018 (% of enterprises) Source: SORS, 2018, pp. 79

Almost all of the enterprises in Serbia use Internet for business purposes – that proportion is somewhere between 99.8% and 100%. The result of such proportion is the introduction of obligation to deliver data to government institution solely through an electronic medium. Apart from that, Internet popularity and increase in technological literacy are making enterprises realize that online presence is a must.

There has also been an increase, of 2.2% in relation to 2017 and of 1.8% in relation to 2016, in proportion of enterprises that have their own website. In 2018, 82.6% of enterprises had their own website (SORS, 2018, pp.81; Figure 10). A high percentage of companies that own a website say that companies in Serbia pay great attention to their visibility on the Internet, in which they find their business opportunity and the opportunity to advertise on the domestic and foreign markets.19

84 82 82.6 80.8 80 80.4 78 % 76 75.2 74 74 72 70 68 2014 2015 2016 2017 2018 Year

Figure 11. Enterprises which have their own webiste Source: SORS, pp. 81

The website is owned by almost all large companies – 94,8%, while the percentage of medium-sized and small companies that have a website is somewhat smaller, accounting for 90,4% of medium-sized and 80,1 % of small businesses. The greatest number of enterprises do business within following activities: Information and communication (93,7%), Real estate activities; Professional, scientific and technical activities (92%); Accommodation and food service activities (92,0%). There are differences depending on the territory: in Belgrade there are 89.0% of enterprises that have a Website, in Vojvodina 83.2%, and in Central Serbia 75.0%. Enterprises having a Website provide mostly services like: personalized content in

19 The sample of enterprises consists of 1781 enteprises in Serbia with 10 or more employees. In addition, all sectors are not included in the sample.

73 the Website for regular/repeated visitors (86.0%); description of goods or services, price list (82.6%); possibility for visitors to customize or design the products (67.6%).

Social media are growing more available in enterprises for business use, which is backed by the results of the survey. In Serbia, 39,5% of companies use social networks in their business (Facebook, LinkedIn, XING, Yammer), 19,9% use multimedia-content sharing sites, such as YouTube, Flickr, Picasso, and 10,3% use blog/Twitter. The share of enterprises using Wiki-based knowledge-sharing tools is 8%.

In 2017 only 41.9% of enterprises ordered goods/services online, which is a slight increase in relation to previous years (Figure 11). Large enterprises are the leading ones in ordering goods/services online – 56.7% of them. Only 43.6% of medium and 40.7% of small enterprises ordered goods/services online. In 2017, online orders were taken by only 26.3% of enterprises.

42.50%

42.00%

41.50%

41.00%

% 40.50% 40.00%

39.50%

39.00% 2013 2014 2015 2016 2017 Years

Figure 12. Enterprises ordering goods/services over the Internet Source: SORS, 2018, pp. 83

When we analyze the structure of enterprises that received orders placed over the Internet, the results are as follows: 34.3% of large enterprises, 26.3% of medium enterprises and 25.8% of small enterprises took online orders.

Proportion of online orders sales volume in total sales volume in 2017 was as follows:

• less than 24% (72.5% of enterprises);

• between 24% and 50% (14.2% of enterprises);

• between 50% and 75% (7.8% of enterprises);

• more than 75% (5.5% of enterprises).

Proportion of online orders sales volume in total sales volume has not significantly changed over the years, although there are some variations (Figure 12).

90 79.4 79.6 80 76 72.5 70 63.5 60 2014 50 Percentige of 2015 enterprises 40 2016 30 2017 20 17.2 2018 10.8 14.2 13.4 9 8.3 10 7.6 7.4 7.5 7.8 5.9 5.7 4 4.75.5 0 0-24 % 25%-50% 51%-75% 75%-100% Percentage of the total turnover

Figure 13. Percentage of the total turnover over the years resulting from orders received over the Internet Source: SORS, 2018, str. 83

For developing countries like Serbia, e-commerce, which is currently very modestly developed, can be noticed as a compelling strategy and a major opportunity for the economic development. All three groups of factors that limit the development of electronic commerce in the Republic of Serbia must be partially or completely neutralized. The problem of inadequate infrastructure for the development of e-commerce needs to be solved, an adequate supply in the electronic commerce must be created, as well as demand for products and services through this type of trade. The government has its role in eliminating all these barriers, especially the first group of infrastructure constraints.

The new phase in the development of e-commerce in the Republic of Serbia should significantly influence the volume of turnover that is achieved in the electronic commerce, as well as on the effects that electronic commerce has on all market participants.

III KEY BARRIERS TO E-COMMERCE DEVELOPMENT IN SERBIA (INCLUDING FOREIGN E-COMMERCE)

E-commerce represents significant, dynamic, ever changing part of modern digital economy. In this sense, due to the nature and complexity of this research, in accordance with European Commission definition, e-commerce will be viewed as a purchasing process in which involved parties engage in online electronic transaction, in which certain activities, such as delivery or payment, can be conducted offline, as well as online20. Implications of the wider understanding approach are multiple, especially in the domain of analyzing key national barriers to e-commerce development.

In order to comprehensively analyze national barriers to e-commerce development in Serbia, it is necessary to understand all the influencing factors. In accordance to the previously stated e-commerce definition, overall e-commerce presence in Serbia consists of both the national and international components. This is consequently reflected onto the present barriers. In the first step of analysis, a macro national point of view will be adopted, classifying e-commerce barriers in Serbia into three groups: demand-related, supply-related and e-commerce enablers-related. In order to fully understand the implications of barriers on national e-commerce usage, simultaneous joint effects of e-commerce enablers and e-commerce benefits / stimuli must be analyzed. For this purpose, a modified version of Hofmann’s model (Hofmann et al., 2018) was adopted. In this analysis, attention will be turned towards barriers and benefits of e-commerce.

Figure 14. Model for analyzing the level of national e-commerce usage Source: modified from Hofmann et al., 2018

20 For more details visit https://ec.europa.eu/eurostat/statistics-explained/index.php/glossary:e-commerce (accessed 6.1.2019.)

1. DEMAND-RELATED E-COMMERCE DEVELOPMENT BARRIERS IN SERBIA

Customer readiness for e-commerce is one of the key conditions for successful e-commerce development (Alyoubi, 2015). One of the key psychological factors influencing intention to adopt e-commerce is perceived usefulness, because, like any other new technology, consumers would start using e-commerce only if they find it useful and more convenient than its alternatives like shopping in regular stores.

In this section demand-related barriers are seen as barriers encountered by (potential) customers (individual and institutional) before, during or after the e-commerce process. These barriers affect the overall availability of online purchasing in Serbia, as well as its potential. These barriers are:

1.1. INFRASTRUCTURAL BARRIERS

Infrastructural barriers are related to the availability of physical and digital capacities which are important (sometimes necessary) for successfully conducting e-commerce transaction (Akelloh et al., 2017). These barriers could be significant since they affect both individual and institutional online buyers.

Figure 15. Number of digital commerce and mobile POS payment users in Serbia, excluding B2B transactions (2018)

Source: https://www.statista.com/outlook/243/150/ecommerce/serbia (accessed 7.1.2019.)

From an individual standpoint, internet access and adequate e-marketplaces are vital in terms of conducting a successful business transaction. According to the study conducted by Statistical Office of the Republic of Serbia (further in the text SORS) in 2018 72.1% of households possesses a computer (47.6% of

78 households has a laptop), whereas 93% of households possesses a mobile phone, albeit many of which are not smartphones. It is evident that approximatively every fourth household in Serbia does not have a computer. Additionally, when these findings are coupled with an economic context, we can deduce that a computer still represents a somewhat luxurious commodity, since only 54.86% of households with an income level below 300 euros possesses one. Additionally, in 2018 around 72.9% of households has an internet connection, out of which only 72.5 % possesses a faster broadband connection. These are relevant data because they show that one in four households in Serbia does not have an internet connection, whereas another one in fourth households only has a slow, outdated internet connection, significantly reducing the overall e-market size and potential (Statistical Office of the Republic of Serbia, 2018). Furthermore, in terms of mobile internet availability Serbia ranks badly in terms of territorial 4G network coverage of just 64%, but maintains a good position in terms of average speed of available 4G network of 30.17 Mbps, although still ranking behind neighboring countries such as Croatia, Hungary and Bulgaria21. As an outcome, 4 million people performed digital payments within their e-commerce transactions in Serbia (B2B transactions, bank transfers and POS payment transactions where mobile card readers were used are excluded), of which 0.3 million customers used mobile POS payments via smartphone apps. These figures, as well as projections are depicted below (figure 14). Corresponding data related to penetration rates are depicted in the following graph (figure 15).

Figure 16. Penetration data related to digital commerce and POS mobile payments, excluding B2B transactions (2018) Source: https://www.statista.com/outlook/243/150/ecommerce/serbia (accessed 7.1.2019.)

When infrastructural barriers to institutional online buyers are observed, situation is significantly different. According to afore cited SORS study of ICT usage in Serbia in 2018, 99.8% of companies in Serbia have internet connection, of which 98.8% possesses a faster broadband connection (every third company has an internet speed higher than 30 Mbps). Additionally, 75.4 % of companies issue portable devices to its

21 For more details visit https://opensignal.com/reports/2017/06/state-of-lte (accessed 7.1.2019.)

79 employees that allow mobile connection to the internet. In terms online presence, 82.6% of enterprises have a website, of which only 25.1% allow for online ordering / reserving, while 35.8% provide a link to certain social media (Statistical Office of the Republic of Serbia, 2018). Low website content interactivity and customer engagement are significant e- commerce barriers in both B2C and B2B domains.

Until recently it was very complicated to undertake online payments in Serbia. Specialized cards for online payments did not exist while other services such as PayPal were not present at the market. Even today, people in Serbia are unable to use PayPal service to its full extent. For example, domestic payments are possible only in domestic currency while PayPal transactions are only undertaken in foreign currencies. In addition, high provisional fees and complicated and long-lasting paybacks make e-commerce less attractive. Quality of postal service, as well as parcel traceability and visibility are vital in lowering infrastructural barriers and building up consumer trust.

1.2. DEMOGRAPHIC BARRIERS

Generation gaps usually represent the starting point of every analysis related to certain ICT adoption process. In the context of demographic barriers e-commerce adoption in Serbia age group matter, especially in terms of affinity and openness towards new technologies, digital trust and e-skills. According to a research conducted by Statista22 23.7% of all individual online consumers are aged between 25 and 34 years, followed closely by those aged 35-44 years (23.3%) and between 45 and 54 years (22.9%). This is somewhat expected for the current market situation in Serbia with the average age of the population of 42.8 years (2018 estimates)23 and a GDP per capita of USD 5,348, leading to a poverty level of almost 25% and a low-middle income rapidly ageing economy24. Online shoppers aged 55-64 years amount to 17%. Lower figure for this age group is expected due to certain aversions towards e-commerce and modern technologies, as well as digital distrust. Youngest analyzed age group of 18-24 years amounts to 13% of all online shoppers. This low figure can be explained due to a shorter year span of the group itself, as well as low to no income status commonly related to this age group who, although very skillful in digital technologies and relatively opened to modern e-commerce, usually depend on their parents’ income, and have limited purchasing capability. Another significant barrier of age group affiliation is related to the overall time spent online. Results of daily usage of the internet are shown below (figure 3). These data

22 For more details visit https://opensignal.com/reports/2017/06/state-of-lte (accessed 7.1.2019.) 23 For more details visit https://www.cia.gov/library/publications/the-world-factbook/geos/ri.html (accessed 7.1.2019.) 24 For more details visit https://import-export.societegenerale.fr/en/country/serbia/market-consumer (accessed 7.1.2019.)

80 represent guidelines, as well as borders of e-commerce potential in Serbia, especially when coupled with population paramaters. Estimates for 2018 are25:

▪ 0-14 years: 14.35% (male 523,473 /female 492,339);

▪ 15-24 years: 11.19% (male 408,379 /female 383,385);

▪ 25-54 years: 41.27% (male 1,475,243 /female 1,445,935);

▪ 55-64 years: 14.21% (male 485,849 /female 520,126);

▪ 65 years and over: 18.98% (male 557,307 /female 786,074).

Another relevant point of the analysis of demographic barriers is the gender of online shoppers. Analyzing the situation on the Serbian market in 2018, we can see that 52.1% of e-commerce users were female26. Although roughly equal in the share, it is relevant to understand that gender can pose a significant barrier, especially if the online contents are not personalized in this sense. Digital and social media targeting strategies must be adapted to the relevant customer group. If a certain product is purchased online by both men and female, both groups must be targeted equally. On the other hand, products meant for only one gender group require specific advertising efforts.

By combining age group affiliation and gender, one can derive important conclusions on how to best understand targeted groups, and avoid barriers related to these parameters. Within SORS study on ICT usage in Serbia in 2018, data on computer, mobile phone and internet usage were analyzed. These findings are presented below (figure 16). We can see that the most relevant age group (25-54) behaves quite differently, depending on the gender. Consequently, barriers to e-commerce adoption can arise from lower usage of internet and computer technologies by female part of online shopper population.

25 For more details visit https://www.cia.gov/library/publications/the-world-FACTBOOK/GEOS/RI.HTML (accessed 7.1.2019.) 26 For more details visit https://www.statista.com/outlook/243/150/ecommerce/serbia (accessed January 7, 2019.)

Figure 17. Daily internet usage rate by age groups in Serbia (2016)

Source: https://www.eshopworld.com/blog/serbia-ecommerce-insights/ (accessed 7.1.2019.)

Final component of this class of barriers is related to the educational level of online shoppers. According to SORS study on ICT usage in Serbia in 2018 among computer users, 59.7% have secondary educational level, 17.7% lower than secondary educational level, and 22.6% tertiary educational level. According to the study, 93% of computer users with tertiary educational level, 80.5% of users with secondary educational

Figure 18. Overall share of Internet (top left), mobile phone (bottom right) and computer (bottom left) usage by age group and gender (2018)

Source: http://publikacije.stat.gov.rs/g2018/pdfe/g201816013.pdf (accessed January 7, 2019)

82 level and 41.1% of users with lower than secondary tertiary level used a computer in the last three months (more than 3,108,000 people use a computer almost every day). Additionally, among internet users, 59.3% attained secondary educational level, 19.4% of users attained lower than secondary educational level, and 21.3% tertiary educational level. Of those 90.8% of internet users with tertiary educational level, 83% of users with secondary educational level and 46.9% of users with lower than secondary tertiary level used internet in the last three months (more than 3,108,000 people use internet almost every day)27. These data are very important, especially when coupled with the overall educational structure of Serbian population. According to 2011 Census around 16% of the population have tertiary educational level. One in two people in Serbia have secondary education, whereas around one third of the entire population have lower than secondary education. This is important, because the people with tertiary education are the ones most likely to engage in e-commerce transaction, but they are also the smallest segment within Serbian educational structure. High share of people with lower than secondary educational level poses a significant barrier in e-commerce development in Serbia.

1.3. SOCIO-ECONOMIC BARRIERS

Socio-economic barriers in e-commerce have a significant effect on its potential and development (Daviy and Rebiazina, 2015). Socio-economic population factors, such as income, purchasing power and level of urbanization are significant in determining the overall potential of e-commerce usage on a national level.

According to the survey performed by SORS in 201828, with one of the lowest average net salaries in Europe, it takes consumers 75% of their net salaries to afford Minimal basket of consumer goods in Serbia. That is one of the reasons why people are not keen on risking when buying online and choose to see (and feel) goods prior to their purchase. Due to that, over time, people did not get a chance to gain trust in e- commerce.

In terms of the level of urbanization as an e-commerce barrier, data from the SORS survey on ICT usage in 2018 78.2% of urban household possesses a computer, 78.3% have an internet connection. When non- urban household are observed, situation is quite different, with only 61.8% having a computer and 63.9% having an internet connection. Overall level of population urbanization in Serbia in 2017 was 56%29. This implies that urbanization level poses a significant socio-economic barrier to e-commerce development in Serbia, due to limited online accessibility of non-urban population.

27 For more details visit http://publikacije.stat.gov.rs/g2018/pdfe/g201816013.pdf (accessed January 7, 2019) 28 For more details visit http://publikacije.stat.gov.rs/g2018/pdf/g20185639.pdf (January 7, 2019) 29 For more detail visit https://data.worldbank.org/indicator/sp.urb.totl.in.zs (accessed January 8, 2019)

Figure 19. Share of households owning a computer (top graph) and having an internet connection (bottom graph) depending on the average monthly household income

Source: http://publikacije.stat.gov.rs/g2018/pdfe/g201816013.pdf (accessed january 7, 2019)

Another significant socio-economic barrier is the income level of the population. SORS survey on ICT usage in 2018 shows that 87.9% of households with an average monthly income above 600 euros have a computer. For households with an average income between 300 and 600 euros this figure is 80.6%, whereas households with income lower than 300 euros have a much lower computer ownership ratio of just 54.8%. Almost identical figures apply to having an internet connection. These data are shown below (figure 18). What is interesting for both computer ownership and having an internet connection is that figures in 2018 for households with an average monthly income above 600 euros are significantly lower than in the previous year. The study does not offer an explanation for this, therefore a further analysis is required in order to answer this question. These findings provide a clear image of e-commerce limitations in Serbia, especially when coupled with national statistics, which provide a figure of approximatively USD 483 for an average monthly net salary amount in Serbia in October of 2018. Furthermore, median value of this indicator was around USD 380, which means that 50% of all employed people in Serbia earn no more than USD 380 a month30. Coupled with the fact that unemployment rate in Serbia in the third quartal of 2018 was 11.3% (25.3% for people aged between 15 and 24) and that the inactivity rate was 44.5%, we can see that the low income of the majority of Serbian population poses a significant barrier to further e- commerce development.

30 For more details visit http://www.stat.gov.rs/sr-latn/vesti/20181225-prosecne-zarade-za-oktobar-2018/?s=2403 (accessed 9.1.2018.)

1.4. BEHAVIORAL / COGNITIVE BARRIERS

Behavioral barriers are related to certain patterns and habits exhibited in online shopping behavior which pose a limitation to e-commerce development, whereas cognitive barriers are related to mental maps of individuals or organizations which lower the potential of e-commerce development (Kshetri, 2007). Most of people associate internet with efficiency, which is why they often buy things online that they need in the near future. Also, the longer the delivery period is the more people fear whether they will get purchased goods. On the other hand, due to low purchasing power people are not willing to pay extra for faster delivery.

According to SORS study in 2018 more than 1,800,000 people bought something online in the last three months. Of all the internet users, 45.4% never bought anything online. Although this figure has drastically improved over time (in 2014 it was 59.5%), this data still shows that a lot of internet users in Serbia are reluctant to purchase online, mainly due to a lack of trust. Of the people who actually purchase online, 57% ordered something online only once or twice in the last three months. Frequent online shoppers, who purchase online more than 10 times in three months amount to only 5.6%. These figures are significantly different in EU-28, where 15% of online shoppers have 10 or more e-commerce transactions in three months, whereas more than 40% of online shoppers spend between 100 and 500 euros on online purchases in three months31. This shows that e-commerce is heavily under utilized in Serbia, and that people do not have a habit of purchasing regularly online. Usually e-commerce transactions are sporicidal, and coupled with previous physical contact with the merchandise (showrooming). Mainly, internet is viewed as an information channel, where certain data on desired products can be gathered, but not as a means of purchasing and paying (webrooming).

In the last three months, 55.4% people who were involved in e-commerce transactions spent in total less than 50 euros. Only 0.7% of online shoppers spent in excess of 100 euros in the last three months. These figures were somewhat expected, since small parcels with a value of less than 50 euros are not subjected to customs duty, although VAT is still charged. This data goes hand in hand with the low levels of online purchasing usage intensity and frequency.

Serbian Central bank publishes data regarding card payments (using regular or internet payment cards) for goods and services online and classifies those payments by currencies. In 2018 the total number of such transactions was 7.333.929 which represents an increase of 166% compared to 2015, when there were 2.757.790 such transactions. Data shows that over 38% of transactions were related to domestic websites, which represents an improvement compared to 2015, when the proportion of domestic website related transactions was 26%. However, foreign websites are still the most popular ones. Still, these figures depict a low customer trust in domestic websites. Furthermore, preference towards international e-

31 For more details visit https://ec.europa.eu/eurostat/statistics-explained/index.php/e- commerce_statistics_for_individuals#most_popular_online_purchases (accessed 10.1.2018.)

commerce website puts a significant emphasis on barriers related to international online trade, such as logistics, language and legal discrepancies, as well as additional cultural barriers.

In terms of goods and services ordered online, difference between Serbian and European online shoppers is quite significant. When goods which are bought online by more than 20% in 2018 (observation period is one year) of online shoppers are analyzed, in Serbia these are clothes and sport goods (55.5%) and household goods (22.6%), while electronic equipment comes third (18.3%)32. In EU-28 on the other hand, these are clothes and sport goods (64%), travel and holiday accommodations (53%), household goods (46%), tickets for event (38%), books, magazine and newspapers (32%), films and music (26%), electronic equipment (26%), food or groceries (26%), video games and software (23%) and telecommunication services (20%)33. Again, the lack of online trust manifests itself as a behavioral barrier in terms of limiting what can be sold via internet in Serbia.

Figure 20. Means of payment for e-commerce transactions in Serbia with projections for 2019-2023 period, excluding B2B transactions (2018) Source: https://www.statista.com/outlook/243/150/ecommerce/serbia (accessed January 7, 2019.)

When it comes to the manner of payments, the lack of online trust of Serbian online shoppers again comes into play.

32 For more details visit http://publikacije.stat.gov.rs/g2018/pdfe/g201816013.pdf (accessed 10.1.2018) 33 For more details visit https://ec.europa.eu/eurostat/statistics- explained/index.php?title=file:online_purchases,_eu28,_2018_(%25_of_individuals_who_bought_or_ordered_goo ds_or_services_over_the_internet_for_private_use_in_the_previous_12_months).png (accessed 10.1.2018.)

According to data provided by Statista, e-commerce transactions in Serbia are paid by cash upon delivery in 32% of cases in 2018, as is shown in the figure below (figure 19). By comparison, this figure is 9% in EU-28. On the other hand, use of cards in paying for e-commerce transactions is significantly lower in Serbia (15%) than in EU-28 (41%), which shows that customers in Serbia are unwilling to provide their personal data online, especially financial ones. This is a significant behavioral barrier that significantly lowers e-commerce market potential, especially in terms of developing more complex, cash-free forms.

Finally, use of social media is important online behavioral market characteristic strongly correlated to online shopping. In 2017 number of social media users in Serbia was 3.58 million people, and this figure is expected to grow to 3.77 million in 202134. These are relatively low figures. In terms of preferred online social media, Facebook holds a dominant position in 2018. Majority of population with a social media presence is focused on Facebook, limiting the overall exposure to different kinds of ads, banners and other multimedia contents available online, which are related to e-commerce. Especially interesting is the fact that computers are used in 89% of all online purchases in Serbia in 2018, followed by smartphones (4%). This is important because the preferred device further limits e-commerce potential, because laptops and PCs do not possess the level of interactivity as smartphones do. It is interesting to note that when computers are used as a platform for accessing social media, use of sites like YouTube (6.35%), Twitter (5.27%) and Pinterest (4.89%) slightly grows, compared to when smartphones are used as a platform, in which case Facebook is an absolutely dominant app with a share of 92.32%, which further emphasizes lower digital literacy of Serbian people, as well as obvious unfamiliarity with the online capabilities which a smartphone or tablet platform possess.

2. SUPPLY-RELATED BARRIERS TO E-COMMERCE DEVELOPMENT IN SERBIA

In this section supply-related barriers are seen as barriers encountered by sellers (individual and institutional) before, during or after the e-commerce process. These barriers affect the overall Serbian e- commerce market size and potential. These barriers are:

2.1. ORGANIZATIONAL BARRIERS

34 For more details visit https://www.eshopworld.com/blog/serbia-ecommerce-insights/ (accessed January 10, 2019)

Many micro, small and medium enterprises (MSMEs) do not have adequate investment budgets and their access to funds is limited. According to the USAID study conducted in 2016, banks accounted for total of 90% of external funds for financing. Moreover, according to the same study, only 10-30% of investment loan applications are approved. Maturity structures of loans tend to be short, as most of the loans issued are for working capital purposes. Also, financing market in Serbia lacks alternative sources of financing MSMEs such as equity financing, micro financing, risk capital funds etc., mostly due to almost non-existent capital market. Lack of adequate managerial skills significantly limits MSMEs e-commerce development.

Lack of human resources with e-commerce experience is and additional problem. Existing educational system does not provide enough experts that understand digital component of the business. This is slowly changing.

According to the SORS data, in 2016, only 38.2% of small enterprises had any sort of innovation, while the figure among medium enterprises is equal to 54.4%. Moreover, MSMEs in Serbia mostly invest in production innovations. Only 27.3% of Serbian small enterprises in 2016 had organizational/marketing innovations, while the same figure for medium enterprises is equal to 42.2%. Many of the MSMEs owners do not have the necessary knowledge and management skills to understand the importance of innovation in areas other than production processes and mostly focus on day-to-day activities. Most of them are also not familiar with the shifts in the way of how goods are sold today. Therefore, it is hard for them to understand the value that e-commerce implementation can bring them. According to 2017 SBA Fact Sheet availability of information for MSMEs in Serbia is almost 1.5 standard deviations lower that of EU MSMEs. Additionally, spending on online advertisement is not adapted to identified online shopper behavior. According to Statista total digital ad spending in Serbia in 2018 amounted to 226 million USD, as shown below (figure 8). We can see that the majority of expenditures are associated with social media advertising. Although global trends justify this kind of approach, national situation is a bit different, both in total number of social media users, as well as low social websites and apps usage, besides Facebook. Companies in Serbia must adjust digital marketing mix strategy to national market specifics, in order to efficiently and effectively increase e-commerce potential. Furthermore, digital ad spending is mainly focused on mobile platforms. According to Statista, 54% of total digital ad spending was invested in smartphone segment, which is still not justifiable in case of Serbian market, since computers represent the main e-commerce purchasing tool (figure 20). This kind of approach, with a growing intensity of mobile ad investments creates a division for online customers between online information gathering via smartphones and online purchasing via computer, which reduces convenience, thus redusing the willingnes to participate in online transactions

Lack of past experience - Very few MSMEs in Serbia have utilized e-commerce capabilities and therefore, other MSMEs do not have any successful examples in their environment that would incentivize them to invest in e-commerce themselves. This is a significant limiting factor, especially when trying to enter complex supply chain networks of MNCs operating in Serbia, who often implement certain online e- procurement platform, such as SAP Ariba or Microsoft Dynamics.

Figure 21. Total digital ad spending in Serbia with projections according to the type of advertising, excluding email marketing and influencer sponsorships (2018)

Source: https://www.statista.com/outlook/216/150/digital-advertising/serbia (accessed 11.1.2018.)

According to a study by SORS in 2017 companies are twice more likely to be engaged in an online procurement transaction than in online selling transaction. Within this consideration, large companies are most proficient in participating in these kinds of transactions, since 56.7% ordered something online, while 34.3% sold something online. Situation is very different for small companies, since only 40.7% ordered something online, while 25.8% sold something online. In total, 41.9% of enterprises in Serbia purchased goods or services via internet, while 26.3% received online orders, which led to the fact in 72.5% of cases online-generated revenue amounted to less than 24% of total company’s revenue35. We can conclude that online sales usually represent an additional, complementary source of revenue with no crucial impact on overall business performance.

2.2. MARKET BARRIERS

35 For more details visit http://publikacije.stat.gov.rs/g2018/pdfe/g201816013.pdf (accessed 10.1.2018)

Market barriers to e-commerce development in Serbia are related to limitations encumbered by the online suppliers related to the specific national market characteristics which limit the potential of e-commerce development.

Companies in Serbia do not have the luxury of being able to sell their products through large platforms, such as Amazon or Alibaba, that enable low-cost placement of goods, simply because such e-market platforms do not operate in Serbia, whilst those that do operate in Serbia, such as Booking.com are often underutilized compared to neighboring countries. Therefore, MSMEs in Serbia have to develop and maintain their own online stores in order to sell goods online. Investment in development and maintenance of up-to-date online stores can be quite high compared to other operating investments due to the fact that the supply of workforce with necessary IT skills is very limited and that their fees are high compared to those of average workforce. As stated previously, according to the survey conducted by SORS every forth corporate website in Serbia offers customers an opportunity to purchase online. This kind of market situation proved as a fertile ground for the development of domestic, specialized e-marketplaces, which focused on a specific market niche and positioned themselves through channeling of IT expertise and online centralization of targeted supply and demand, such as polovniautomobile.com and donesi.com.

Unofficial online resellers and black markets are a significant problem for future e-commerce development in Serbia. There are a lot of profiles on social media, such as Facebook and Instagram, which illegally sell copies of different widely known brands of goods, such as clothes, perfumes, accessories etc. It accounts to a significant proportion of overall e-commerce in Serbia, and yet this grey area of national economy stays outside the official data. People are often unsure whether they are about to purchase something online from a legal distributor or a black-market reseller, thus often refraining from online buying.

2.3. TECHNOLOGICAL (SECURITY AND INFORMATIONAL) BARRIERS

“Knowledge is power” has never been truer than in the case of digital commercial transactions. Companies now possess enormous amounts of data on their products and customers. Being able to personalize the offer brought before an individual customer is the source of competitive advantage for many online retailers and wholesalers. When companies cannot fully utilize the potential of Big Data concept, or fail to provide necessary digital protection of sensitive customer information, significant barriers to e- commerce development are created.

90 customers, or even if they do, they are not updated on a regular basis. Moreover, awareness of importance of up-to-date high-quality data is low among Serbian MSMEs, mostly due to the fact that they have not seen the application of it in practice. It is often very difficult to convince them to even invest in an ERP system needed for better decision-making. Knowledge about cloud computing services is quite limited, since only 15.5% of all enterprises in Serbia pay for these services, according to SORS. This is a significant drawback, since companies are unable to produce coherent and universally accessible databases, nor are they familiarized with business optimization tools usually offered in a Software-as-a-Service (SaaS) form. Additionally, situation in Serbia is such that there are no “bright” examples of a successful CRM program, even among biggest national retail and wholesale companies.

As well as on the demand side, there are many security concerns among the MSMEs regarding the online payment systems and their level of trust is consequently low, regarding such systems. Additionally, data encryption is still in its infantile stage when the majority of companies in Serbia are concerned. Operating systems in many firms are outdated, while software used are often unlicensed or cracked versions which cannot be updated, reducing their efficiency. Application of modern technologies, such as blockchain use in data encryption is unknown to Serbian B2B segment, significantly reducing the effectiveness and efficiency of e-commerce in Serbia, mainly from a technological standpoint.

2.4. ECONOMIC BARRIERS

Economic barriers arise from the compromised soundness and rationale of certain business activities related to e-commerce transactions.

MSMEs in Serbia mostly offer products with low levels of added value. According to the Chamber of Commerce and Industry in Serbia, in 2016 Gross value added by MSMEs presented only 18.5% of Gross sales, which is 3 percent points below average for Serbian industry. On top of that, GDP per person employed among MSMEs stood at 11.856 EUR in 2016, which is 14% below average and 33% below most productive large companies. During 2016, MSMEs in Serbia generated 46.7 million EUR foreign trade deficit, while at the same time large companies generated surplus. Not just that, but deficit generated by MSMEs rose by 11.8% in comparison with 2015. Also, export to import ratio among MSMEs fell by 1.7.

According to the World Bank’s Connecting to Compete report from 2016 Serbia ranks as 76th out of 160 countries in the area of logistics as measured by LPI Index. Apart from that, as many other industries in Serbia, logistics industry is very concentrated, meaning that few large companies in the industry cover most of the market. Such players are more willing to provide their services to large corporations and hardly want to engage with MSMEs due to their low sales volumes, and even when they do their fees are too high for MSMEs, making delivery expensive for MSMEs. Moreover, efficiency of traditional postal services in Serbia is low, making it less attractive for this purpose.

Another economic barrier to e-commerce development is the fact that in this national stadium of development, e-commerce transactions are used predominantly for the purchase of relatively standardized merchandise which can be inspected physically in a store, prior to online purchase. This represent afore mentioned problem of showrooming, which often lowers the margin of the trader. This, alongside potential sales cannibalization or ultimately sales loss through webrooming reduce the incentive of Serbian traders to sell their products online, or even provide complete merchandise details via internet.

2.5. LACK OF OMNICHANNEL APPROACH

Poor application of omnichannel approach (integrated classical and electronic channels-brick and click and all other channels. Omnichannel approach provide convenience to customers. Existance of classic stores increase the trust of customers in online business. Most traditional shops are not open 24 hours a day, seven days a week, 365 days a year. Internet usage makes it possible to extend working hours and increase the ability to interact and provide services to consumers. Today's consumers have less time due to a fast lifestyle characterized by modern trends. In addition, consumers have a huge selection of products, which complicates shopping. If a company is not present in electronic channels, consumers can see it as a disadvantage compared to the competition. In electronic channels, it is possible to offer a higher degree of customization to the individual customer, which also affects the profitability. The long-term survival of a company depends on their ability to use more than one channel, as many competitors apply multichannel approach.

Consumers choose channels depending on a number of factors. For example, the rise in fuel prices encourages consumers to buy more often over the Internet than in stores, which tells sellers that more attention needs to be paid to the Internet sale. The state's interest is to increase the resilience of its businessmen to the impact of the crisis, thereby simultaneously increasing their competitiveness in the regional and global markets. There are no many examples of successful omnichannel strategies in Serbia.

2.6. BLACK MARKET E-COMMERCE

Important barrier is a non-fair competition from the black market. In modern era, the part of the black market is located on the Internet. 3.2 million people in Serbia are active social network users, thanks to Facebook, Instagram and YouTube, which are the leading social networks (eShop world, 2018). There are many profiles on social media, such as Facebook and Instagram, which illegally sell copies of different widely known brands of goods, such as clothes, perfumes, accessories etc. Many individuals who sell goods on Facebook and Instagram can avoid paying taxes, and therefore their prices are lower. It totally accounts to a significant proportion of overall e-commerce in Serbia and yet stays out of the official data.

By buying from individuals instead of enterprises shoppers lose the rights imposed by Law on Consumer Protection. Buying from non-registered sellers, and bad shopping experience create a barrier for further shopping.

The Ministry of Trade, Tourism and Telecommunications seeks to point out all the traps and rights of consumers on the Internet by informing and educating citizens or consumers.

2.7. LACK OF DATA ANALYTICS

MSMEs in Serbia are usually not equipped with advanced analytical tools and are therefore less able to derive value from online sales. At the same time, it is very costly for MSMEs to buy such software or to hire developers to create their own. Many of MSMEs in Serbia do not even have any databases about their customers, or even if they do, they are not updated on a regular basis. Moreover, awareness of importance of up-to-date high-quality data is low among Serbian MSMEs, mostly due the fact that they have not seen the application of it in practice. Integrating your e-commerce engine with ERP system, can reduce the cost of sales transactions, improve inventory management, generate new revenue, reduce the time between sales order placement and sales order shipment, etc. The need for companies to integrate their ERP systems with e-commerce is overlooked because of cost or the business disruption caused by having to change existing systems, thus it is hard to convince owners to invest in an ERP system needed for better decision-making.

3. E-COMMERCE-ENABLERS-RELATED E-COMMERCE DEVELOPMENT BARRIERS IN SERBIA

E-commerce enablers can be viewed in many ways, as mentioned earlier, like certain factors of influence (Alqahtani et al., 2012). Within this research e-commerce enablers have been viewed as market actors in Serbia who are not main participators in an e-commerce transaction, but who have significant direct and indirect effect on the form, development progress and outlook of e-commerce in Serbia. These enablers are logistics providers, financial institutions, online service providers, professional associations, state- owned institutional actors, infrastructure providers and software and hardware providers, while corresponding barriers are specifically related to each e-commerce enabler individually.

3.1. BARRIERS RELATED TO LOGISTICS PROVIDERS

Serbian market is highly concentrated in terms of companies providing state-wide logistics coverage. Furthermore, fees and charges are relatively high, especially compared to neighboring countries. Delivery times vary a lot, damaged shipments occur, and parcel tracking options are rather limited. These are all significant barriers since companies in Serbia involved in domestic e-commerce transactions have a difficult choice of whether to internalize operating risk with an in-house logistical solution, or outsource logistical activities. Few companies in Serbia have financial means of satisfying all logistic business requirements through internal capacities, therefore common solutions often represent certain forms of trade-offs. Either way, cost structure of Serbian online sellers is often burdened with high operational costs. Things are additionally complicated with the introduction of an international factor in e-commerce transaction.

3.2. BARRIERS RELATED TO FINANCIAL INSTITUTIONS

Financial institutions are market actors who provide financial means for companies to invest in the development of e-commerce business (software and hardware acquisition, distribution capacity development, etc.), insurance for online ventures, and also represent a financial mediator between participants of e-commerce transactions. In Serbia, modern payment technologies, such as PayPal or cryptocurrencies are underutilized, with significant usage restrictions, whereas other means of payment, such as credit cards are used less compared to developed countries, mainly due to security concerns and high charges and fees. Furthermore, financial institutions reduce e-commerce potential because they have high provisions on e-commerce transactions.

Payment systems in Serbia are characterized by the fact that they impose high transaction fees for companies when charging their customers, which makes online sales less attractive. This also coincides with the fact that cash is by far the most widely used method of payment. Banca Intesa was the first bank to introduce e-commerce service in Serbian market, back in 2007 when it enabled the citizens to perform online shopping. From 2007 to the beginning of 2014 service to e-commerce participants has only been provided by Banca Intesa, which charged 5% of the transaction for this service. Banca Intesa now holds the leading position in e-commerce market, offering several payment cards (DinaCard, MasterCard, Maestro, Visa, and American Express). Serbian citizens performed more than 650,000 online transactions in 2016 using Banca Intesa e-commerce services, and merchants recorded more than RSD 3.5 billion of

94 turnover. Growth in the number of transactions by 66% and turnover by 53% compared to 2015 confirmed Banca Intesa’s leading position in Serbian e-commerce market36. (Milošević, 2017).

It is very important to provide a significant stimulus for the financial infrastructure that supports commerce. Intensifying of competition in this segment is a key to a decrease of transaction fees that banks charge and that represent a precondition for e-commerce functioning. Today, these services are also provided by UniCredit bank, AIK bank, Raiffeisen bank Belgrade and Komercijalna banka.

Given that the preferred method of payment in Serbia is still cash, it is not surprising that only 450-500 Internet stores37 accept payment cards from one of the five domestic banks that offer a service of acceptance of the payment cards on the Internet, the so-called e-commerce service (Birovljev, 2018).

Trends in e-commerce, mainly based on electronic payment methods, were coming from the rest of the world to Serbia within five years. Today's projects in electronic payments are not late more than two years in comparison to the surrounding countries. Innovations in this segment in Serbia are reserved for several banks that have a vision and means to develop electronic payments. Unfortunately, due to the necessary initial high investment, there are not enough startup companies in this area. Benefits of the banking system are a high level of security and security in online payments.

Active participation of the largest banking institutions present on the market in Serbia is ever more evident in terms of e-commerce development. In this context, it SoGe Bank may be mentioned, which offers payment service, monthly online store maintenance for customers (RSD 1000), as well as iPAY services, instant payments, QR codes payments (implementation will begin soon), with certain innovations in the fintech business. A similar approach is available at Raifeissen Bank, which offers to its clients, but also to interested parties, an opportunity of using their online retail platform, with accompanying digital, advisory and analytics services.

3.3. BARRIERS RELATED TO GOVERNMENT INSTITUTIONS

Government institutions, such as customs, National Postal Office, National Bank, Ministry of Trade, Tourism and Telecommunication, national courts and many SOEs present significant e-commerce enablers. Their market position, size and legislative status imply that their actions within the scope of e- commerce have a profound, resonating effect. Therefore, all limitations imposed by these actors, as well

36 Airline tickets have the biggest share in Banca Intesa e-commerce transactions, followed by tickets for culture events, house appliances and books, clothes and footwear, cosmetic products, and mobile telecommunication services - http://www.diplomacyandcommerce.rs/banca-intesa-confirmed-the-leading-position-in-e-commerce- market-growth-in-the-number-of-transactions-and-turnover-via-e-commerce-service/ 37 Since there is no official Registers of online stores in Serbia, there is a rough estimation that there are up to 3000 Internet stores in our country.

95 as their internal inefficiencies represents significant barriers to e-commerce development. Some of the main barriers are relative inefficiency of national postal service, limited statistical data coverage of e- commerce transactions and a conservative stance towards new, modern means of payments, low involvement of the courts of law, especially in disputable low-amount e-commerce transactions and low implementation of modern e-commerce techniques and approaches within public procurement process, which are often seen as “rigged” and not transparent enough.

3.4. BARRIERS RELATED TO E-COMMERCE SERVICE PROVIDERS

In a narrow sense of concept definition, e-commerce enablers would be considered all companies which provide business solutions which enable the conduct of e-commerce. In this sense e-market creators, outsourcing companies, which provide SaaS solutions, companies which develop personalized e-commerce systems for companies, or sell software platforms, and consulting companies focused on online business optimization (including both e-commerce and digital marketing) are considered as the main representatives of this category. It is important to note that the majority of companies from this segment are international, and that there are not many companies physically present in Serbia which specialize in providing e-commerce solutions, therefore, Serbian companies have to make do with already defined platforms and solutions, which are not optimized for the Serbian market. Furthermore, Serbian companies are seldomly willing to invest money on a monthly basis for having a subscription to a certain online e- commerce platform.

3.5. BARRIERS RELATED TO INFRASTRUCTURAL PROVIDERS

Within this category, companies which provide infrastructure necessary for conducting e-commerce transactions are analyzed, excluding SOEs. These companies provide internet connections, hardware solutions and other equipment necessary for the conduct of e-commerce. In this category, applying the broadest definition of e-commerce enablers, providers of modernized distributional capacities can also be considered. All barriers related to the limitations of their offers and existing solutions are also manifested as limiting factors of e-commerce development.

In this section a detailed analysis of e-commerce barriers in Serbia was provided, through classification of limitations depending on the source of the limitation itself. Therefore, demand-related, supply-related and e-commerce enablers-related categories were constructed. It is necessary to point out that other considerations are also possible, like analyzing e-commerce barriers depending on the nature of the transaction (B2B, B2C, B2G, etc.) or depending on the phase of the transaction in which the barriers are manifested (pre-transactional, transactional and post-transactional barriers). Finally, special care should be

96 taken when analyzing e-commerce as a whole, since there are significant differences between two main aspects of e-commerce, e-procurement and e-sales.

In order to finalize the proposed model, detailed analysis of e-commerce benefits is required. General positive aspects such as improved customer convenience, improved data analytics, improved data gathering and database management, potential reduction of operating costs (lower inventory levels, less personnel, etc.), global reach, increased brand awareness, scalability and marketing optimization and improvement are well known and documented. What needs to be analyzed are specific benefits of e- commerce use and development in Serbia, and how it positively effects the main stakeholders.

IV SWOT ANALYSIS OF E-COMMERCE IN SERBIA

STREANGTHS: WEAKNESSES: • Solid Internet infrastructure (availability of • Low e-commerce engagement; different types of internet, number of • Expensive International parcel shipment to EU providers, etc.). • Average salary and average household • Legislation procedure for new pure-click consumption is one of the lowest in Europe; startups is relatively simple and not • Consumer trust is low; expensive; • Low education levels of the population and low • Strong corporate internet presence; computer literacy; • Favorable trading agreements with certain • Language barriers, especially when ordering non EU-28 countries, especially Russia; via international websites; • Cheap electricity. • Customs procedures, for certain products; • Relatively undeveloped logistics; • High transactional costs (provisions of banks).

OPPORTUNITIES: THREATS: • Omnichannel approach of companies in • Low market attractiveness, especially in terms Serbia (integrated brick and click); of online spending, online product purchasing • E-commerce can create certain by category and the number of online international or even global market niches shoppers; for specific authentic Serbian local • Negativ e-commerce PR products; • Slow digital e-commerce innovation • The Government is annually increasing introduction; their efforts in supporting the expansion of • Safety and privacy issues (personal data the growing IT industry; protection); • E-commerce represents a potent market • Low expertise and experience regarding e- context for many small national startups; commerce transactions; • Strong social media usage in Serbia can be • One of the oldest population in Europe; used for synergetic effects when coupled with e-commerce; • E-commerce has proven as a useful tool in tackling certain specific local or microlocal market requirements.

1. STREANGTHS:

Internet infrastructure is solid in Serbia. According to SORS study of ICT usage in Serbia in 2018, 99.8% of companies in Serbia have internet connection, of which 98.8% possesses a faster broadband connection (every third company has an internet speed higher than 30 Mbps).

Opening a new company in Serbia is relatively easy, regardless of nationality. Administrative requirements are low, as well as required equity. Companies focused on e-commerce are categorized as retailers and wholesalers, and treated like any other company, with no additional legislative requirements. E-commerce is available to all interested individuals and companies (with certain exceptions such as online sales of medicaments, cigarettes, alcohol, etc.).

Serbia is not a member of EU, but has bilateral trading agreement with EU-28, as well as CEFTA and EFTA. What is important that Serbia also has preferential trading agreements with Russia, Kazakhstan and Belarus. This means that Serbia has a strong trading mediatory role, especially in relations between EU- 28 and Russia, where trade restrictions exist.

Serbia has the cheapest electricity in Europe at the price of 0.0705 EUR/kWh (with the exception of Ukraine). This figure is 2-3 times lower than in EU-28 countries38. This represents a significant strength in e-commerce development, especially in terms of capital-intensive online markets, which require 24h available complex electronic systems which use a lot of electricity. In short, every company in e-commerce business, where electricity costs have a high share in operational costs, has a significant international competitive advantage.

2. WEAKNESSES:

International parcel shipment in Serbia is more expensive than in EU-28 countries. This is a significant weakness, especially in terms of international e-commerce development in Serbia.

Low average income in Serbia. National statistics provides a figure of approximatively $483 USD for an average monthly net salary amount in Serbia in October of 2018. Furthermore, median value of this

38 For more details visit https://ec.europa.eu/eurostat/statistics-explained/index.php/electricity_price_statistics (accessed February 9, 2019)

99 indicator was around USD 380, which means that 50% of all employed people in Serbia earn no more than USD 380 a month39.

Average Serbian online shopper is very risk-aversive and conservative. When products bought are analyzed, only few categories, such as clothes, household goods and electronic devices have a significant share. Educational level of potential customers is relatively low. According to SORS study on ICT usage in Serbia in 2018 among computer users, 59.7% have secondary educational level, 17.7% lower than secondary educational level, and 22.6% tertiary educational level.

Lack of customer e-commerce experience. Of all the individual internet users, 45.4% never bought anything online. Frequent online shoppers, who purchase online more than 10 times in three months amount to only 5.6%. These figures are significantly different in EU-28, where 15% of online shoppers have 10 or more e-commerce transactions in three months, whereas more than 40% of online shoppers spend between 100 and 500 euros on online purchases in three months40.

One of the main reasons why a significant gap between Serbia and EU-28 in terms of product categories bought online, especially films, music, games and computer upgrades, exists is because of a strong presence of online piracy.

Serbian Customs, in some situations, have complex procedures and required administrative paperwork, which also lowers delivery times.

According to the World Bank’s Connecting to Compete report from 2016 Serbia ranks as 76th out of 160 countries in the area of logistics as measured by LPI Index.

3. OPPORTUNITIES:

Omnichannel approach is great opportunity for many Serbian enterprises. This approach has significant advantages in terms of customer trust, market expansion and cost reduction among other advantages.

E-commerce represents a low-cost means of attaining additional revenue for many Serbian marketers. Experience from physical retail can be coupled with online market opportunities, in order to expand brand recognition and market size.

39 For more details visit http://www.stat.gov.rs/sr-latn/vesti/20181225-prosecne-zarade-za-oktobar-2018/?s=2403 (accessed January 9, 2019) 40 For more details visit https://ec.europa.eu/eurostat/statistics-explained/index.php/e- commerce_statistics_for_individuals#most_popular_online_purchases (accessed January 10, 2019)

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Serbian Government has proclaimed that Serbia will become the land of IT. In this sense, significant efforts have been made since to provide required financial and institutional support for the development of this sector. As e-commerce is heavily dependent on the development and implementation of ICT, this progress will have positive effects in future development.

E-commerce is often the best way to develop a new business, which is especially important for newly founded startups in Serbia.

Further smartphone penetration is significant opportunity for e-commerce development.

4. THREATS:

According to SORS study in 2018 around 1,800,000 people bought something online in the last three months. Of all the internet users, 45.4% never bought anything online.

The lack of online trust manifests itself as a behavioral barrier in terms of limiting what can be sold via internet in Serbia. Safety and privacy issues concerning e-commerce are very present in Serbian population.

Lack of innovation is also a problem. Many of the MSMEs owners do not have the necessary knowledge and management skills to understand the importance of innovation in areas other than production processes and mostly focus on day-to-day activities. Therefore, it is hard for them to understand the value that e-commerce implementation can bring them.

In general, people in Serbia are uncertain about their rights as online customers and are unaware about how (and which) law could protect their interest when buying online. In combination with their fear of buying unknown goods, overall it results in lower levels of online purchases.

Negative e-commerce PR. Emphasized statement can be used to describe online PR, since customers are more likely to provide reviews of the transactions in which they were involved, while potential customers are more likely to pay attention to such reviews, since they provide a significant source of information in relatively immaterial shopping process. Internet frauds exists, but sometimes even bad communication between customer and seller can lead to an unsatisfied customer receiving something that was not ordered

101 nor paid for. Since returns are oftentimes difficult and costly, the customer will lose trust in e-commerce and probably leave a bad review online. Sellers in Serbia often neglect this, but these negative reviews can sometimes have an avalanche effect, seriously damaging the market reputation of the seller in the end. This bad PR image is very difficult to rectify, especially in online context. This kind of behavior presents a threat both on the micro, as well as macro level of e—commerce development in Serbia.

Serbian citizens are sometimes exposed to fraudulent online behavior and cybercrime. Internet scams related to travel and online holiday vacation reservations, software purchasing, as well as acquisition of many products, such as electronic devices or mechanical parts, are present. Court proceedings are rare in case of low amount online frauds, and when undertaken usually last for a long time and often proceeding costs outweigh the value of the initial e-commerce transaction. Customers are institutionally advised to take care what they buy online and where, putting the majority of online purchasing risks on them, reducing the willingness of people to purchase online. However, these scams are sometimes overrepresented in media and create bad image for many correct e-commerce marketers.

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V BENCHMARK ANALYSIS OF E-COMMERCE

1. E-COMMERCE IN EU41

According to Ecommerce Europe association (European Ecommerce Report 201742) while developed EU markets are still leading by number of online customers, Central and East European markets recorded during 2016 the biggest increase in retail online sales. Romania has achieved the best results in such sense with an increase of 38%. Slovakia and Estonia had an increase of 35%, and Ukraine made an increase of 31%. Many of these countries are considered to be markets dominated by the use of mobile devices over computers, when it comes to online shopping, since most consumers in those countries prefer to shop online using a mobile phone. There is also a trend in these countries that customers could receive their packages on certain delivery terminals. This method is preferred by 95% of Estonian citizens, probably due to lower costs (for buyer as well as for seller) and increased chances for impeccable service.

Overall increase of e-commerce continues and small markets enlarge their share in consumers` base. Central and Easter countries have the best growth rates, whereby many of them (like Romania) have a significant space for commencing an online abroad trade. Key recommendations for marketing experts who would like to have the best results are multilingual websites compatible with smartphones. Lucrative delivery options and payment methods which encourage trust are also trends expressed among retailers, and which assist developing markets.43

1.1. UNIQUE DIGITAL MARKET STRATEGY

Since the initiation of Unique digital market strategy44 in May 2015, European commission has worked on removing the online barriers which disable people to fully access the range of all goods and services offered by EU enterprises. Suppression of unjustified cross-border barriers, online customers protection and

41 HTTPS://EC.EUROPA.EU/DIGITAL-SINGLE-MARKET/EN/NEW-EU-RULES-E-COMMERCE 42 HTTPS://WWW.ECOMMERCE-EUROPE.EU/PRESS-ITEM/EUROPEAN-ECOMMERCE-REPORT-2017- RELEASED-ECOMMERCE-CONTINUES-PROSPER-EUROPE-MARKETS-GROW-DIFFERENT-SPEEDS/ 43 HTTPS://WWW.CLICKZ.COM/ECOMMERCE-IN-EUROPE-HOW-CENTRAL-AND-EASTERN-COUNTRIES- ARE-DRIVING-GROWTH/112280/

44 Unique digital market is part of the EU program `Digital agenda for Europe 2020`, incentives of suggested strategy Europe 2020 are defined by European Union

103 promotion of cross-border online content access are some of the ways in which Unique digital market strategy could be implemented.

E-commerce is one of the foundations of Unique digital market strategy and EU has undertaken several steps to facilitate and make online trade more secure for EU consumers. To achieve the full potential of e-commerce, the EU has made the following steps:

• Revision of Payment services directive and new rules about cross-border package delivery service which both are already in force

• Making new rules which will stop unjustified geo-blocking, and which came into force on 3. December 2018.

• Revision of consumer protection rules that will come into force in 2020

• Introducing new rules about VAT for online sales of goods and service, and which will come into force in 2021

1.2. NEW RULES FOR ENDING UNJUSTIFIED GEO-BLOCKING IN EU45

Geographical blocking (geo-blocking) disables customers to use internet in some EU member state for purposes of buying on foreign websites (which belongs to another country, EU member also). This makes a big problem for consumers: e.g. in 2015. as many as 63% of web pages checked and prevented customers, in some of ways, to buy in another country. The rules imposed by EU commission which will come into force on 3. December 2018. all over EU will end citizenship status and residence discrimination. The rules ensure that people won`t confront anymore with unjustified barriers such as redirecting to website for their residence country or necessity to pay with debit or credit cards originating from some certain country. Online sellers must treat all EU customers in the same way, no matter from which country they buy. Implementation of regulations against geo-blocking will be conducted on a national level.

Transport services, small enterprises financial services and audio-visual services are not covered by new geo-blocking rules since sector law regulations deal with these services. EU transport rules already forbid citizenship status discrimination or discrimination based on air transport, or bus, or ship transport destination. Special EU regulations that protect customers exist when it comes to consumer credits, or taking the mortgage or even opening a bank account. Facilitating cross-border access to audio-visual services is another part of incentives for Unique digital market strategy.

45 HTTPS://EC.EUROPA.EU/DIGITAL-SINGLE-MARKET/EN/NEW-EU-RULES-E-COMMERCE

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1.3. DECREASING THE PRICE OF CROSS-BORDER PACKAGE DELIVERY46

In most of the EU countries cross-border e-commerce increases twice as fast as domestic e-commerce; four billion packages are ordered online and delivered all across EU every year. there is PostEurope – trade association with the head office in Brussels which represent 52 public Post office operators in Europe. PostEurope unites its members and promotes greater cooperation, sustainable growth and continuous innovations47. Main characteristics of Interconnection program of Post office operators with the focus on e-commerce (E-commerce Interconnect Program) are: harmonized set of services in the country of origin and destination; a platform for complete tracking of shipments from place of dispatch to place of delivery; RFID barcode technology; free solution for the return of goods purchased abroad via the Internet; harmonized processes across Europe; quickly resolve customer queries by connecting call centers with as many as 180 post offices worldwide.48

Prices of packages delivery abroad are on average three to five times more expensive than prices of delivery within a country. High costs of delivery are identified by 62% of companies which would like to trade online. Since May 2018. new rules on cross-border e-commerce package delivery came into force guaranteeing price transparency and competition. This will facilitate finding the cheapest method of sending the delivery from one member to state to another.

Delivery prices restriction does not exist, but now companies have to proclaim their prices, so the customer could be able to easily compare them. From the next year customers will be able to compare the delivery prices on the special website page of European commission. National governments will every year gather information from delivery package companies. When the packages delivery is a subject of mandatory universal service national regulatory authorities will have to evaluate where the tariffs are unreasonably high.

1.4. ONLINE CUSTOMER RIGHTS PROTECTION49

The new rules are set to enter into force in January 2020, which will make it easier for national authorities to protect online consumers. The policy will allow removal of sites or profiles on social networks where

46 HTTPS://EC.EUROPA.EU/DIGITAL-SINGLE-MARKET/EN/NEW-EU-RULES-E-COMMERCE 47 HTTPS://WWW.POSTEUROP.ORG/ABOUTUS 48 HTTPS://DELIVER4EUROPE.EU/FACTS-FIGURES/

49 HTTPS://EC.EUROPA.EU/DIGITAL-SINGLE-MARKET/EN/NEW-EU-RULES-E-COMMERCE

105 frauds are identified. It will also be possible to request information from internet service providers or banks to track the identity of dishonest online traders.

The commission has suggested new rules for digital contracts which are currently under discussion by Parliament and Council. Suggested rules would make consumer rights clearer when accessing for digital content or digital services. For example, if the received digital content is not as agreed or as reasonably expected, consumers would have some contract rights. These rights would be also implemented when a buyer gives personal data to a trader before paying. In April 2018. Commission also suggested new agreement which will additionally strengthen consumer rights on internet:

• Internet markets will have to inform buyers if they are buying from traders or a person, so the buyers are more conscious about their rights if something goes wrong

• When the trader pays for search result buyers will be transparently informed, and online trade places will have to inform buyers about key parameters configuring results ranking

• When paying for a digital service, buyers will have benefits from some informative rights with a 14 days deadline to cancel the contract

1.5. NEW VAT RULES50

EU member states are estimated (by European Commission) to lose 5 billion euros in VAT revenue annually due to exclusion from low-value taxation, and by 2020 that figure would reach 7 billion euros. More than 75% of all packages have a weight of less than 2 kg and a value of less than 150 euros and come mainly from China. The European Commission has established an obligation for the Union member states to abolish the tax exemption for small value shipments (mainly up to € 22) by the end of 2020.

1.6. ECOMMERCE EUROPE, EUROPEAN ASSOCIATION FOR ELECTRONIC TRADE51

Ecommerce Europe represents a voice of European digital sector trade. With its 20 national associations, Ecommerce Europe represents more than 75 000 companies which sell goods and services online all over

50 HTTPS://ECOMMERCE.HR/DO-2020-GODINE-KRECE-OPOREZIVANJE-POSILJKI-MALE-VRIJEDNOSTI/

51 HTTPS://WWW.ECOMMERCE-EUROPE.EU/

106 the Europe. European traders still confront with difficulties when selling online, especially when it comes to cross-border sale. They do business on the European level to help law authorities to make a better legal frame for online traders. Ecommerce Europe currently supports:

Individual, completely coordinated and easily comprehensive rules in several fields. For an example, Contract law in EU is just minimally coordinated. It would be easier for traders to sell abroad if they could rely on the same rules for law guaranties and remedies in case of defective products;

Justified and balanced solution for digital economy taxation, which could be accepted on the global level without creating trade barriers for EU;

Balanced approach, based on clear and transparent principles, in regulating relations between online platforms and online stores that trade via platforms.

1.7. FUTURE ECOM52

Topic: SME competitiveness Time frame: From 1st June 2018. until 31st May 2022. Budget: 1,676,598.00 EUR

Digitalization exploitation in term to increase B2B e-commerce – It is evaluated that in sense of sale B2B e-commerce in EU will be in 2020. twice as size as B2C, which is also proved by the huge unrealized potential for SME (small and medium enterprises) in EU. SME inner processes digitalization and automation is key for managing and keeping the pace with global e-commerce demands with ensuring economical profit of course.

Future Ecom is targeting policy makers and business support agencies across the EU who need to fully understand the key barriers for SMEs to leverage and benefit from the internet-driven sales market and to improve digitalization and automation. This is achieved through the exchange of experiences and good practices in 8 EU regions at Future Ecom.

The Future Ecom is partly funded by European fund for regional development, and is implemented by Coventry University Enterprises Ltd. Partners of Future Ecom are: Coventry University Enterprises Ltd. (Great Britain) as Future Ecom`s coordinator, North Denmark (DK), Business and innovation center Lippe-Detmond GILDE (DE), Magnesia Chamber (EL), Lithuanian innovation center (LT), NERSANT – Business association of Santarem region (PT), ELVET-Emilia-Romagna developing agency, Cursor Oy, Regional development company Kotka-Hamina (FI) and Regional council Kimenlaakso (FI).

52 HTTPS://WWW.INTERREGEUROPE.EU/FUTURE-ECOM/

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The main result will be making of Action plan by regions, based on interregional exchanges. Knowledge and capacities which will be acquired by partners will enable creation of new incentives and/or business support programs that will be compared with the best practice. In the end of the project, monitoring of realized incentives will improve the influence of regional policy instruments dealt by Future Ecom partners. The final results will be distributed all across EU.

E-business structural funds operational program – Policy instrument that covers implementation of e- business solutions for small and medium enterprises, including business processes optimization related to production and/or services and performances optimization (e.g. customer service, logistics e-marketing, resources management, ordering and so on) through information technology in context of data transmission networks (e.g. IRC development and implementation, collecting necessary software licenses and maintaining services outsourcing, etc.). The goal of the instrument is to support small and medium enterprises to grow on national, regional and international markets and to increase its innovation and productivity.

1.8. VAT AND E-COMMERCE: NEW DETAILS ABOUT INTERNET MARKETPLACE RULES (2021)53

On the 11th of December 2018 European Commission has published new proposals with a goal of making online markets responsible for calculation, charge and payment of VAT on transactions with customers. The proposal to amend the VAT Directive and the proposal to amend Executive Regulation 282/2011 follow the VAT e-commerce package adopted by EU member states on December 5, 2017, introducing new VAT obligations for online markets and simplifying VAT harmonization for online business.

From January 2021 electronic interface (e.g. online stores, portals, etc.) will become responsible for charging VAT even from companies which are not originating from EU but sell products/services to EU citizens. This will be considered as buying the goods from supplier (B2B supplies) and delivering it to buyers (B2C deliveries). The companies will have to pay VAT on B2C transactions. This is implementing when:

• facilitating goods and services sale at a distance with a maximal intrinsic value of 150 euros which exports from non-EU member state to EU

• facilitating goods delivery to consumers within the EU when the supplier is not founded in EU. This rule would be implemented no matter of intrinsic value of delivered goods

53 HTTPS://WWW2.DELOITTE.COM/NL/NL/PAGES/TAX/ARTICLES/VAT-AND-E-COMMERCE-NEW-DETAILS- ON-RULES-FOR-ONLINE-MARKETPLACES-IN-2021.HTML

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Main purpose of new VAT obligations is to ensure that VAT authorities will receive VAT amount in case that non-EU sellers haven`t followed the rules. The Commission is now introducing provisions that clarify situations where electronic interfaces are considered to have facilitated sales between users and represented in details the records they must keep for sale through their interface.

2. CROATIA

E-commerce in increasing since Croatian EU accession in 2013. According to a recent research of Croatian daily news ``Poslovni Dnevnik``, there were 1.75 million registered online buyers in Croatia in the end of 2017 (population of Croatia is about 4 million). The growth rate in 2017 was 18% with 250 000 new buyers. In Croatia, 60% percent of internet users shop online, and between 6 and 10 percent of internet users shop once in a month at least (9% more than year before). Only 6% of internet users have never bought anything online. It is believed by marketing research agencies that the market value of e-commerce in Croatia is 446 million dollars, so the trade chains in Croatia generate about 30 million dollars income annually only by online transactions.54

E-commerce in Croatia is developing more and more due to increased use of internet in business. E- commerce in Croatia offers in small part products and services which could be advantageous for those who are included in e-commerce. Buyers who still turn to traditional ways of shopping and with a lack of trust in online payments as well as mistrust in giving personal data online are the potential barrier in Croatia. Hence, buyers must be educated about the ways how to protect themselves and what to expect. Online shopping is vastly promoted in media. Croatia has shown a lot of interests in development of e- commerce especially by implementing the E-commerce law. Adjustment to EU law frame would be probably the biggest challenge for Croatian companies that practice e-commerce. In February 2014 Croatian E-commerce law was harmonized with EU Directive 2000/31/EC.

E-commerce development strategy in Croatia for period from 2007 to 2010 exists on the website of Croatian Ministry of economy. Beside this, Digital agenda for Europe which has to be followed know (since the Croatia is an EU member) could also be found.

Regulations which arrange e-commerce in Croatia are provisions of Trade law (NN 87/08, 96/08, 116/08, 76/09, 114/11, 68/13, 30/14) and provisions of E-commerce law (NN 173/03, 67/08, 36/09 i 130/11, 30/14), which is completely in accordance with EU Directive about e-commerce 2000/31/EC. Among other things to this form of trade are applicable: the provisions of the Consumer protection Law (NN 79/07, 125/07, 79/09, 89/09, 133/09, 78/12 and 56/13), the provisions of the Companies Law, The Law on Protection of

54 HTTPS://WWW.EXPORT.GOV/ARTICLE?ID=CROATIA-ECOMMERCE

109 personal data, the Law on Customs, the Law on Value Added Tax, the Law on Postal Services, the Criminal code Law, the Law on Obligations, etc.55

Croatia implemented `e-Croatia 2020` strategy in 2017. which is a strategic document made with purpose of improving quality of life of Croatian people by increasing competition in economy and with IT support. Usage of high-quality public services arranged to be in accordance with present strategies and law frame of Croatia, as well as with EU directives and sector`s recommendations is also one of the Strategy`s purposes. By the end of 2020. computer and language skills of 2000 custom workers will be improved, and the level of their competencies will be increased and some certain eLearning modules are to be developed. Necessary equipment and IT tools for implementing inspection activities in e-commerce and e-activity on internet are acquired. (Ministry of public administration of Croatia, 2017.)

The cross-border e-commerce rises as twice as fast as domestic e-commerce in most of EU countries.56 In 2015, mail arrived from China to Croatia had an increase of 42%, according to Croatian Post, the Croatian national postal operator and leader in the postal services market in Croatia. That is the key reason why Croatian Post has joined E-Commerce Interconnection Program (ECIP). The purpose of ECIP is to conduct completely interconnected network for e-commerce products delivery abroad and, as a main goal, to provide the same purchase and delivery experience that customers have with foreign e- traders, as they should expect when buying from domestic e-traders. Croatian customers now buyer lower prices for delivery services in Europe, Americas, Canada, Australia and New Zealand with quicker delivery.57 According to Hacom58 even 95% of packages delivered to Croatia are originating from China (2017). For domestic e-traders this means that EU won`t deal with the Chinese competition which has subsidized delivery at least for several more years, but with only 5% of packages sent by EU traders within the Union. Due to a fact that EU traders are discriminated (they have to ensure everything which Chinese traders do not have and they offer higher level of safety and customer protection), Croatia demanded form EC to legally regulate the fact if the trader is from EU.

Croatian Ministry of Economy published in 2016 `Guide for doing an e-commerce activity` with purpose of improving e-commerce in Croatia. How to manage e-commerce activities, what are e-traders` obligations towards customers and EC (2016) measures for removing e-commerce obstacles are explained by the Guide. (Ministry of administration of the Republic of Croatia, 2016)

`eCommerce Croatia` association founded in 2015 as an incentive for e-commerce market development support. `eCommerce Croatia` association has been founded with a purpose of informing, educating, connecting and providing aid to e-traders and other included in creation, implementation and e-commerce promotion processes. More than 50 laws have to be taken into consideration when one is about to open

55 HTTPS://WWW.MINGO.HR/PAGE/KATEGORIJA/E-TRGOVINA 56 HTTPS://DELIVER4EUROPE.EU/FACTS-FIGURES/ 57 HTTPS://WWW.CROATIAWEEK.COM/42-MORE-POST-FROM-CHINA-ARRIVING-IN-CROATIA/ 58 HAKOM – Croatian regulatory agency for network activities

110 an online store in Croatia (which often fears entrepreneurs). Hence, `eCommerce Croatia` offers free advice to its members with a support of specialized e-commerce lawyer.59

2.1. LAW SUPPORT FOR E-INVOICE INTRODUCTION

Pilot project for introducing and exchange of e-invoices in B2B segment caused by economy analysis was initiated and coordinated by Croatian Ministry of Economy in the end of 2012. The project has been realized in coordination with Tax authorities, Croatian state archive of Ministry of Culture and Croatian business representatives the project was realized in term to encourage more use of e-invoices in Croatian entrepreneurs’ business and to achieve more savings and their competitiveness.

The pilot project for introduction and exchange of e-invoices in Croatian entrepreneurs` businesses has been conducted during the period of 7 months which resulted in creation of document named ` Guidelines for handling electronic account exchange using the EDI system`.

One more connected activity is the e-invoices exchange process between enterprises and public administration (B2A).60

By introducing e-invoices61 Croatia has put much effort to standardize a significant part of B2B activity. It is the introduction of e-invoice instruments which significantly increases business efficiency crucial for e- commerce, an activity which highly demands speed of business. Actually, it is a multi-iteration process of national implementation of such instrument. The first step was the conceptual introduction into legal frameworks. This was done through the following laws and regulations:

• Law on e-invoices issuing in public procurements (NN 24/2018)

• Handbook on technical elements, issuing and exchange of e-invoices and supporting documents in public procurements

• Handbook on sort and level of fees for services of sending and receiving e-invoices for contracting authorities in public procurement

It is important to note that companies have an obligation to apply for the approval of the introduction of e-invoices with the competent institutions. The implementation itself is not limited to the instrument itself,

59 HTTPS://ECOMMERCE.HR 60 Further information could be found at HTTPS://EC.EUROPA.EU/INEA/EN/CONNECTING-EUROPE- FACILITY/CEF-TELECOM/2017-HR-IA-0143 (30.5.2019.) 61 Further information could be found at HTTPS://WWW.MINGO.HR/PAGE/KATEGORIJA/E-RACUN (30.5.2019.)

111 but is predicted to be introduced and incorporated into standardized data exchange frameworks, which would be based on the EDI system.

Another important contribution in this regard is the mandatory application of e-invoices in public procurement. This is a measure envisaged by the Law on Electronic invoicing in public procurement, which leads to significant savings in the public procurement process, as well as to increased transparency of business operations. It is estimated that combining e-invoices with other digital instruments, such as e- payments, can produce positive effects in the amount of 6% to 13% of the total procurement amount, which means more than HRK 2.6 billion for Croatia.

2.2. NATIONAL SUPPORT AND FORUMS CONTRIBUTION

In December 2010 EC issued Statement about e-invoices benefits in EU and the Decision for establishing the European forum for multiple e-invoices. European commission stressed how important e-invoices are for speeding up the economic growth and increasing competitiveness of the entire European economy.

In accordance with the paragraph of Decision for establishing the European forum for multiple e-invoices Republic of Croatia as a candidate state for EU accession requested participation in the work of the Forum with the status of observer country. The observer country status was approved in September 2011. and Croatian minister of economy named several representatives to contribute in the work of the Forum for e-invoices. According to: EC`s Decision on establishing European multi-forum for e-invoices (C (2010) 8467), Decisions of Commission for establishing National council for e-commerce (COM (2010) 712 final) Službeni glasnik br. 96/2010, 78/2011, klasa: 650-01 / 10-02 / 01, number: 5030116-11-3 od 7. July 2011, 87/12, 96/13), article 33 of National council for e-trade and Conclusion

Members of National multi-forum for e-invoices are nominated from external experts by the National council. President and correspondent of the multi-forum are appointed by the minister of economy. Forum`s work field is:

Helping European commission (from now EC) in monitoring the development of e-invoices market and level of implementing e-invoices in the production as well as service sector in all EU member states;

Contribution in exchange of experiences and good practice of EU member states which will facilitate adoption of solutions for operating form of e-invoices;

Suggesting adequate solutions for other cross-border barriers/topics connected with e-invoices exchange;

Supporting and following activities that lead to implementing of standard data model for e-invoices;

Administrative job of Council done by Ministry of economy;

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2.3. E-COMMERCE PUBLIC PORTAL

On the website of Ministry of economy could be found one special part dedicated solely to e-commerce.62 This web page contains the following:

• E-commerce description – description of what is assumed by e-commerce term, who are the contributors in e-commerce and what type do exist (e.g. B2B, B2C, B2A, C2A, etc.)

• Advantages of e-commerce – all advantages of e-commerce listed. Global dimension, group sale via internet, significantly lower doing business costs, 24 hours availability of doing business, maximum comfort, safety and control of purchase, information about current prices, promotion and lower prices of some products for buyers/consumers, possibility of buying the products which could not be found on domestic market, other buyers` experiences and gray economy suppression are all emphasized in this section.

• 5 advice on how to protect from frauds – All that glitters is not gold (it is suggested to buyers to buy via reliable websites and to seek for trustmarks), choosing secure payment (accent is on e-payment advantages), what could be hidden behind (how to identify a fake website, which information must contain a good website, how to read reviews, etc.), to if the price is valid (VA included, custom fees included, delivery costs, hidden costs, etc.), not to correspond with unknown users (spam, identity steal, frauds and so on)

• Relevant laws and regulations list

• E-commerce condition indicators in Croatia – interesting graphical solutions that represent basic e-commerce indicators: buying/selling via internet, IT sector data, and so on

• Relevant documents

• Useful links

Instead of being a separate portal this page is subcategory of the website of Ministry of Economy containing basic information. Beside this, many more important elements, like e-commerce Guide are not represented on such page.

62 Further information could be found at HTTPS://WWW.MINGO.HR/PAGE/KATEGORIJA/E-TRGOVINA (30.5.2019.)

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2.4. TENDERS 2018

Many tenders took place in June and July 2018 with a purpose of investing in: software, equipment, design and development of web pages, development of applications and m-trade solutions (mobile trade) as well as innovations development:

1) `WWW VOUCHERS FOR SME`63

• When receiving the vouchers micro, small and medium companies are encouraged to improve their network solutions in representing and sales of their own products and services. The goal of this call is to contribute to addressing the identified weaknesses of SME regarding the insufficient and inadequate implementation of e-commerce and m- commerce solutions for better market positioning.

• Activities that could be accepted to finance within this call imply creating and/or promotion of one or more areas, and those are: business web pages, e-commerce and m- trade.

• Suggested projects have to include one or more acceptable cost categories which are: making a business web page; improving business web pages including adjustment for mobile phones and tablets; trade and/or websites upgrade by implementing online payment methods. Parallel with some mandatory cost category/categories suggested projects are allowed to contain one or more acceptable cost categories such as: domain optimization service; creating applications and solutions for m-commerce (mobile coupons and loyalty cards); costs of domain renting, or server/cloud renting in term of doing business up to one year from the day the service was provided.

• The voucher amount (grant amount) is not allowed to be less than 15 000 HRK or more than 100 000 HRK

• The call is always open and is valid from 29. June 2020.

• Project implementation is not allowed to start before the voucher is given. Implementation period could not last more than 12 months from the day the voucher is given

• Fund: European fund for regional development

63 HTTPS://STRUKTURNIFONDOVI.HR/NATJECAJI/WWW-VAUCERI-ZA-MSP-OVE/

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• Program: OP Competitiveness and cohesion 2014-2020

2) Improving competitiveness and efficiency of SME with ICT (Information and communication technology)64

• This tender is for companies looking to invest in the creation/development /procurement of ICT business solutions, designed to optimize jobs/business processes/production; or implementation, adaptation and integration of business solutions with existing/new ICT system.

• Acceptable costs are: purchase of standard and out-of-the-box software and development of specific software; software upgrade license; costs of using SaaS (Software as a Service) models / services; costs of computer and communication equipment; costs for other equipment and devices required solely for direct project activities; employee education; etc.

• Entrepreneurs can receive grants in the amount of 100,000.00 HRK to 1,000,000.00 HRK. The funding rate is up to 65% for micro and small businesses and up to 50% for medium-sized businesses.

• Fund: European fund for regional development

• Program: OP Competitiveness and cohesion 2014-2020

3) Innovation of newly established SME Phase II65

• The goal of this call is to encourage innovations of newly founded SME and to implement it having the new product or service on the market as a result

• Activities that could be implemented include: adaptation developed product/service to market demands; preparations for product/service launch – e.g. marketing plan and business and marketing review, marketing research and innovations testing, market analysis verification, preparations for next innovation cycle, etc.

• Eligible companies are small and medium enterprises not older than 36 months from the day of applying the project

• Support amount given to every project will be between 150 000 and 1500000 HRK, and help intensity is up to 85%

64 HTTPS://STRUKTURNIFONDOVI.HR/NATJECAJI/POZIV-NA-DOSTAVU-PROJEKTNIH-PRIJEDLOGA- POBOLJSANJE-KONKURENTNOSTI-I-UCINKOVITOSTI-MSP-KROZ-INFORMACIJSKE-I-KOMUNIKACIJSKE- TEHNOLOGIJE-IKT/

65 HTTPS://STRUKTURNIFONDOVI.HR/NATJECAJI/INOVACIJE-NOVOOSNOVANIH-MSP-OVE-II-FAZA/

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• Fund: European fund for regional development

• Program: OP Competitiveness and cohesion 2014-2020

2.5. DIGITAL MARKETING WORKSHOP

On 27th of February 2019 Labin city organized one day education about digital marketing. Purpose of educational workshop was to give delegates an insight in digital marketing in simple and applicable way. Google Ads, Facebook and Instagram content and Facebook and Instagram advertisement were emphasized the most during the workshop.66

2.6. `KNOWLEDGE FOR FUTURE` WORKSHOPS (2019)67

In 2019 several workshops in couple of Croatian cities will take place, and on every location will be held two workshops: How to manage a workshop and How to work with clients from Croatia and worldwide. The former is for entrepreneurs who want to make their own website or engage experts for such job, and later is for honorary persons and small businesses entrepreneurs who would like to establish or to widen their knowledge about work with long distanced clients. Participation is free and limited to up to 20 delegates.

Plus, hosting (the biggest hosting provider in Croatia), Algebra (the biggest and the fastest growing educational group in Croatia), Step Ri (Scientific-Technological park of University of Rijeka) and Coin Zadar (mutual work space) are partners which finance these workshops.

2.7. ENTREPRENEURS` IMPULSE

In term to develop and level up competitiveness in SME sector, and to make new work places Croatian government has implemented since 2012. the Entrepreneurs` impulse project as a stimuli project for SME.

66 HTTP://WWW.LABIN.HR/GRAD-LABIN-POZIVA-NA-EDUKACIJU-O-DIGITALNOM-MARKETINGU

67 HTTPS://ZNANJEZABUDUCNOST.COM/

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Trade and entrepreneurship are stimulated through: grants; easier financing access; creating an international business dimension; investing in research and development (R&D). A perfect opportunity for traders to use public funds for creating an online store was the incentive of Ministry for Entrepreneurship to give an advantage to companies which were supposed to be more competitive on European market by investing in new technologies and education of employees. The budget for 2014. was 1,26 billion HRK.68

2.8. ICT IMPLEMENTATION FOR IMPROVING BUSINESS PROCESSES69

This grant scheme is designed to support SMEs' investment in information and communication technologies and to co-finance the analysis of existing business processes and innovations and their digitalization, including hardware and software costs. The idea of this call for proposals was to provide grants to micro, small and medium-sized enterprises for digitalization of business, as part of the implementation of the Operational Program "Regional Competitiveness 2007-2013". The European Union has donated a total of 24,061,600 HRK through the European Regional Development Fund. The individual value of the grants ranged from 150,000 to 750,000 HRK. One of the funded activities was the creation or improvement of online stores.

2.9. CRISS70

Croatian schools have joined the European project in developing digital competencies of students. The CRISS project was launched as part of the European program for research and innovation, OBZOR 2020, to test a platform that will enable the acquisition and evaluation of students' digital competences in primary and secondary schools across Europe.71 The goal of the project is to involve 490 European educational institutions which will cover 25,400 students and 2,290 teachers during the 2018/2019 school year. The project involves 15 international partners from the European Union, who are leaders in the fields of new technologies, digital competences, educational innovations, learning and teaching. The Croatian partners in the project are the Faculty of Organization and Informatics, University of Zagreb, which plays a key role in the preparation and implementation of the project, as well as the Croatian Academic and Research Network (CARNET). Also, 21 primary and secondary schools from Croatia will participate in the project. Croatian students and teachers will be involved in the project through the Croatian Academic and

68 HTTPS://MARKER.HR/BLOG/WEB-SHOP-ULAGANJE-KROZ-PODUZETNICKI-IMPULS-209/ 69 HTTPS://MARKER.HR/BLOG/IZRADA-WEB-SHOPA-UZ-BESPOVRATNI-DRZAVNI-POTICAJ-217/ 70 HTTP://SPI.EFST.HR/EVOLUCIJA-DIGITALNE-KOMPETITIVNOSTI-DIGITALNA-PISMENOST-U-EU/ 71 HTTPS://WWW.MEDIJSKAPISMENOST.HR/HRVATSKE-SKOLE-U-EUROPSKOM-PROJEKTU-ZA-RAZVOJ- DIGITALNIH-KOMPETENCIJA-UCENIKA/

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Research Network (CARNET). Teachers will be able to apply the CRISS platform in the teaching activities of various subjects, thereby developing and accessing digital competences.

2.10. CERTIFIED SHOP® AND EMOTA TRUSTMARKS

CERTIFIED SHOP® is a national trustmark which proves that customers trust to traders.72 The mark confirms compatibility with national and European secure purchase standards, so then is given also European mark – EMOTA. CERTIFIED SHOP® confirms that the shop is reliable and safe and that customers could put full trust in it. Online traders with do business in accordance with strict European standards, represent good examples and offer high quality of their services are pointed out by this mark. At the same time that is the same reliability sign in region whose quality is recognized and supported by the main European organization EMOTA. In that way traders are able to increase abroad credibility and reach wider range of customers on EU level. Only Shopper`s Mind has the license in Croatia to give European trustmarks.

2.11. E-COMMERCE GUIDE, EXTENDED EDITION

It is the document which has the purpose to provide e-traders with information about their business activity.73 The guide contains the following elements:

• Law frame that must be respected during business activities, what is allowed to be sold on internet

• Advice and pre-start business procedures

• E-traders’ obligations

• Advice for good and efficient business

It is actually a PDF document having some illustrations. The text itself is not too big and contains basic elements on first place.

72 HTTPS://SMIND.HR/OZNAKA-CERTIFIED-SHOP/

73 Further information could be found at HTTPS://WWW.MINGO.HR/PUBLIC/TRGOVINA/VDC2_20116.PDF (30.5.2019.)

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2.12. A GUIDE FOR BUSINESSES THAT TRADE REMOTELY OUTSIDE BUSINESS PREMISES

It is kind of a shorter version of previous document74, containing first and foremost the next information:

• New rules

• New obligations

• List of advantages

• List of disadvantages

• Special part referring to data security

• Advice and list of content and offer presenting models

The document is also in PDF format and is represented through illustrations which makes it easier for reading and interpretation. It is the first step in informing interested, but without giving any detailed proposals or insights.

2.13. E-PUBLICATIONS

This is only a one part of Ministry of Economy`s website containing a set of different documents. One of them is the Status of internet trade in Croatia and European Union in 2013.75 This represents a short document with review of important macro information (use of devices, internet usage, B2C internet buying, e-sale for SME, analytical restructuring of these indicators, comparison with EU-28). The document is also in PDF with data from 2013. without any updated version. Beside this one more connected

74 Further information could be found at HTTPS://WWW.MINGO.HR/PUBLIC/DOCUMENTS/VODI%C4%8D%20ZA%20POSLOVNE%20SUBJEKTE%20 KOJI%20TRGOVINU%20OBAVLJAJU%20SREDSTVIMA%20DALJINSKE%20....PDF (30.5.2019.) 75 Further information could be found at HTTPS://WWW.MINGO.HR/PUBLIC/DOCUMENTS/STANJA%20INTERNETSKE%20TRGOVINE%20U%20RH% 20I%20EU%20U%202013.,%20BRO%C5%A1URA,%20OLISTOPAD%202014..PDF (30.5.2019.)

119 document exists named Digitalization Index in Croatia for 201576, with a quick review of data about internet usage in Croatia.

2.14. YELLOW CLICK – CROATIAN POST OFFICE ONLINE STORE

Croatian Post Office has established its own official online store77 in term to ensure reliable alternative for internet trade with standardized delivery and payments solutions for Croatian citizens.

Multichannel sale has been implemented in term to increase customers` safety and trust. Beside online store, customers have an opportunity to order the product via mobile phone, or in the nearest post office.

Available payment options are:

• Cash – when taking the package

• By card (once or maximum on 12 annuities)

• PayPal

• Pre-invoice

During promo periods the Post offers delivery free of a charge. Categories of products in sale are:

• Actions and useful products

• House

• Tools and garden

• Sport and leisure activities

• Toys and kids

• Office material and products for school

• TV, audio, video

76 Further information could be found at HTTPS://WWW.MINGO.HR/PUBLIC/TRGOVINA/DESI_RH161115.PDF ZA 2015. (30.5.2019.) 77 Further information could be found at HTTPS://WWW.ZUTIKLIK.HR/ (30.5.2019.)

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• Computers, mobile phones, equipment

• Health and beauty

• EVOTV

Supply is marked by a large number of brands.

2.15. LOGISTICS OPTIMIZATION – CROATIAN POST

Croatian Post (hpekspres) has created special e-PAKET78 service for users who send a large number of shipments and demand secure and reliable delivery and payment, especially for companies which deal with:

• e-commerce

• TV shop

• Catalogue sale e-PAKET receives on the seller`s address, and is ordered on the buyer`s address or in some post office. The service is paid by the buyer. e-PAKET option includes some additional services as insurance, or some additional documents and so on.

In addition to the e-Package option, Croatian Post has a so-called suitcase (public service provider) located in the territory of Croatia. It is possible to pick up a shipment at these locations, as is possible in every post office (it is important to note that there are certain restrictions on shipments that can be received in this way).

Another innovation in the Croatian Post business is the introduction of e-mail services.79 It is a service by which users can receive mail in electronic form, as well as securely and protective pay all bills, especially by using all types of payment cards.

The last element of the offer that can be linked to e-commerce promotion is the Moja Pošta loyalty program.80 Paying electronically through the Post, receiving or buying within the Post offers collect points,

78 Further information could be found at HTTPS://WWW.POSTA.HR/EPAKET/234 (30.5.2019.) 79 Further information could be found at HTTP://WWW.EPOSTA.HR/ (30.5.2019.) 80 Further information could be found at HTTPS://WWW.MOJAPOSTA.HR/O-PROGRAMU (30.5.2019.)

121 which allow you to receive certain products as a gift. It is a great way to stimulate online shopping and raise customer safety, as well as the overall number of e-transactions.

2.16. SOCIAL NETWORKS STRATEGY

On the YouTube Croatian Ministry of Economy has an official channel81 where have been uploaded numerous video materials. Advice how to use digital technology (especially for elder), the dangers of internet, customer protection, SME workshops, as well as streaming of relevant conferences are only some of the topics that could be found on the YouTube channel. Although it is a well-managed profile it is not so well connected with other social networks like Facebook or LinkedIn.

Beside the Ministry, European Commission Croatia also has a YouTube channel82 where could be found pretty interesting videos. The main purpose of the channel is to increase conscience about international goods trade, develop of e-commerce and cultural integration which all represent macro-oriented additional contents necessary for e-commerce development, as well as the good example of mixing materials of several different public institutions.

3. ESTONIA

Estonia ranks 9th in the Digital Economy and Society Index (DESI) for 2017, based on European Commission data. In terms of public services via the Internet, Estonia is at the top, and when it comes to digital skills of the population and Internet usage, it is above the EU average. Estonia is ranked 17th in the EU for connectivity. The European Commission has noted that 4G is widely available in Estonia and that mobile broadband usage is very high. Basic coverage for fixed broadband has increased, but is still well below the EU average. With 91% of households having fixed broadband access last year, Estonia ranks 25th among EU countries.83 Residents of Estonia engage in internet activities more than the average EU

81Further information could be found at HTTPS://WWW.YOUTUBE.COM/CHANNEL/UC3DACHDOXV2VOS5QHXP6SQQ/VIDEOS (30.5.2019.) 82Further information could be found at HTTPS://WWW.YOUTUBE.COM/CHANNEL/UCJZZ2QC3FE4PMBO1_9SRNYW/VIDEOS (30.5.2019.) 83 HTTPS://WWW.EXPORT.GOV/ARTICLE?ID=ESTONIA-E-COMMERCE

122 citizen, and the country ranks sixth in internet usage. Postal or internet retailing accounts for 3.6% of total retail sales (2017).84

As the world moves from the physical to the digital, various opportunities came into option to increase prosperity around the world, one of them being the e-residences initiative. Estonia is a pioneer in this field, with its e-residency85 program, created in 2014. No matter where a person lives, if they have internet access, they can apply to become an e-resident of Estonia. Like citizens and residents of Estonia, e-residents receive a government-issued digital ID and have full access to Estonia's public e-services. This enables them to establish a reliable EU business, with all the tools they need to do business globally. They can then use their digital identity to manage their business completely online from anywhere in the world at minimal cost and with almost no problems. The e-resident program offers people from developing countries access to Estonia's digital infrastructure and legal frameworks to take advantage of e-commerce opportunities.

The application process is relatively simple and fast. The e-residence comes in the form of a smart card with a microchip and no photo, and connects to a USB card reader for two-step authentication. An e- resident ID card, valid for five years, allows its owner to digitally sign, authenticate and encrypt documents. It also opens access to international payment service providers such as Google and PayPal, as well as fintech services. Once verified as Estonia's e-residents, users can register the company online, perform e- banking transactions, access international payment service providers, file taxes online, manage the company remotely and sign documents and contracts digitally. They also benefit from the EU legal framework - and more the perception of trust that goes with it.86

This membership provides benefits such as secure digital identity and access to Europe's single digital market. The program is intended for anyone interested in establishing an international business regardless of location. Businesses can operate online within a legally and widely trusted EU framework. E-residency gives some entrepreneurs the chance to mitigate their country's political and infrastructural deficiencies, as well as to adapt to the global online market. There are numerous different online business, including the Serbian company Limo4, which used e-residency to accept payments from providers that were not previously available in Serbia.87

The program offers paperless administration and a simple tax system with 0% corporate tax as long as the profits are reinvested into the company. Such conditions are very favorable for the development of e- commerce, especially in the SME sector. E-residency helps people participate in e-commerce by enabling them to: 1) run a business independently of location, resulting from the establishment, registration and administration of an Estonian company online; 2) open a bank account in Estonia for the purpose of starting

84 HTTP://E-KAUBANDUSELIIT.EE/ENGLISH-SUMMARY/ 85 HTTPS://E-RESIDENT.GOV.EE/ 86 HTTPS://ETRADEFORALL.ORG/DEVELOPMENT-SOLUTION/E-RESIDENCY-BRINGING-EUROPES-E- COMMERCE-OPPORTUNITIES-DEVELOPING-COUNTRIES/ 87 HTTPS://WWW.DIPLOMACY.EDU/BLOG/E-RESIDENCY-POTENTIAL-BOOSTING-E-COMMERCE

123 the business and gain access to payment services; 3) digitally signing documents and contracts with an e- signature accepted as a qualified signature in the EU.

The top ten countries with the highest number of applicants for the e-resident program are some European countries (Finland - 4683 candidates, Ukraine, Germany…), Russia - 3469 candidates, USA, China and India - 2299 candidates. There are only 205 persons from Serbia who have applied for e- Resident and 10 persons from Croatia. The main economic activities of e-residents established by the new companies are business and other management consulting activities, programming activities and non- specialized wholesale trade.88

Although e-commerce has never been a primary goal of the e-residency program, the program has value in this regard as well. Overcoming the digital divide and engaging all countries in e-commerce is acting as a growing trend. The Estonian e-residency program is an example of an innovative way to create a more inclusive online space.

3.1. STIMULI/DEVELOPMENT OF E-COMMERCE IN ESTONIA

E-commerce is a growing trend in Estonia. However, the results of a 2016 survey conducted by Praksis show that Estonian companies are not yet able to take advantage of e-marketing opportunities to grow their companies' export.89 Medium and small internet marketers are losing out to foreign competitors (especially those from China). European Commission surveys show that Estonia is in the second half of European countries in terms of e-commerce performance indicators. At least 60% of shoppers in Estonia are shopping in cross-border online stores and this figure is increasing by one tenth each year. While people between the ages of 35 and 50 prefer shopping in Estonian and European stores, the younger generation has no such preference.90

Estonian businesses use a variety of e-solutions and social media to promote their products and services, but they do not use all the opportunities offered by e-commerce and e-marketing when exporting. Various delivery solutions, payment systems, regulatory requirements and e-marketing are the topics where entrepreneurs mostly have a lack of knowledge which all make e-export more difficult to realize.

Aside from the classic support for export growth, it is necessary to increase e-export among Estonian entrepreneurs. To this end, in 2017, in cooperation with the Chamber of Commerce, the Estonia

88 HTTPS://APP.CYFE.COM/DASHBOARDS/195223/5587FE4E52036102283711615553 89 HTTPS://WWW.KODA.EE/EN/NEWS/E-EXPORT-NEEDS-DEVELOPING 90 HTTPS://WWW.SEB.EE/ENG/NEWS/2019-02-05/WHERE-LIES-GROWTH-POTENTIAL-ESTONIAN-ONLINE- SHOPS

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Company (EAS) organized training on e-export and product development.91 The focus was on practical recommendations and helpful advice that apply to e-commerce activities regardless of sector. The inclusion of speakers with hands-on experience in the training program is very important for entrepreneurs interested in developing e-export. These people have real experience, which encourages others to test new solutions and learn from the success and failure of others.

3.2. PUBLIC PORTAL

Public portal e-Estonia has been established with an aim to represent the Estonian way of achieving the status of one of the most developed digital societies in the World and in such way to inspire other countries to do the same.92

The website itself is very interactive and has been made very well. Contents are graphically and visually are pleasant without making an over information problem. The website contains the following:

• E-identity – on the first place is meant as issuing e-documents, e-cards, as well as e-residency program (HTTPS://E-ESTONIA.COM/SOLUTIONS/E-IDENTITY/)

• Safety – electronic evidence of all law articles, acts, electronic judiciary, electronic police and blockchain technology could be find on this part of the website

• Healthcare – electronic access to medical databases, issuing electronic prescription and e- doctor

• E-administration – Estonia has implemented a cloud technology in term to unite IT systems from all public institutions in one pretty fast and efficient system. Beside this part for e-voting and e-cabinet also exist (system for public activity organization which dismissed paper use from public bureaucracy)

• Mobility - part dedicated to autonomous driving, payment for parking by mobile phone and reservation system at border crossings

• Business and finance – Tax e-payment, electronic banking and electronic business register

• Education – online base of all education institutions, and set of different applications that improve education quality on all levels

91 HTTPS://WWW.KODA.EE/EN/NEWS/E-EXPORT-NEEDS-DEVELOPING 92 Further information could be found at: HTTPS://E-ESTONIA.COM/

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• Inner operating systems and services – digital cadaster, e-evidence of citizens, as well as x- road operating system which connects all public services and is such sense increase potential for national and international public services integration

The website is very transparent with clear classification. Everything is interactive. Every section brings some content with it like key information, interesting facts and user impressions. Aside from this the website contains the list of connected websites in B2B context primarily, because an accent is on increasing digital investment attractiveness of Estonia. This is provided by unique VR part of the site, as well as with special part dedicated to trade exchange and investment. Additionally, the site has a part for tourists which levels up touristic attractiveness of Estonia.

Relevant publications of all other previously mentioned elements of the site could be found on the website. These documents are in PDF format. In the end, next to the part where users could leave their feedback exist also connection link with social networks (FB and Twitter). Part with braking news and media content also exists.

3.3. E-RESIDENCY PROGRAM

One of the best e-solutions which made Estonia one of the most developed societies in the World is e- residency program. It is the program which provides people from developing countries to access Estonian digital infrastructure and law frames so they can take advantage of e-commerce. The program represents a transnational digital identity providing anyone and anywhere an opportunity to succeed as an entrepreneur. Like citizens and residents of Estonia, e-residents receive a government-issued digital ID and have full access to Estonia's public e-services. This enables them to establish a reliable EU business, with all the tools they need to do business globally.93

Once verified as Estonia's e-residents, users can register the company online, perform e-banking transactions, access international payment service providers, file taxes online, manage the company remotely and sign documents and contracts digitally. They also benefit from the EU legal framework - and more the perception of trust that goes with it.94

This website (HTTPS://E-RESIDENT.GOV.EE/) contains the following important elements:

• Interactive elements (call to action buttons), and instructions on how to create a profile and how to start a business displayed through connected pop-up content

93 Further information could be found at: HTTPS://E-RESIDENT.GOV.EE/MARKETPLACE/SERVICE-PROVIDERS/ 94 Za više informcija pogledati: HTTPS://ETRADEFORALL.ORG/DEVELOPMENT-SOLUTION/E-RESIDENCY- BRINGING-EUROPES-E-COMMERCE-OPPORTUNITIES-DEVELOPING-COUNTRIES/

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• Detail instructions on how to start your own business in Estonia. It is not another classical Guide, but string of connected steps with instructions for every activity solely (LinkedIn functions pretty similar when creating the profile)

• List of partners and the most successful companies founded this way

• Examples and stories of people who started up business this way. Those are short life story descriptions, mini case studies in the part with companies, but the website offers an opportunity to establish communication with these people (creating positive values through examples and rising customers security)

• Blog and part with Twitter content and shares, which were transferred to the site

• Possibility to apply for monthly newsletter

• Applying for contribution in monthly webinars

• Frequently asked questions (FAQs) part

• Part with relevant media publications and content

• Links to social networks (FB, Instagram and Twitter). Likewise, they have an official YouTube channel, but without a link to it on the website

The website has an advanced part about business users with a possibility of opening a VR (virtual) office, or starting mobile banking, or even establishing the company. Option to identify similar businesses, or to do an interactive benchmark of different companies founded this way, as well as to identify the main sources of competitive advantages and contacting owners of those companies could be found in the section Companies of the website. Estonian government claims that only 18 minutes are needed to establish the business in this way in Estonia.

3.4. MEDIA PROMOTION ACTIVITIES

Estonia is a leading country in terms of access to online entrepreneurship, accessible to everyone (regardless of location and residence) through the e-Residency program. Recognizing the enormous potential of the program, the United Nations Conference on Trade and Development (UNCTAD) and e- Residency have teamed up to launch a new initiative called e-Trade for All. The initiative aims to help drive global growth through support to developing countries to encourage their citizens to become involved in e-commerce and entrepreneurship. The program is supported by Jack Ma, founder and president of Alibaba Group, which owns China's largest online retailer. Jack Ma highlighted the importance of this

127 initiative, pointing out that a large part of the world's population is unable to use the potential of e- commerce, often just because of the place where they live. People in developing countries, women and other marginalized groups currently face the greatest challenges in accessing e-commerce. In many circumstances, the financial and administrative obstacles for starting a business can be too high. This is why Estonia's e-residency program is crucial to help unleash the world's entrepreneurial potential. This means that entrepreneurs can apply for a secure digital identity issued by the Estonian government and then use it to set up and manage a company online with minimal bureaucracy.95 All the mentioned show that this project goes beyond Estonia's territorial borders by encouraging entrepreneurs to engage in global trade in 138 countries. Businesses, financial companies, governments and organizations in every part of the world can integrate into this platform for the benefit of their citizens and clients.

3.5. E-LEGISLATION

Estonia has totally digitalized all legislation procedures. One of the key elements for this was creating the electronic base of all laws and regulations accessible by every internet user.96

Trade codex (available at HTTPS://WWW.RIIGITEATAJA.EE/EN/ELI/522062017003/CONSOLIDE), as well as Decision about changes and amendments of Trade codex from 2018 which in one of their parts regulate e-commerce and e-business could be understood as very important support to e-commerce development in Estonia. Also, the Estonian government has issued the Digital agenda for Estonia 2020 (available at HTTPS://WWW.MKM.EE/SITES/DEFAULT/FILES/DIGITALAGENDA2020_FINAL_FINAL.PDF).

One more important in such context is judiciary digitalization. The Estonian government has decided to create an electronic database of offenses, through which all citizens, as well as companies, can be informed about all possible legal violations, as well as possible sanctions.97 This way informing of all stakeholders is centralized. Likewise, an online portal has been created to solve minor disputes and to judge in cases of a standard nature, or where responsiveness and responsive time are crucial.98

95 Further information could be found at: HTTPS://E-ESTONIA.COM/E-RESIDENCY-JOINS-FORCES-WITH-THE- UN-TO-EMPOWER-ENTREPRENEURS-IN-THE-DEVELOPING-WORLD/ 96 Further information could be found at: HTTPS://WWW.RIIGITEATAJA.EE/EN/ 97 Further information could be found at: HTTPS://WWW.RIK.EE/EN/INTERNATIONAL/E-FILE 98 Further information could be found at: HTTPS://WWW.RIK.EE/EN/INTERNATIONAL

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3.6. E-ESTONIA BRIEFING CENTER

Part for B2B interaction exist on the public portal e-Estonia enabling business users to apply and to contribute in meetings with state representatives.99 The goal is to show the whole offer of e-Estonia program as well as connecting and strengthening strings with private and public partners. Interested companies could apply for personalized courses (educative programs) which will be designed in accordance with the company`s needs and desires by representatives of public administration.

In such context e-Estonia portal administrators are completely active and eager to connect Estonian companies from different branches. Calls for establishing contacts with other companies from e-business register are on the first place. Beside this very active is also directing of B2B users to a partner ICT cluster companies100, like digitalestonia.101

3.7. CONTACT CENTER

One part of the public portal is dedicated to users who would like to contact responsible personnel. This is provided in several ways. All members of administrative team are presented publicly with clearly indicated specifications and email contacts. User is able to choose which administrator suits him/her the best and directly contact the administrator. Also, central email address and Call center contact phone are at users` disposal. All these services are organized and presented in above mentioned Briefing center.

3.8. SOCIAL NETWORKS STRATEGY

Social networks strategy has been developed on two level bases. First level is for B2C users on e-Estonia portal. In this context there are pages on FB, Twitter and YouTube having the same name. Graphically all contents are very well created. The contents actually represent multimedia content which describe users how to use certain parts of the portal. In addition, videos and publications concerning some conferences or educative programs are also available. Although there is no separated content for e-commerce, some articles about this topic and connected areas, like internet safety, exist.

99 Further information could be found at: HTTPS://E-ESTONIA.COM/BRIEFING-CENTRE/ 100 Further information could be found at: HTTPS://E-ESTONIA.COM/IT-SECTOR/ 101 Further information could be found at: HTTP://DIGITALESTONIA.COM/

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Following pages are cited:

HTTPS://WWW.YOUTUBE.COM/USER/ESTONIANICT

HTTPS://WWW.FACEBOOK.COM/ESTONIADIGITALSOCIETY/

HTTPS://TWITTER.COM/E_ESTONIA

The second level is for B2B users within e-Residency program. These contents are closely related to giving advice on how to start a business. Beside tutorials which cover every activity solely, interviews with owners of companies founded this way are possible and materials for discussion and webinars are available also. In this context there are pages on FB, Twitter and YouTube having the same name.

Following pages are cited:

HTTPS://WWW.INSTAGRAM.COM/E_RESIDENTS/

HTTPS://TWITTER.COM/E_RESIDENTS

HTTPS://WWW.FACEBOOK.COM/ERESIDENTS/

HTTPS://WWW.YOUTUBE.COM/CHANNEL/UCMB926TR_2IXHIZYUTOSKBG/PLAYLISTS

3.9. KSI BLOCKCHAIN TECHNOLOGY IN PUBLIC ADMINISTRATION

Estonia is one of the few countries which use blockchain technology to encrypt all publicly available data.102

3.10. EDUCATION OF PEOPLE ABOUT USE OF E-SOLUTIONS103

Since the end of 90`s and early 00`s the digital inclusion and e-skills have become one of the main topics in political programs in Estonia.

102 Further information could be found at: HTTPS://E-ESTONIA.COM/SOLUTIONS/SECURITY-AND-SAFETY/KSI- BLOCKCHAIN/ 103 Further information could be found at: HTTPS://E-ESTONIA.COM/WP-CONTENT/UPLOADS/FAQ-A4-V02- DIGITALCOMPETENCES-1.PDF

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Using e-services has shown as very eligible for citizens. Estonian government has put a lot of effort to educate their citizens about how to use e-services. A lot of attention is given to classes of electronic literacy. What is of utmost importance when it comes to e-solutions is very good internet connection. Since the end of 90`s all schools in the country have internet connection. The government has invested a lot of money to supply schools with internet access, modern tools and digital equipment. Since childhood robotics, software development and new technologies are included in children education. The national curriculum also emphasizes development of digital competencies. This represents one of the eight main competencies with the schools` focus.

Even preschoolers in Estonia learn about software development, robotics and new technologies. Estonia launched the ProgeTiger program in 2014 to improve technological literacy of teachers and students. Hence, different courses and trainings have been conducted, including robotics, software development and even groups for computer hobbies which has shown to be very popular.

The eKool service helps children to get use to e-services. This application covers classes, tasks and presence on the course. Parents could also access the data. All these measures have led Estonia to many positive results, and many children who finished the school in 2000. have become businessmen and businesswomen. The biggest concentration of start-up technologies per capita could be found in Estonia.

Older generations have also been covered by the government`s investing programs. Partnership between public sector and some nongovernmental organizations including the business community as well is trying to correct some shortcomings in digital literacy present among some parts of population. People with the biggest risk of being socially excluded (older people, unemployed, low qualified workers) are especially in the focus of the partnership. For example, the government launched in 2009. a program for older people named `Ole kaasas` (Being included). Classes are held in the whole country and the program also acquire subsidies for purchasing a computer for seniors. During two years period 40 thousand people have been educated.

One more big political incentive during the late 90`s concerning e-services was Policy of information society. The Strategy of information society in Estonia in 2013 covered the period from 2007 to 2013. Now the focus was on access to technologies and resources including broadband internet access. In the upcoming Strategy for information society 2020 (that covers period from 2014 to 2020) focus will be put on digital literacy and ICT experts supply. The plan is to put an accent on securing ICT skill on high school level – pupils will be obligated to achieve the basic level of ICT until the end of their school, and robotics and software development classes must be offered in every region in the country. Beside this a lot of attention is given to learning for life (in term of developing adults skills), when it comes to university education developing specific ICT modules (for some certain sector or job), as well as some vocational education and training; Adjusted measures for entrepreneurs in term to integrate ICT into basic business processes, by using ICT in marketing (e-channels) etc. The Estonian government launched in 2011. revised

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Competitiveness strategy `Estonia 2020` with broader and more efficient use of ICT in all sectors of economy and among all population categories.104

Foundation Estonia Company is responsible for share of European structure funds and subsidies in entrepreneurship sector and for innovation grants. With European structure funds the Foundation established a support mechanism so the companies could demand specific ICT training for their employees. Employers used support programs for hiring trainers and to offer training programs to their employees (2007-2013).

One of the responsibilities for the Ministry of Education is to secure adequate number of ICT experts in commerce. National research and development strategy is of the utmost importance for the issue of ICT expert’s education. One part of the strategy is Estonian high education ICT and research- developing activities of state program 2011-2015 (shortly: ICT program). The program represents cooperation among all Estonian state Universities, ICT sector and government also in term to increase quality of ICT education and to strengthen cooperation among all stakeholders in this area.

Numerous incentives have tried to improve image about ICT studies among young in the country:

Estonian association for information and telecommunications (ITL) deals with the incentive All is IT aimed to promote ICT careers and e-skills. Activities like: web portal, lectures in schools, career advisor, special events inclusion of young people like IT night or `Back to school` campaign are all included by this program. Financial support for the program is given by the ERDF. The ITL was also responsible for e-skills national week in 2012. and 2013.

StartIT is an incentive by Estonian association for information and telecommunications containing a website that promotes education opportunities in ICT and natural sciences to young Estonians. The project receives financial support from European regional development fund and includes activities like lectures, career advisors and events for including young people as IT night is (including trainings for increasing awareness, team work, audio/video games, etc.). IT Night was held for the third time in March 2013.

SmartLab project was started in 2012 with a purpose to make young people aware and interested in robotics in general and especially in ICT. Group work for young Estonians aged between 10 and 19 is offered in the following fields: Computer work, creating of websites, web design and graphics, computer construction and robotics, smartphones application development, etc.

Estonia has a set of political programs and incentives of interested stakeholders that focus on digital entrepreneurship. At the end of 2011, the Estonian government started Start-up Estonia – start-up businesses promotion program in fast-growing areas with big role of ICT. Program brings in Estonia

104 Further information could be found at: HTTP://ESKILLS- MONITOR2013.EU/FILEADMIN/MONITOR2013/DOCUMENTS/COUNTRY_REPORTS/COUNTRY_REPORT_ES TONIA.PDF

132 mentors, mostly leaders in innovation sectors from all over the World to share their knowledge and best practice with local entrepreneurs through set of workshops, interactive lectures and networking events. The first accelerator program in Estonia in games industry has been established in Talin with purpose to nurture the Estonian role in this sector which indeed high growth. The program also supports student trips in Silicon Valley and promotes annual international start-up conference Latitude59 in Talin.

3.11. COMPLEX PERSONAL DATA PROTECTION SYSTEM105

There is no unique data repository in Estonia, but all information is distributed among different institutions. Government organizations can pass on information using a system called X-road, but all operations are monitored. Any action by a person or official seeking information leaves a mark. At the same time, civil servants should give reasons for such a request. If they do something unreasonable, the person may contact the Data Protection Inspectorate, Department of Justice.

3.12. IMPROVING CUSTOMERS RIGHTS

2018: The changes planned by the Directive apply to both general trade and e-commerce, and if the Directive were adopted, consumer rights in Estonia would be improved. One of the planned changes is to extend the time that the deficiency of the product is assumed to have been existed during the transfer of goods from six months to two years.106

At this point, there is a principle which assumes that a sale to the consumer incompatible with the contract terms and conditions discovered within six months of the goods being transferred to the buyer, unless such assumption conflicts with the nature of the item or defect. The draft aims to extend the period to two years.

In the case of a consumer sale the draft seeks to abolish the regulation that the consumer must inform the seller of the non-compliance of the goods with the contractual terms within two months after having found out about the non-compliance.

105 HTTPS://MEDIUM.COM/@ANNASAVINA/HOW-ESTONIA-BECAME-THE-MOST-MODERN-DIGITAL- STATE-IN-THE-WORLD-F777D853AAA6 106 HTTPS://WWW.KODA.EE/EN/NEWS/EUROPEAN-UNION-PLANNING-INCREASE-OBLIGATIONS- BUSINESS-CONSUMER-SALES

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Although dealers have until now had a right to decide whether a product should be repaired or replaced, the new draft law provides that the consumer can choose between repair and replacement unless one of these options is impossible or illegal, or unreasonably expensive for the seller in relation to the second option.

The plan for the directive is to enter into force on the twentieth day following its publication in the Official journal of the European Union, and Estonia should adopt the directive within two years.

3.13. PROMOTION OF ESTONIA AS A CHINESE E-COMMERCE BUSINESS CENTER107

Ministry of foreign affairs and communications puts a lot of effort to promote Estonia as hub for Chinese e-commerce companies. Estonia is interested to take an advantage of e-platform in term to increase goods flow from China to Estonia. Estonian transport and communications companies in e-commerce sector work together with Chinese partners on inventing a possibility for increasing of online ordered goods transport across Estonia. It is believed that this cooperation will make a huge contribution to global e- commerce growth.108

Estonia is interested in taking an advantage of e-platform in order to increase goods flow from China through Estonia.

In November 2017. Estonia has signed an agreement in sector of e-commerce and ICT with China. Not only because of Estonian geographical position, but also because of Estonian very quick business start and because of Estonian pretty low bureaucracy level China is interested to cooperate with Estonia.

107 HTTPS://NEWS.ERR.EE/822310/MINISTRY-KEEN-TO-PROMOTE-ESTONIA-AS-HUB-FOR-CHINESE-E- COMMERCE-BUSINESSES 108 Further information could be found at: HTTPS://NEWS.ERR.EE/822310/MINISTRY-KEEN-TO-PROMOTE- ESTONIA-AS-HUB-FOR-CHINESE-E-COMMERCE-BUSINESSES

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SECOND PART: ANALYSIS OF THE RESULTS OF E- COMMERCE RESEARCH IN SERBIA

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I IN-DEPTH INTERVIEW WORKSHOPS – KEY RESULTS

The in/depth interviews represent a very important tool for achieving key insights about E-commerce in Serbia. Through in-depth interviews the research team has gathered more detailed, valuable understanding of e-commerce topic in Serbia. Experience, behavior, emotions and/or attitudes have been thoroughly examined during in-depth interviews. The interviews lasted between 45 and 60 minutes and have been conducted by project managers during the period from 27th February to 21st March 2019, since all interlocutors were on high level positions at their organizations. Starting from 25th January until 5th of July, 4 workshops with main stakeholders were conducted.

The goal was to conduct 20 interviews containing:

• At least five representatives from e-commerce businesses, following the structure of at least 3 micro, small or medium businesses, of which at least one should be managed by a woman.

• Logistics (courier services) – Post office and at least one more company

• Payments – At least two institutions included in electronic payments

• At least one company operating with e-commerce technology

• State representatives – at least five interviews (including Customs administration and National Bank of Serbia)

• Other stakeholders – up to five interviews

In term to identify the level of e-commerce in Serbia, and to figure out main barriers to its further development, as well as to collect suggestions about adequate measures that could overcome these barriers 22 in-depth interviews have been conducted with main stakeholders from the e-commerce sector in Serbia. Among all respondents were also representatives of:

• Companies which operate through e-commerce, but some of the companies must be managed by women. Six companies were interviewed in total and at least five of them were micro, small and medium businesses, and three of them were owned by a woman.

• Subjects which give the support for operating through e-commerce. Interviews with five representatives of institutions which offer services of financial payments are done. All main actors in this field were interviewed. Also, representatives of two big courier services were interviewed as well as one representative of the company which deals with e-commerce technology.

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• Representatives from the public sector, including National Bank of Serbia and Customs Administration, were also interviewed – five public institutions in total.

• Beside above mentioned, interviews have been also done with three representatives of business community who have much influence on e-commerce in Serbia.

According to conducted interviews the whole interviewing plan has been accomplished.

All four planned workshops with key stakeholders were conducted. Two workshops had a general character where all stakeholders were included and two of them were specially intended for logistics and institutions which enable e-commerce payments.

Following the most important questions hereinafter are given the main results obtained through interactive work with main stakeholders.

1. DEVELOPMENT LEVEL AND MAIN PARTICIPANTS IN THE ELECTRONIC COMMERCE IN SERBIA

1.1. HOW WOULD YOU MARK LEVEL OF ACTIVITY OF E-COMMERCE IN SERBIA?

Level of activity was generally marked as low, especially in comparison with developed markets. E- commerce market is certainly still developing and the situation is better than before, but it still does not have the shape as it should in this moment. Maybe the biggest expansion of the electronic trade has been seen through orders from foreign web sites (e.g. AliExpress and so on). Although the rapid development of this market is notable, especially for large retailers and urban areas, there is a great potential for development in small and medium-sized enterprises, which either do not sell their goods online at all or do not do the right thing.

Although distinct increase of e-commerce in Serbia in the last couple of years, it is still fall behind Western European countries and other developed markets. In comparison with these countries level of activity is low. When it comes to region countries, level of activity of e-commerce in Serbia is lower than in Hungary, Slovenia and Croatia, but it is higher than in Bosnia and Herzegovina and then in Montenegro.

Total number of businesses operating through e-commerce is not easy to evaluate, however according to some evaluations e-commerce market in Serbia contains about 300 relevant online stores which represent a very small market. Perhaps the level of activity is not actually such low due to final turnover which is done offline – more than 60% of transactions are started online (research about product), but they finish

137 with paying in person. However, increased use of payment cards is notable by all population categories (although fear of using them and ignorance still exist) which is directly connected with increase and development of e-commerce. Traders have also recognized the significance of e-commerce and have put their interests for this kind of trade, but they usually need help – actually education about e-commerce so they could fully implement it.

1.2. WHO ARE THE MAIN PARTICIPANTS IN ELECTRONIC TRADE IN SERBIA?

The main participants in e-commerce in Serbia are recognized by all who are in the e-commerce chain:

• Traders – Techniques retailers on first place (e.g. Tehnomanija, Win, Gigatron); sports equipment (Sport Vision); babies and children equipment (Aksa, Dexy Co); clothes (Zara, H&M); Internet portals designed to advertise the sale of used or new items, cars and products (Kupujem-Prodajem, Limundo); and in service category: air transport companies (AirSerbia), online betting (Mozart) and mobile operators.

• Buyers

• Courier offices – Almost all examinees have pointed out courier offices, such as: DExpress, PostExpress (Posta Srbije), City Express, Axs;

• IT companies which provide establishing and maintaining online stores, as well as companies which provide Online/Internet infrastructure

• Financial institutions – institutions responsible for issuing electronic money, as well as banks: Intesa bank, Unicredit bank and others.

• Government – market regulator

Still not enough developed awareness of e-commerce advantages and potentials among majority of the stakeholders is big problem state the interviewed stakeholders.

2. MAIN BARRIERS TO DEVELOPMENT OF ELECTRONIC TRADE IN SERBIA

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Several questions have been posted to interviewed stakeholders concerning this topic

2.1. WHAT HAS INFLUENCED E-COMMERCE IN SERBIA TO BE UNDEVELOPED?

Main reasons for limited development of e-commerce in Serbia could be found on both sides – supply side of market and on the demand side (ignorance and misinformation), and in the e-commerce surrounding (insufficient technological solutions development and grey economy).

Grey economy (trading with products without paying taxes or customs for it) has influence not only on sellers, but also on buyers which have a lack of trust in online shopping because in such situation they do not have a guarantee whether the goods will arrive and what actually will arrive. Aside from mistrust as the main barrier for online shopping, the buyers are uniformed about security process concerning online shopping. Online payments (the buyers do not know they have an insurance by paying with cards), data security, whether the ordered products will be delivered, how to return/change the product in case it actually does not suit them (reclamation procedure is complicated), in case of having the problems who is the responsible person for their complaints and how to exercise their own rights are all the topics the buyers are insecure about. To put a long story short, buyers are uneducated and very insecure about electronic trade (e-commerce). Additionally, lack of real-time synchronization among large number of traders, as well as non-transparency, represent factors which influence on low level of online shopping because they ruin user’s experience. It is a very common case that end users do not understand and do not know that they can buy certain products online, and if they know then they do not see the benefits of e-commerce and the whole process seems too complicated to them. The lack of a habit of paying online and then ordering goods the same way is at the root of the low level of online shopping.

When it comes to traders, although the significance of e-commerce is mainly recognized, ignorance and misinformation about establishing and managing online stores are representing main barriers. According to interviewed traders, obtaining of key information is very hard to do – there are rarely the online places where it could be read, or it is not clear which laws are covering online stores, or traders do not know who to contact if they would like to export their products or if they have some issues, hence gathering the information is done ad hoc – by experience from practice.

Insufficient information is represented on both sides of market, on the demand side as well as on the side of supply. Cheap cash (cash economy) and small awareness of people about payment cards usage are also representing e-commerce constraints.

Creation of negative image about e-commerce (electronic trade) in public, mostly due to fact that in media most of the topics about e-commerce are about frauds and negative experience, have also had an impact on e-commerce underdevelopment. Positive experiences are not promoted enough, but the light is certainly shed on negative experiences.

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After answering to above mentioned question, the interviewers have concretized what could be the potential barriers to e-commerce development.

2.2. DO THE LAW BARRIERS EXIST?

Responders generally do not have bigger objections to law frame – regulation is modern, applicable and good enough. Some major law barriers do not exist, however the law is far from perfect in a way that some obstacles could easily disappear like: Currency law, Prevention of money laundering and finance of terrorism law, upcoming changes concerning Post office service law (customer identification). Also, insufficient bilateral cooperation which exists between Control authorities of different countries, and decentralized e-commerce engagement done by competent authorities (Market inspection and Tax authorities for example). Customer protection is weakly regulated and the law is difficult to apply to individual stakeholders involved.

Are the problems actually demand side barriers: buyers’ mistrust, buyer’s socio-economic status (income, education…), buyer’s willingness to use technology, impossibility to access fast internet connection, and so on?

From the aspect of demand, the biggest obstacle to the further and faster development of e-commerce in Serbia are: lack of customer trust, need for customers, distrust of the purchase itself, as well as payment of cards. Customers fear that they will not receive the product they have ordered or that it will be damaged. Potential customers do not know the basic things about card payment (what is a card transaction, what is the interbank fee, issuer/acceptor, which are card brands, how inadequate goods are advertised); do not know what a web shop is, what are the payment methods, etc. Low incomes also affect distrust of online shopping and card usage. There is a fear for data security, especially for older generations, who in fact use technology less often.

Unreliability of courier offices, courier’s rude attitude, and delivery solely (from 9 to 17 or returning to seller if not picked up on certain date) also dissuade people from ordering goods online. Reclamation/returning of previously ordered product occurs to be serious problem for buyers – reclamation procedure is complicated – the product could not be exchange in any store and money refund takes more than two weeks.

Lack of call center which would solve problems and give applicable and timely information also has a negative impact on further e-commerce development.

Are the problems actually supply side barriers: organizational barriers in companies which are bidders in electronic trade (lack of: cash, qualitative personnel, gained experience, managerial potential), e-commerce market underdevelopment (e.g. lack of market platforms like Alibaba or Rakuten),

140 technological barriers, grey economy in electronic trade, lack of multichannel access (combining electronic and classic trade etc.)?

Ignorance of traders about online shopping represents maybe the biggest obstacle in implementing and development of e-commerce in Serbia. In practice is notable that traders do not poses enough knowledge about this way of trade, they do not know what they actually need for opening the online store, or how to make a website, how to sell online, what are the reasons for small number of realized purchases etc. Traders do not realize the real importance of timely information for buyers who need to know information about when their order will arrive, under which conditions and what is the exact amount of money needed to buy it.

Traders are mostly uninformed about all the advantages of online trading, and several problems like: how to make a web shop, what it should contain, who would be able to make that for them, what is the price of making the one mostly occur when some trader express willingness to open an online store. Problems also occur among traders who already deal with internet trade, because they usually do not know how to manage an online shop, or they do not have enough of experience, they are not familiar with the digital marketing, or simply they are lack of qualitative personnel who would manage their online trade. Traders have difficulties to approach customers – they haven’t found appropriate channel. Beside this, information needed for business are hard to obtain, traders do not know where to find this information. Hence, instead of managing their business they usually spend more time in seeking for relevant laws. Most of the problems are among medium traders who don’t know what they are (not) allowed to do, according to law, simply because they are not sure whether some law refers to their company or not, or because traders find the law unclear. This is actually in collision with the statement that regulation barriers don’t exist. One of the problems which has been cited by one of the stakeholders was that traders do not put enough effort to go deeper in law regulation.

Problems are also inside-organization processes (decision makers demand development of electronic trade and employees afraid of change and run away from unknown). NE RAZUMEM RECENICU (NIJE KOMPLETNA). Technology solutions (platforms used by traders) also occur as a problem, as well as integration of online stores into payment systems. Traders don’t connect their ERP system with online stores and then buyers don’t have an information whether the product is on stock or not (there is no real-time synchronization), and orders processing is mostly done manually instead of being automated.

Gray economy, which is in expansion, is a big problem – no one knows whose responsibility is for goods sold by small traders via e-commerce platforms (except MUP – cybercriminal section, no one from market inspection is trained for illegal e-commerce).

Are the problems actually barriers on the side of participants which improve realization of e-commerce in Serbia? (Post office, courier offices, Custom administration, providers of financial services – payments, providers of technological services, ministry responsible for electronic trade, etc.)

The most highlighted barrier to progress, on the side of participants which improve realization of e- commerce in Serbia, is courier offices. Objections to courier offices concern: unreliability of courier offices

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(it is not fast enough, customer’s time is not respected), courier’s rude attitude (customers usually tend to make their impression about the whole company by the experience with the courier), difficulties to employ sufficient number of deliverers, their services` price (courier offices are expensive, Post office is cheaper, but there are also other deficiencies such as delivery time), bad organization and lack of unified service and unique approach among all courier offices. Primary problem for courier offices is to find qualitative couriers. What is the advantage of the Post office is the disadvantage of courier offices and vice versa, perhaps the Post office and the courier offices are managing to overcome their deficiencies?

Second important barrier looking through the prism of logistics support are customs. Customs electronic payment does not exist, but due to necessity for forwarders to poses custom payment documents it would be much easier if it actually exists. The custom worker has his discretionary right to evaluate the shipping, or to refuse to accept what is written on the delivery. The custom workers also don’t accept confirmation if the payment is done via m-banking, although the confirmation is valid. Traders and buyers often find problems with export/import (special problem is return of goods back in Serbia), and the custom process itself is time and money consuming.

Few examinees have also cited banks as one of the barriers, because they charge high fees for online purchases and they do not have an appropriate way to approach traders. Also, the banks do not make any steps towards educating card users about security and safety of payment cards during online shopping.

3. STRENGTHENING MEASURES FOR E-COMMERCE IN SERBIA

3.1. WHICH MEASURES SHOULD BE TAKEN TO IMPROVE THE CONDITION OF SERBIAN E-COMMERCE?

Education on both sides of market – the supply and the demand side – would be probably selected as the most important measure for encouraging the e-commerce increase in Serbia. Almost every respondent has mentioned the education, hence the general observation is that the buyers and the traders are uninformed and uneducated when we speak about some individual aspects of online trade, but also about the whole process in general. Benefits from the e-commerce, confirmation that people won’t be deceived, information that online payments are safe and what are real risks, what are customers`/traders` rights, importance of the education but communicated in the comprehensive way for customers are all the aspects of e-commerce that should be explained to people.

Education could be conducted in several ways. On one hand, banks could educate people about security and safety of card payments and online orders using promotion, media campaign or by informing the card users (when the card is issued) that they have an online shopping ability with cards and that the transaction

142 is safe. One of the options which could be also used is to engage faculties to educate their students about e-commerce and the payments security through introducing the online payment options at the faculty.

Making the guide for e-commerce, which would contain all the necessary information would significantly contribute to education and informing of public community about advantages and functioning of e- commerce. The guide should be dedicated to both the buyers and the traders, and it could be financed by a Ministry of trade or by some independent organization. There is an opinion that education should be done by some independent organization that owns a pretty high level of knowledge in e-commerce, but also in business in general. Participation of all stakeholders is important; however, the government should not be the main actor of such process, nor the banks because it could make a wrong impression on people (e.g. only by being in a certain bank could allow people to buy at certain trader).

Beside education, the e-commerce should be promoted through media and all means of communication. It is necessary to create a positive image about e-commerce in public by using media campaigns (e.g. TV promotion which would approach to elder generations who are prone to traditional way of shopping) which will promote positive examples and experiences of other people – in that way reliance level and motivation of people to shop online and to pay by cards would increase. Except on the buyers’, the positive effects of promotion could be seen on the trader’s side who do not trade online at the moment, but would maybe try such option after receiving positive feedback from their colleagues. Positive examples, such as SoGe Bank, which offers payment service, monthly online store maintenance for customers (RSD 1000), as well as iPAY services, instant payments, QR codes payments (implementation will begin soon), with certain innovations in the fintech business, as well as Raifeissen Bank, which offers to its clients, but also to interested parties, an opportunity of using their online retail platform, with accompanying digital, advisory and analytics services, should be emphasized and pointed out in the media. It is necessary to show the significance of proactive approach of relevant financial institutions in developing and improving e-commerce in Serbia, especially in the SME context.

Except education, informing, promotion and subsidies, several more ways to increase e-commerce level in Serbia are suggested:

• Quality increase of courier offices service and Post office service, standardization of service

• Bank transactions decrease

• Permanent improvement of user experience in the process of online shopping

• Retailers (which do business mainly on Instagram and by that illegal) perhaps should not register as d.o.o. – maybe better option for them is to register as an Entrepreneur with Flat rate taxation (and they are supposed to pay about 200 euros). On that way the buyers are also protected. Platform owners should also inform themselves about laws concerning their business

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• Making the guarantees for buyers – to introduce the option in which the funds will be transferred from the buyers to the sellers’ account only after the buyer receive the delivery and approve the transaction

• Need for identification should be abolished for small amount payments

• Sublimation of all laws, processes, best practices Education on the supply and demand sides (personnel, traders, buyers);

• Exempt e-commerce start-ups from paying contributions

• Problem of e-commerce counselor’s inexistence should be solved institutionally – whether through call center or something else. Mentoring with Start-ups, but also with the present businesses is very important.

• Existence of call center which will provide people with all necessary information. Someone should control that call center.

• To make an inter-sector technical group (from different ministries, Tax authorities, National bank of Serbia…) which people could contact to solve their specific problems

• To make a network agreement of parallel institutions in the same speaking area countries about data exchange (it already exists on the level of courts, criminal acts, but not for e- commerce); To centralize competent authorities dealing with e-commerce – Market inspection and Tax authorities should deal with e-commerce and others should give their inputs;

• Better struggle against cash economy and gray economy

3.2. WHAT COULD BE DONE BY RELEVANT MINISTRY IN TERM TO IMPROVE E-COMMERCE CONDITION IN SERBIA

Significant number of respondents have stated that Ministry could not do much. The main role should be to listen to the market and filter information, but above all to find support for other participants in e- commerce. Some concrete suggestions are listed below:

• Creating of the inter-sector technical group (which would contain e-commerce market specialists from different ministries, Tax authorities, National Bank of Serbia…) which people can contact to solve their specific problems and which will provide adequate information or track to relevant institutions.

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• Making the Guide for e-commerce buyers and sellers which will provide all elementary information about e-commerce on one place. Guides should in very simple way explain what should be done and how. Organizing of educational workshops would also help.

• Making the media campaign which would raise public awareness about electronic trade.

• Establishing a Market place for retailers where they could, like on AliExpress, open their stores and upload their products. Creation of safer platform (instead of using Limundo and Kupujem-Prodajem) would contribute in development of electronic trade and it would have a positive effect on both – retailers who find making their own web-shops expensive and buyers who would feel more secure.

• Incentives to help traders through direct or indirect subsidies.

• Before coming into force, government should promote the new Post services law, so that people could introduce with it, otherwise lot of people will give up their online shopping because of the misuse afraid.

• Creating specialized logistics center would also contribute e-commerce development

• Make an educative workshop for bookkeepers on how to make an online payment entry (case of PayPal)

• More strict surveillance under local courier offices

• Speeding up custom process would help too

The goal of conducting in-depth interviews is achieved: all inputs were obtained from both the barriers and strengthening measures for e-commerce in Serbia. Besides, in-depth interviews have served as an input for finalizing the questionnaire which was used for interviewing Internet users and companies in Serbia.

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II ANALYSIS OF QUANTITATIVE RESEARCH RESULTS

Comprehensive quantitative researches are conducted for the purposes of this project. They are about surveying companies and Internet users. Hereinafter is given the analysis of mentioned research.

1. RESEARCH OF E-COMMERCE BUSINESSES

1.1. 1. METHODOLOGY

FIELD OF RESEARCH

Research of the companies which do electronic trade is very important because it should facilitate identification of the key barriers on the supply side, and to make clear which measures could be useful for electronic trade participants. The survey should provide reliable information about online traders` stances, key barriers which they meet in everyday business, and key measures which could facilitate them to improve their business.

Also, gathered information will show what is the experience of business community in this sphere so far. CATI (Computer-Assisted Telephone Interviewing) technique of gathering data has been implemented, which means that experienced interviewers have surveyed representatives of randomly chosen companies via telephone. The research team would like to express its gratitude to CFG representatives on excellent cooperation, useful suggestions during the survey creation and great help during the training of interviewers.

SAMPLE DESCRIPTION

Missing of adequate registers about companies doing e-commerce business, as well as the fact that most of the traders are not registered or do their business activities on Facebook or Instagram were the problems during the creation of sample. Having in mind that the population is unknown, our research

146 team has found that approximate size of the population is between 1000 and 2000 online traders based on in-depth interviews and secondary sources. Although this result should not be taken for granted it is planned to interview 150 online traders, which represents a significant part of the population even in the case it is made a mistake in the previous evaluation. Due to importance of multichannel trade in the sample is necessary to be relevant number of traders owning online stores and classical stores.

Research of the companies that practice e-commerce has been conducted on the sample of 150 companies different by size (up to 9 employees, between 10 and 49 employees, above 50 employees), whose primary activities are goods trade or services trade. On behalf of the company, the questionnaire was answered by a person in a managerial position (owner / co-owner, director, e-commerce manager) or one of the other employees competent in the research topic.

Given the fact that none of the current legal entity registers in Serbia (e.g. APR, PKS, Bisnode etc.) does contain information whether some legal entity has online store, and hence the official base of online traders does not exist it is impossible to complete a representative sample by: activity, size and statistical region. However, research team had put their effort to make regional representation heterogeneous in term to make the sample more comprehensive and more efficient so companies in it are different in their size and their business activities (which are determined in advance).

DATA COLLECTION PROCESS

Interviewers and the training method

Prerequisite for successful implementation of any project is detailed training of interviewers who will work on it. With active participation and great help of client, the research team had organized trainings for one part of interviewers while other interviewers were educated on additional training modeled on basis of the first training lead by supervisor. Trainings have included following:

• General training about working methods, quality standards in the process of work, as well as software usage for data collection

• Introducing with research goals, target groups and other details about project

• Training with questionnaire, analysis of every single question and its potential specifics

After the training has finished every interviewer was obliged to conduct at least 3 surveys before starting to work on project. During the period of field work the supervisor has been available at any moment for additional information, no matter if they are just about the questionnaire they occur during the interview.

Team of interviewers was assembled by associates:

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• Of different age and educational background with perennial experience of work with companies as target groups

• Who are eloquent, kind, convincing and stubborn, with developed communicational skills and trained to motivate the examinee and keep him active during the whole interview (these properties are especially expressed when it comes to long list of multiple choices or when it is expected to give an open answer which should be descriptive as much as possible).

Database usage and connecting methods

For research purposes data about companies are used from the following sources: APR database, Bisnode database, database of companies created in previous researches, as well as database created especially for this purpose (web search – social networks, websites etc.).

Calls usually took place during working days in period between 9:00 and 16:00. Given the specifics of target group (i.e. individual sellers on social networks) calls took place during working days even after 16:00 and at weekends as well.

Field work control

Validity of the surveys has been logically checked throughout the whole sample, and by re-calling and checking some key questions from the questionnaire and demographics (e.g. size of the company, business activity, etc.) covering at least 30% of the sample, randomly chosen.

RESEARCH INSTRUMENT (QUESTIONNAIRE)

The questionnaire was prepared in close cooperation with the client. Hence the CATI software has been used in the survey, the whole questionnaire was converted into digital form. Research team has thoroughly checked, multiple times tested and finally approved the electronic version of questionnaire.

ADVANTAGES OF CATI TECHNOLOGY

Prior experience states that advantages of electronic work in comparison with paper work are numerous:

• Less chance of making a mistake by an interviewer and more successful achieving of high- quality standards (the questionnaire is programmed with logical connections, e.g. the

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interviewer could not continue to the next question without fulfilling all necessary options in the previous one)

• Distinct instructions for every question are given to interviewers (e.g. to read or not to read answers, multiple choice possible, one answer only, etc.)

• Avoiding mistakes made by entering answers afterwards

• Ability to automatically rotate the answers in questions where the answers are read (in a way to avoid monotony of answering)

• Easier monitoring of screen out respondents (the program ensures secure elimination of respondents who are not eligible for one of the set criteria)

• Better logical control of interviewers` work in term to make report more qualitative

• Better technical control of interviewers` work in term to ensure respondent`s right answer

• Possibility of tracking the flow of field work (by individual questions or in total) and timely reacting on potential mistakes

• More efficient monitoring of set quotas during the field work

• Decrease of expanses (e.g. there is no printing of the questionnaire or afterwards entering in software, nor the control of entered)

• Time saving on: preparation of the project, entering received data, control process of entered data, as well as on work itself

• Better control of average time per interview

1.2. MAIN RESULTS AND SUGGESTSIONS

General impression of research with companies is that e-commerce is a very important aspect of their business activity. This refers of course to the companies which have developed online trade and are, as the findings suggest, quite satisfied. However, aware of fast-moving technology progress nowadays, temporary satisfaction does not prevent them to think about further development of such trade channel – on the contrary.

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Representatives of Serbian business community who are surveyed would welcome any incentive focused on further development of e-commerce in our country. The priorities for legal entities could be found on the graphs in the bottom of this text. Suppression of gray economy is the most important for those who already have the developed electronic trade. For those who don`t trade online, the most important is Guide for e-commerce. Just as important is additional education of potential customers because their mistrust which has roots in having insufficient information has been recognized as the main obstacle for further development of e-commerce. E-traders also don`t run away from self-education, which is certainly commendable, so this activity is also on the top of stimuli list. Introducing official quality certification for E-trade, state financial subsidies, and determining clear rules and obligations for courier offices would also create positive changes. What should be emphasized is that all the proposed measures were finely accepted and received high marks (from 4.2 upwards on the scale from 1 to 5).

Stimuli measures for e-commerce development. Scale is from 1 to 5, where 1 means insignificantly small, and 5 means pretty high. (Examinees whose companies have online stores, N=151) Average

Gray economy suppression in e-commerce 113 19 76

Additional education and better informing of potential 12 4 21 73 customers through media

Introducing official quality (reliability) certification for E- 2 3 7 21 67 trade

Financial subsidiaries fo e-traders 2 3 9 17 68

Education of e-traders 11 11 26 61

Determining clear rules and obligations for courier offices, 21 10 27 60 banks and other service providers Technology help (making of websites, corresponding 03 13 26 58 platfomr etc.) Making the Guide for e-trade (business, legal and 13 12 26 58 technology guide) Existance of call centre supported by Ministry where 3 6 8 25 59 people would be able to find all the necessary information Business strategy definition help 03 19 29 49

Insignificantly small Small Not small, not high High Pretty high

Figure 22. Measures for stimulating e-commerce development

150

Which of these measures could persuade you to think about starting the online sale? (Respondents whose companies don`t have online sale, N=58)

Making the Guide for e-trade 10

Technology help (making of websites, 9 corresponding platform etc.)

Financial subsidiaries for e-traders 7

Other 10

Nothing from listed 53

Figure 23. Measures for e-commerce implementation consideration

With the seriousness of the economy approaching e-commerce, the fact is that it is not really a novelty, and the majority of the surveyed business population has years of experience in it. Question about importance of some means of such trade makes clear and expected difference between smaller and bigger e-traders. The bigger the company the more expressed opinion of website efficiency is. On the other hand, social networks are far more significant for smaller companies and individual sellers.

Evaluation of certain business aspects in companies with multichannel sale brings us an interesting conclusion. Namely, no any aspect was marked negatively, so it could be said that the confidence of this part of business community is on a very high level.

Unlike existing e-traders who are not only aware of significance and benefits that new technology brings, but recognize the progress of their status and business from year to year, those who don`t implement e- commerce are dominantly uninterested for its development. Stating that they don`t have needs for e- trade as their main argument would be probably be the consequence of imminence the e-trade advantages, so putting an effort in their education should be a right choice.

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1.3. MAIN RESULTS AND SUGGESTSIONS

• Developing a set of measures for suppression of gray economy in E-commerce in Serbia • Creating the media campaigns with the purpose of introducing (potential) online customers and additional education for them about advantages that lies in e-commerce in Serbia • Making an e-commerce guide which will especially help to those who still haven`t started online way of doing business • Education of e-traders – It is necessary to give a chance to e-traders to acquire new knowledge and to implement knowledge they already have • Financial incentives for e-traders • Help with technology and strategy • Initiating a call center for e-commerce • Raising the visibility of e-traders certification • Defining clear rules for those who supply support activities • Enclosing e-commerce to the part of business community which does not deal with it, introducing with the process, education about its significance and advantages

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2. ANALYSIS OF BUSINESS RESEARCH RESULTS

2.1. GENERAL E-COMMERCE PERCEPTION

Graph 1: Does your company offer online/internet sale of its goods and services? (All examinees, N=209)

Yes No

Between 10 Internet Multichannel Goods Services Up to 9 50 and more Total and 49 sale only sale trade trade employees employees employees Base 209 54 97 166 43 96 56 57 Yes 72 100 100 77 53 75 66 74 No 28 0 0 23 47 25 34 26

Confidence interval Significantly above the average 95% 90% Significantly below the average 95% 90% Figure 24. E-commerce product and services offer

Interviewed business people are very aware of significance and advantages of new technologies. Almost three quarters (72%) has cited that their company has developed online sale. As expected, in comparison with services sector (53%) such percentage is higher among those which offer goods (77%). One should have in mind that the research was aimed on subjects which have online sale.

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Graph 2: Does your company poses sale premises? (All examinees, N=209)

Yes No

Between 10 Internet Multichannel Goods Services Up to 9 50 and more Total and 49 sale only sale trade trade employees employees employees Base 151 54 97 128 23* 72 37 42 Yes 64 0 100 68 43 43 73 93 No 36 100 0 32 57 57 27 7

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 25. Posession of stores

Two thirds of interviewed companies have a developed traditional trade, mainly physical stores. It is not surprising that this number arise with the size of the company, so then 9 out of 10 representatives of companies which have 50 or more employees have given affirmative answer to this question.

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Graph 3: Why don`t you offer online/internet sale of your goods or services? (Examinees whose companies don`t have online sale, N=58)

We have no need for that 72

Planning to introduce online sale 14

Limited capacities of the company 5 (financial capacities, human capacaties etc.)

General mistrust in e-commerce 2

Website/online sale platfom creating and 2 maintaing expanses

Customers` small demand 2

Developed domestic competition in e-sales 2

Other 12

50 and Up to 9 Between 10 Goods Services more Total employee and 49 trade trade employee s employees s Base 58 38 20* 24* 19* 15* We have no need for that 72 58 100 92 74 40 Planning to introduce online sale 14 21 0 0 16 33 Limited capacities of the company (financial capacities, human 5 8 0 4 0 13 capacities etc.) General mistrust in E-commerce 2 3 0 0 0 7 Website/online sale platform creating and maintenance 2 3 0 4 0 0 expanses Customers` small demand 2 3 0 4 0 0 Developed domestic competition in E-sales 2 3 0 0 5 0 Other 12 16 5 8 21 7 Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 26. Reasons for not offering e-commerce

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Although the majority of firms which do not offer online trade of their products and services claim that they actually do not have need for that (72%), certain number of companies are planning to introduce this kind of sale channel in their business activity (14%).

Graph 4: Which of the following measures could convince you to consider starting up an online sale? (Examinees whose companies don`t have online stores, N=58)

Making the Guide for e-trade 10

Technology help (making of websites, 9 corresponding platform etc.)

Financial subsidiaries to E-traders 7

Business strategy definition help 3

Additional education and better informing of potential customers 3 through media Existence of call centre supported by Ministry where people would be able 3 to find all the necessary information

Introducing official quality (reliability) 3 certification for E-trade

Precise law regulations in term of suppression gray economy in E- 2 commerce

Planning to start up the online trade 12

Other 10

Nothing from listed 53

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Between 50 and Goods Services Up to 9 10 and 49 more Total trade trade employees employee employe s es Base 58 38 20* 24* 19* 15*

Making the Guide for e-trade 10 13 5 8 21 0

Technology help (making of websites, corresponding 9 13 0 8 11 7 platform etc.) Financial subsidiaries to E-traders 7 8 5 8 5 7 Business strategy definition help 3 0 10 4 5 0 Additional education and better informing of potential 3 5 0 0 5 7 customers

Existence of call center supported by Ministry where people would be able to find all the necessary 3 5 0 0 5 7 information

Introducing official quality (reliability) certification for 3 5 0 0 11 0 E-trade

Precise law regulations in term of suppression gray 2 0 5 0 5 0 economy in E-commerce

Planning to start up the online trade 12 18 0 0 11 33

Other 10 8 15 8 5 20

Nothing from listed 53 45 70 67 53 33

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 27. Measures for considering e-commerce introduction

In accordance with previous question there is a predominance of entrepreneurs who would be pretty hard to motivate to start online sales (53%). Nonetheless, quarter of them cites that additional education with guide for E-commerce, technological or financial aid would give them a stimulus for online store development.

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Graph 5: From the perspective of entrepreneur, how would you mark the significance of E- commerce in Serbia, in general? Please use the scale from 1 to 5, where 1 means negligibly small, and 5 means pretty high. (Examinees whose companies do online sale, N=151)

1 4 11 25 36 25

Insignificantly small Small Not small, not high High Pretty high Doesn`t know/Rejects to answer

Between 10 Internet Multichannel Goods Services Up to 9 50 and more Total and 49 sale only sale trade trade employees employees employees

Base 151 54 97 128 23* 72 37 42

Average 3.7 3.8 3.6 3.6 4.0 3.6 3.7 3.7

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 28. Perception of e-commerce relevance in Serbia

On the other hand, regardless of the way of sale, or supply type, or company`s size, e-traders mark significance of e-commerce in Serbia really high (average is 3.7 on scale from 1 to 5). What`s more, 60% of them consider this way of trade at least important, and about quarter as very important.

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Graph 6: How much are you satisfied with E-commerce activity of your company? Please use scale from 1 to 5, where 1 means completely unsatisfied, and 5 means completely satisfied. (Respondents whose companies do E-commerce, N=151)

Average 1 2 7 31 38 22

3.7 Completely unsatisfied Mostly unsatisfied Not satisfied, nor unsatisfied Mostly satisfied Completely satisfied

Between 10 Internet Multichannel Goods Services Up to 9 50 and more Total and 49 sale only sale trade trade employees employees employees

Base 151 54 97 128 23* 72 37 42

Average 3.7 3.8 3.7 3.7 3.7 3.6 3.6 3.9

Confidence

interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 29. Satisfaction with internal e-commerce activities

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Graph 7: For how long do you have a developed online sale? (Examinees whose companies have online sale, N=151)

1 15 34 19 32

Up to a year Between 1 and 3 years Between 3 and 5 years More than 5 years

Between Interne Up to 9 10 and 50 and Multichannel Goods Service Total t sale employee 49 more sale trade s trade only s employee employees s Base 151 54 97 128 23* 72 37 42

Up to a year 15 11 18 16 13 15 5 24

Between 1 and 3 years 34 28 37 34 35 28 49 31

Between 3 and 5 years 19 24 16 20 17 25 8 19 More than 5 years 32 37 29 31 35 32 38 26 Confidence

interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 30. Duration of e-commerce implementatinon

The question of the years of existence of e-commerce within a firm reveals us that it is not anything new for our traders. Namely, half of the interviewed companies have developed these activities more than 3 years ago, and third of them 5 years ago. Actually, those which are included in E-commerce for a 1 year represent the smallest amount (15%).

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Graph 8: How much is an online sale represented in your firm, in percentages? Please try to give an approximate evaluation. (Examinees whose companies have online stores, N=151)

0% 20% 40% 60% 80% 100%

1 3 18 23 19 7 29

Less than 1% From 1% to 5% Between 5% and 20% Between 20% and 50% From 50% to 99% 100% of turnover is realized by Internet

Between 10 Internet Multichannel Goods Services Up to 9 50 and more Total and 49 sale only sale trade trade employees employees employees Base 151 54 97 128 23* 72 37 42

Less than 1% 3 0 5 4 0 3 3 5 From 1% to 18 2 27 20 9 13 22 24 5% Between 5% 23 4 34 23 26 15 27 33 and 20% Between 20% 19 6 27 20 17 14 16 31 and 50%

From 50% to 7 7 7 7 9 10 8 2 99%

100% of turnover is 29 81 0 27 39 46 24 5 realized by Internet Confidence interval *Small base for conducting Significantly above the average 95% 90%

relevant conclusions Significantly below the average 95% 90% Figure 31. E-sales share in total sales

Something more than a third of examined firms (36%) stated that the participation of online sale in total sale is somewhere between 50% and 100%. Truth be told, this result is significantly influenced by retailers who exclusively sell their products or services online, but on the other hand, the contribution of e- commerce is not negligible for those with multi-channel sales as well - 34% say that it participates with 20% and more percent in their total sales. An equal number is estimated between 5% and 20%.

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Graph 9: Based on your experience so far, how many percentages of the online sale are done by one of the following ways? Please give us at least approximate evaluation. (Examinees whose companies have online stores, N=151)

1 20 76 4

Social networks (FB, Instagram, etc.) Websites Smartphone applications

Interne Between 10 Multichannel Goods Services Up to 9 50 and more Total t sale and 49 sale trade trade employees employees only employees

Base 151 54 97 128 23* 72 37 42

Social networks (FB, 20 31 14 21 15 30 19 5 Instagram, etc.) Websites 76 66 81 75 76 68 77 87

Smartphone 4 3 5 3 10 2 4 8 applications

*Small base for conducting Confidence relevant conclusions interval Significantly above the average 95% 90%

Significantly below the average 95% 90% Figure 32. E-sales share by type

According to opinion of business society in Serbia the online sales are the most efficient way of e- commerce. The bigger the firm the more expressed this opinion is. On the other hand, individual sellers and smaller firms for which we could assume to contain the largest part of subgroup which deals only with online sale, far more often in this context stress social networks (30% versus 20% for the whole sample).

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2.2. BARRIERS IN BUSINESS

Graph 10: In your opinion, what is the biggest barrier to further development of E- commerce, looking from the side of supply, namely e-traders` side? (Examinees whose companies have online sale, N=151)

Buyers` mistrust 35 17 Weak development of e-commerce in the country 20 11

Gray economy in e-commerce 13 19

Lack of financial funds 9 8

Lack of quality human resources 6 13

Lack of prior experience 5 9

Too big demands in term of data security 2 9 Impossibility of taking pace with fast technology development 1 4 Weak development of multichannel approach (combining of classical and electronic trade) 1 5 The biggest barrier Second biggest barrier Other 9 6

Although the buyer`s mistrust could not be directly connected with online supply it is certainly the first on the barriers lists to further development of e-commerce in Serbia. This statement is especially often among representatives whose companies have 50 or more employees. Also, it is recognized as the one of two main barriers by half of the examinees. Then it is followed by: weak development of e-commerce trade in country and the spread gray economy in this field.

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Between 50 and Up to 9 Internet Multichannel Goods Services 10 and 49 more The biggest barrier Total employ sale only sale trade trade employee employe ees s es Base 151 54 97 128 23* 72 37 42 Buyers` mistrust 35 31 37 36 30 29 30 50 Weak development of E-commerce in 20 20 20 17 35 22 19 17 the country Gray economy in E-commerce 13 13 12 13 9 13 14 12 Lack of financial funds 9 7 9 8 13 11 8 5

Lack of quality human resources 6 4 7 5 9 6 8 5 Lack of prior experience 5 6 4 5 4 3 11 2 Too big demands in term of data 2 0 3 2 0 1 0 5 security Impossibility of taking pace with fast 1 4 0 2 0 3 0 0 technology development Weak development of multichannel approach (combining of classical and 1 2 1 2 0 0 3 2 electronic trade) Other 9 13 6 10 0 13 8 2

Between 50 and Up to 9 Internet Multichannel Goods Services 10 and 49 more Second biggest barrier Total employ sale only sale trade trade employee employ ees s ees Base 151 54 97 128 23* 72 37 42 Gray economy in E-commerce 19 17 21 20 17 13 30 21 Buyers` mistrust 17 17 18 20 4 17 14 21

Lack of quality human resources 13 13 12 12 17 11 14 14 Weak development of E-commerce in 11 11 10 10 13 14 8 7 the country Lack of prior experience 9 7 10 9 9 6 11 14 Too big demands in term of data 9 11 7 6 22 8 3 14 security Lack of financial funds 8 11 6 9 0 13 8 0

Weak development of multichannel approach (combining of classical and 5 2 6 5 4 6 5 2 electronic trade)

Impossibility of taking pace with fast 4 4 4 3 9 6 3 2 technology development Other 6 7 5 6 4 8 5 2

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 33. Supply side barriers to e-commerce development

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Graph 11: What would you highlight as the biggest barrier from the demand side, buyers` side? (Examinees whose companies have online sale, N=151)

Mistrust 54 19

Insufficient technological literacy 16 20

Lack of money 15 15

Fear of the unknown 7 33

Some geographical barriers (too expensive delivery to some parts) 31

Language barriers 13 Fear of data misuse (name and surname, address, payment cards.) 13

Insufficient financial literacy 1 5 Socio-demographical indicators such as education and income 1 Infrastructural barriers, as fast internet unavailability 1 The biggest barrier Other 4 Second biggest barrier

From the demand side, mistrust to electronic trade is far the biggest barrier for its further development (54% thinks that, and 73% of examinees put it as one of the two main barriers). Then it is followed with insufficient technological literacy, lack of money and fear of the unknown.

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Between Up to 9 50 and Internet Multichannel Goods Services 10 and 49 The biggest barrier Total employ more sale only sale trade trade employee ees employees s Base 151 54 97 128 23* 72 37 42 Mistrust 54 44 59 55 43 44 62 62 Insufficient technological literacy 16 17 15 13 35 21 11 12 Lack of money 15 24 9 14 17 19 14 7 Fear of the unknown 7 6 7 8 0 6 8 7 Language barriers 1 0 2 2 0 0 0 5

Fear of data misuse (name and 1 0 1 1 0 0 0 2 surname, address, payment cards.)

Insufficient financial literacy 1 2 0 0 4 0 0 2

Socio-demographical indicators

such as education and income Infrastructural barriers, as fast

internet unavailability Other 4 6 3 5 0 7 3 0

Between Up to 9 50 and Internet Multichannel Goods Services 10 and 49 Second biggest barrier Total employ more sale only sale trade trade employee ees employees s Base 151 54 97 128 23* 72 37 42 Fear of the unknown 33 30 35 31 43 33 32 33

Insufficient technological literacy 20 19 21 20 17 17 19 26

Mistrust 19 28 13 19 17 26 19 5 Lack of money 15 15 15 16 13 13 16 19 Fear of data misuse (name and 3 2 3 3 0 3 0 5 surname, address, payment cards.)

Language barriers 3 2 3 2 4 1 5 2

Some geographical barriers (too 1 2 1 2 0 1 3 0 expensive delivery to some parts)

Socio-demographical indicators 1 0 1 1 0 0 0 2 such as education and income

Infrastructural barriers, as fast 1 0 1 1 0 0 3 0 internet unavailability Confidence

interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 34. Biggest supply side barrier to e-commerce development

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Graph 12: What do you find as the biggest barrier to other participants` side which facilitate/provide support for e-commerce`s realization? (Examinees whose companies have online sale, N=151)

Courier offices` unreliability 44 7

Banking terms, actually payment systems 13 13

Insufficient government`s help 9 20

Too much expensive shipment for in the country 9 19

Too much expesnive shippment for abroad 7 11 Inexistence of clearly defined law frame and regulations 4 7 Technological services providers` conditions (making of the websites, platforms) 4 8 Custom regulations 3 4

Internet infrastructure 3 5 The biggest barrier Other 4 7 Second biggest barrier

In Serbian business community`s opinion, unreliability of courier offices is the main threat to electronic trade, looking from perspective of other participants in it or from perspective of others who participate in its realization (44%). Banking terms took second place (13%) and insufficient governments engagement in this sector is third (9%).

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Up to 9 Between 10 50 and Internet Multichannel Goods Services The biggest barrier Total employee and 49 more sale only sale trade trade s employees employees Base 151 54 97 128 23* 72 37 42 Courier offices` unreliability 44 39 46 50 9 42 41 50 Banking terms, actually 13 11 14 8 43 17 14 7 payment systems Insufficient government`s 9 11 8 7 22 8 5 14 help Too much expensive 9 9 8 10 0 8 11 7 shipment for in the country Too much expensive 7 9 6 9 0 4 14 7 shipment for abroad Inexistence of clearly defined 4 6 3 3 9 4 5 2 law frame and regulations Technological services providers` conditions (making 4 7 2 4 4 6 0 5 of the websites, platforms) Customs regulations 3 2 4 4 0 3 5 2 Internet infrastructure 3 4 2 2 4 1 3 5 Other 4 2 5 3 9 7 3 0

Banking terms, actually 13 11 14 13 13 8 14 21 payment systems

Too much expensive 11 15 9 13 4 13 14 7 shipment for abroad Technological services providers` conditions (making 8 9 7 7 13 6 8 12 of the websites, platforms) Inexistence of clearly defined 7 11 5 6 13 8 5 7 law frame and regulations Courier offices` unreliability 7 4 8 8 0 7 5 7 Internet infrastructure 5 2 6 4 9 3 0 12 Customs regulations 4 4 4 5 0 1 8 5 Other 7 6 7 6 9 11 5 0

Confidence

interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 35. E-commerce enablers barriers to e-commerce development

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2.3. MEASURES FOR STIMULATION

Graph 13: In your opinion which measures would improve further development of E- commerce in Serbia? (Examinees whose companies have online sale, N=151)

Education 24 Better and more efficient work of courier offices 13

Smaller post fee amounts 11 Efficient and better payment 11 Better marketing 9

Governemnt`s help 8 Laws 5 Gray economy regulating 4

Bank provisions decrease 4 Online shopping safety 3 Easier shiping process towards abroad 2 Introducing of PayPal 1 Other 6

Nothing 13

First of all, our entrepreneurs believe that additional education about e-commerce would speed up its development (24%). Such opinion is very common among representatives of companies which have 50 or more employees (40%). The second place on the list is taken by more responsible and efficient work of courier offices (13%), and followed by smaller post fee amounts and better payment system (both aspects by 11%).

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Up to 9 Between 10 50 and Internet Multichannel Goods Services Average Total employee and 49 more sale only sale trade trade s employees employees Base 151 54 97 128 23* 72 37 42

Precise law regulations in term of suppression the gray 4.7 4.6 4.7 4.7 4.7 4.6 4.9 4.7 economy in E-commerce

Additional education and better informing of potential 4.6 4.6 4.6 4.7 4.2 4.5 4.8 4.7 customers through media Introducing official quality/reliability certification 4.5 4.4 4.5 4.5 4.0 4.4 4.8 4.4 for E-sale Financial subsidies for E- 4.5 4.6 4.4 4.5 4.5 4.5 4.5 4.3 traders Education of E-traders 4.5 4.4 4.5 4.5 4.4 4.4 4.5 4.5 Defining clear rules and obligations for courier offices, 4.4 4.1 4.6 4.5 4.0 4.2 4.8 4.5 banks and other services providers

Technology help (making of websites, corresponding 4.4 4.4 4.4 4.4 4.3 4.3 4.6 4.4 platform etc.)

Making the Guide for e-trade (technology, law and business 4.4 4.4 4.4 4.4 4.4 4.3 4.3 4.5 guide)

Existence of call center supported by Ministry where 4.3 4.1 4.4 4.3 4.2 4.2 4.4 4.4 people would be able to find all the necessary information

Business strategy definition 4.2 4.2 4.3 4.2 4.3 4.1 4.3 4.4 help Confidence interval *Small base for conducting Significantly above the average 95% 90%

relevant conclusions Significantly below the average 95% 90%

Figure 36. Measures for further e-commerce development in Serbia

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Graph 14: How much influence would take the following measures for further development of E-commerce in Serbia? Please use the scale from 1 to 5, where 1 is insignificantly small, and 5 is pretty high. (Examinees whose companies have online sale, N=151) Average

Precise law regulations in term of suppression the gray 113 19 76 economy in e-commerce Additional education and better informing of potential 12 4 21 73 customers through media Introducing official quality (reliability) certification for e- 23 7 21 67 sale

Financial subsidiaries to e-traders 23 9 17 68

Education of e-traders 11 11 26 61

Defining clear rules and obligations for courier offices, 21 10 27 60 banks and other services providers Technology help (making of websites, corresponding 03 13 26 58 platform etc.)

Making the Guide for e-trade (technology, law and 13 12 26 58 business guide)

Existence of call centre supported by Ministry where 3 6 8 25 59 people would be able to find all the necessary…

Business strategy definition help 03 19 29 49

Insignificantly small Small Not small, not high High Pretty high

If we look only subgroups of companies, we would be able to see that companies which have between 10 and 49 employees usually stand out by the willingness to more firmly support law regulations (4.9). Quality certification (4.8) and defining clear rules and regulations for courier offices, banks and other services providers (4.8 to 4.4 on the whole sample) would also be strongly supported by the companies.

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Up to 9 Between 10 50 and Internet Multichannel Goods Services Average Total employ and 49 more sale only sale trade trade ees employees employees Base 151 54 97 128 23* 72 37 42

Precise law regulations in term of suppression the gray economy in 4.7 4.6 4.7 4.7 4.7 4.6 4.9 4.7 E-commerce

Additional education and better 4.6 4.6 4.6 4.7 4.2 4.5 4.8 4.7 informing of potential customers

Introducing official quality 4.5 4.4 4.5 4.5 4.0 4.4 4.8 4.4 (reliability) certification for E-sale Financial subsidiaries to E- 4.5 4.6 4.4 4.5 4.5 4.5 4.5 4.3 traders Education of E-traders 4.5 4.4 4.5 4.5 4.4 4.4 4.5 4.5 Defining clear rules and obligations for courier offices, 4.4 4.1 4.6 4.5 4.0 4.2 4.8 4.5 banks and other services providers Technology help (making of websites, corresponding 4.4 4.4 4.4 4.4 4.3 4.3 4.6 4.4 platform etc.)

Making the Guide for e-trade (technology, law and business 4.4 4.4 4.4 4.4 4.4 4.3 4.3 4.5 guide) Existence of call center supported by Ministry where 4.3 4.1 4.4 4.3 4.2 4.2 4.4 4.4 people would be able to find all the necessary information

Business strategy definition help 4.2 4.2 4.3 4.2 4.3 4.1 4.3 4.4

Confidence

interval *Small base for conducting Significantly above the average 95% 90%

relevant conclusions Significantly below the average 95% 90% Figure 37. Perception of measures for further e-commerce development in Serbia

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Graph 15: Is there any regulation barrier which solving would improve E-commerce in Serbia? (Examinees whose companies have online sale, N=151)

51 Yes 35 No Not sure

Between 50 and Internet Multichannel Goods Services Up to 9 Total 10 and 49 more sale only sale trade trade employees employees employees Base 151 54 97 128 23* 72 37 42

Yes 14 22 9 16 4 21 8 7

No 35 26 40 37 26 33 22 50

Not sure 51 52 51 48 70 46 70 43

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 38. Regulatory barriers whose resolution would improve e-commerce in Serbia

As expected, half of the examinees are not familiar with the possible law barriers in process of online trade. Third of them consider the barriers do not exist. Interestingly, that percentage is the biggest among leaders of the biggest interviewed firms (50%). Number of those who claim that the barriers of such type could exist is not big enough to be taken into consideration.

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Graph 16: have you ever heard about blockchain technology? (Examinees whose companies have online sale, N=151)

Yes No

Between 50 and Internet Multichannel Goods Services Up to 9 Total 10 and 49 more sale only sale trade trade employees employees employees

Base 151 54 97 128 23* 72 37 42

Yes 25 35 19 19 57 35 14 17

No 75 65 81 81 43 66 86 83

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 39. Familiarity with blockchain technology

Only one quarter of the interviewed enterprises is familiar with the term of the blockchain technology.

174

Graph 17: Could you explain in a simple way what is blockchain? (Examinees who have heard for the blockchain technology)

46 54

Yes No

Between 50 and Internet Multichannel Goods Services Up to 9 Total 10 and 49 more sale only sale trade trade employees employees employees

Base 37 19* 18* 24* 13* 25* 5* 7*

Yes 46 47 44 42 54 52 40 29

No 54 53 56 56 46 48 60 71

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 40. Level of blockchain technology understanding

Something less than half of the few of examinees who have heard about the blockchain technology believe they could easily explain to others what it means.

175

Graph 18: Have you ever heard about Smart contract term? (Examinees whose companies have online sale, N=151)

Yes No

Between 50 and Internet Multichannel Goods Services Up to 9 Total 10 and 49 more sale only sale trade trade employees employees employees Base 151 54 97 128 23* 72 37 42

Yes 21 20 22 20 26 22 19 21

No 79 80 78 80 74 78 81 79

Confidence interval *Small base for conducting Significantly above the average 95% 90%

relevant conclusions Significantly below the average 95% 90% Figure 41. Familiarity with smart contracts

For 80% of entrepreneurs in Serbia, term Smart contract is something unknown.

176

Graph 19: Would you say that business activity and status of E-traders in Serbia in comparison with 3 years ago are…? (Examinees whose companies have online sale, N=151)

74 Worsened

On the same leve

Improved

Between 50 and Internet Multichannel Goods Services Up to 9 Total 10 and 49 more sale only sale trade trade employees employees employees Base 151 54 97 128 23* 72 37 42 Worsened 2 4 1 2 0 3 3 0 On the 25 22 26 23 30 28 27 17 same level Improved 74 74 73 74 70 69 70 83

Confidence interval *Small base for conducting Significantly above the average 95% 90%

relevant conclusions Significantly below the average 95% 90%

Figure 42. Comparisson of e-traders’ situation in the last three years

Although they think that a lot could be improved, significant majority of entrepreneurs think that status and business activity of e-traders in our country are better than before 3 years (74%). Quarter of them recognize that barely has something changed and 2% notice worsening.

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2.4. SAMPLE STRUCTURE

Annual income

Up to 50,000€ 15

From 50,000 to 100,000€ 5

From 100,000 to 200,000€ 5

From 200,000 to 300,000€ 1 From 300,000 to 500,000€ 2

Over 500,000€ 5

Doesn`t know/rejects to answer 68

Figure 43. Annual corporate income

Predominant business activity

Clothes and shoes 37

Technics and technology 17

Other goods trade (books, furniture, toys, flower stroes etc.) 16 Other services trade (software selling, information conten, 12 different professional services etc.) Sport clothes, shoes and equipment 9

Mostly food products (FMCG) 7 Selling of flying and other transportation tickets, touristic 3 arangements, event tickets etc. Betting 1

Figure 44. Predominant business activity (industry)

178

Number of employees Interviewees' position

Owner, co-owner Up to 9 employees 28 26 Director 44 48 Between 10 and 49 epmloyees Electronic trade 5 manager 50 and more Other employees 25 employees 25 competent for the research topic

Years of existance Region

3 15 21

7 Up to one year 55 Between 1 and 3 years Belgrade 56 Between 3 and 5 years 19 23 Central Serbia Between 5 and 10 years Vojvodina More than 10 years

Share of women ownership Predominant business activity

15 24

54 Without women`s contribution Goods trade 23 1% - 49% 85 Services trade 50% and more

Figure 45. Data on the number of employees, interviewees' position, years of existance, region, share of women ownership and predominant business activity

179

3. INTERNET USERS RESEARCH

3.1. METODOLOGY

FIELD OF RESEARCH

A research has been created to provide a view on opinions and statements of general population about online trade in Serbia and its significance and development level at the moment. Also, gathered data will show what are citizen`s experience in this sphere so far. CATI (Computer-Assisted Telephone Interviewing) technique of gathering data has been implemented, which means that experienced interviewers have surveyed representatives of randomly chosen populations via telephone. The research team would like to express its gratitude to CFG representatives on excellent cooperation, useful suggestions during the survey creation and great help during the training of interviewers.

SAMPLE DESCRIPTION

Survey about electronic trade with general population has been conducted on sample of 1000 adult internet users. With an assumption that 70% of population in Serbia use internet the sample will be leveled at n=1450 so we could get a real picture of internet users.

Chosen sample (n=1450) is a quota sample, nationally representative in terms of: gender, age, settlement type and statistical region. Quota sample considers setting pre-defined crossed quotas which are created based on data from an official national Population census from 2011. This way the research sample represents the status in general population of Serbia in terms of stated demographical indicators. On following pictures is given the example of crossed nationally representative quota sample.

Needed Needed Region Settlement (N) (col %) 1 Vojvodina 1 Urban 273 18.8% 1 Vojvodina 2 Rural 61 4.2% 2 Belgrade 1 Urban 233 16.1% 2 Belgrade 2 Rural 158 10.9% 3 West Serbia 1 Urban 193 13.3% 3 West Serbia 2 Rural 214 14.8% 4 East Serbia 1 Urban 164 11.3% 4 East Serbia 2 Rural 154 10.6% Total 1450 Figure 46. Quotas crossed by statistical region and settlement type

180

Needed Needed Region Q3 Q4 (N) (col %) 1 Vojvodina 1.1 Male 1.1 From 1 to 18 0 1 Vojvodina 1.1 Male 2.2 18-24 21 1.4% 1 Vojvodina 1.1 Male 3.3 25-34 34 2.3% 1 Vojvodina 1.1 Male 4.4 35-44 32 2.2% 1 Vojvodina 1.1 Male 5.5 45-54 34 2.3% 1 Vojvodina 1.1 Male 6.6 55-64 35 2.4% 1 Vojvodina 1.1 Male 7.7 65+ 31 2.1% 1 Vojvodina 2.2 Female 1.1 From 1 to 18 0 1 Vojvodina 2.2 Female 2.2 18-24 20 1.4% 1 Vojvodina 2.2 Female 3.3 25-34 32 2.2% 1 Vojvodina 2.2 Female 4.4 35-44 32 2.2% 1 Vojvodina 2.2 Female 5.5 45-54 35 2.4% 1 Vojvodina 2.2 Female 6.6 55-64 38 2.6% 1 Vojvodina 2.2 Female 7.7 65+ 47 3.2% 2 Belgrade 1.1 Male 1.1 From 1 to 18 0 2 Belgrade 1.1 Male 2.2 18-24 16 1.1% 2 Belgrade 1.1 Male 3.3 25-34 31 2.1% 2 Belgrade 1.1 Male 4.4 35-44 28 1.9% 2 Belgrade 1.1 Male 5.5 45-54 25 1.7% 2 Belgrade 1.1 Male 6.6 55-64 28 1.9% 2 Belgrade 1.1 Male 7.7 65+ 27 1.9% 2 Belgrade 2.2 Female 1.1 From 1 to 18 0 2 Belgrade 2.2 Female 2.2 18-24 16 1.1% 2 Belgrade 2.2 Female 3.3 25-34 32 2.2% 2 Belgrade 2.2 Female 4.4 35-44 29 2.0% 2 Belgrade 2.2 Female 5.5 45-54 29 2.0% 2 Belgrade 2.2 Female 6.6 55-64 34 2.3% 2 Belgrade 2.2 Female 7.7 65+ 39 2.7% Figure 47. Quotas crossed by statistical region, gender and age

DATA GATHERING PROCESS

Interviewers and the training method

181 part of interviewers while other interviewers were educated on additional training modeled on basis of the first training lead by supervisor. Trainings have included following:

• General training about working methods, quality standards in the process of work, as well as software usage for data collection • Introducing with research goals, target groups and other details about project • Training with questionnaire, analysis of every single question and its potential specifics

After the training had finished every interviewer was obliged to conduct at least 3 surveys before starting to work on project. During the period of field work the supervisor has been available at any moment for additional information, no matter if they are just about the questionnaire they occur during the interview.

Team of interviewers was assembled by associates:

• Of different age and educational background with perennial experience of work with companies as target groups • Who are eloquent, kind, convincing and stubborn, with developed communicational skills and trained to motivate the examinee and keep him active during the whole interview (these properties are especially expressed when it comes to long list of multiple choices or when there is expected to give an open answer which should be descriptive as much as possible).

Database usage and connecting methods

Telephone number base containing about 2,5 million numbers (about 20% mobile and 80% house phones) was used covering the whole territory of Serbia including urban and rural settlements. The program was set in a way that calling is done uniformly by the contribution of called numbers in the whole sample, during the whole field task. Calls took place during the whole day (working days from 12:00 to 20:00, and at weekends from 11:00 to 20:00) with accent on afternoon and evening hours so that employed members of households could be covered. This way of work ensures high quality output.

Quotas by gender, age, settlement type and region are set in advance, so the interviewers could not influence on their changes.

Field work control

Validity of the surveys has been logically checked throughout the whole sample, and by re-calling and checking some key questions from the questionnaire and demographics (e.g. gender, age, etc.) covering at least 30% of the sample, randomly chosen. In case of some irregularities telephone control percentage will be increased on 100%.

INSTRUMENT OF RESEARCH (QUESTIONNAIRE)

182

The questionnaire was prepared in close cooperation with the client. Hence the CATI software has been used in the survey, the whole questionnaire was converted into digital form. Research team has thoroughly checked, multiply tested and finally approved the electronic version of questionnaire.

3.2. MAIN RESULTS AND SUGGESTSIONS

Number of internet users among Serbian citizens increases day by day. This is not surprising given the fact that smartphones are nowadays almost considered by default and when the barriers for its usage as financial as technical are almost disappeared.

If we have in mind that more than two fifths (43%) of people bought something via internet in the last 6 months, then the number of online buyers in our country is not insignificant. Time saving and practical aspects of simple and efficient comparing of different offers motivate us on first place to shop online. Although social networks are unmatched by being interested, informing about products and services and their purchase are mostly done via websites.

What could be the main reasons why you shop online? Is there any other reason? I will read you some reasons why people shop online. Do you recognize yours among them?

(Examinees who shopped something online in last 6 months, N=434)

Time saving 30 64 84

It`s practical - I can compare different 19 45 75 offers in short time

Delivery on demanded address 8 35 73

Bigger choice of products and services 15 40 65

Does not require physical effort 6 28 62

Money saving 16 37 49

I could easily obtain products from 6 18 41 abroad which are not available in Serbia Listed with reminding

Anonymity 1 8 Other spontaneously mentioned First mentioned Other 4

Figure 48. Main reasons for internet shopping

183

Definitely we buy clothes, shoes and sport equipment the most, often do we also shop technique and fashion accessories, so according to this we usually visit official retail objects` websites which, when it comes to online shopping, we trust the most. Although a significant part of online shopping in Serbia is done via social networks, whether they are trademarks` profiles or individual traders, these sellers are not considered much reliable.

Factors which could influence more and often online shopping. Scale from 1 to 5, where 1 means it would not influence at all, and 5 means it would influence a lot.

(Examinees who bought something via internet in last 6 months, N=434) Average

Goods could be returned in the trader`s nearest store 12 8 21 66 1

Positive experience of close friends 21 7 31 59 1

Possibility to see the product before the payment is done, or the possibilitu of returning the reserved funds (paying 2 3 10 29 55 1 by cards)

Better supply 24 12 33 49

Smaller delivery costs 7 3 11 21 58

Precise law regulation about online sellers`/E-traders` 2 5 15 31 47 obligations

Better internet supply of classical traders (which already 2 4 16 32 44 1 have retail objects)

That you can read a review about the product/trader 3 3 15 36 41 2 given by other buyers

Wouldn`t inluence at all It wouldn`t inluence mostly Would (not) inluence It would influence mostly Would influence a lot Doesn`t know/rejects to answer

Figure 49. Factors influencing the higher frequency of e-shopping

184

Although the average buyer generally puts a lot of trust in e-commerce (online shopping), that is the exactly what is still missing among the majority of our population which doesn`t shop online. Despite the small number who know for unpleasant experience in this process and although they would be motivated to a certain point to consider this option with the same factors which would stimulate online buyers to increase the extent of their shopping, there exist small chances that fears and changing of habits among people who don`t prefer e-commerce could fall apart without additional education.

3.3. MAIN RECOMMENDATIONS OF THIS RESEARCH

✓ Education of customers and potential online customers, as well as promotion programs designed for them should be focused on the key benefits that e-commerce brings: time saving, easy comparison of different offers, bigger choice, no physical effort nor costs of getting to the point of sale. ✓ Education of customers and promotion should be intensively included in elimination of online shopping fears, such as: receiving non-adequate products fear, or not to receive the product at all, reclamation procedure ignorance, general mistrust to e-commerce etc. ✓ Above mentioned e-commerce benefits and its potential deficiencies, as well as traders` rights and obligations and customers` rights should be represented to Serbian population in the right way and through adequate media. ✓ Technological literacy of people should be intensively improved ✓ Conducting a set of measures which will secure more qualitative and cheaper delivery ✓ Creating an online offer of classical and online traders which will be in accordance with the needs of Serbian customers

185

4. ANALYSIS OF INTERNET USERS RESEARCH RESULTS

4.1. INTERNET USERS` HABITS

Graph 21: How often do you use internet?

(All examinees, N=1000)

0% 20% 40% 60% 80% 100%

1 85 12 3

Every day Several times a week Once a week

Significant majority of citizens use internet every day (85%). What is more, there are no respondents who use internet less than once a week. As expected, younger population use internet more, even though, among older users percentage of everyday users is also high. Especially active users of internet are those who are employed with an above average salary (income) (90%).

186

2 6

90 127

Above Above

Average

90% 90%

15 81

121

interval Average Confidence 95% 95%

15 82

309

Bellow Bellow Average

1 2

413 Rural

ow the averagethe ow

587 Urban

88 287 Vojvodi Significantly bel Significantly

Significantly above the average

268

West Serbia

195 East

Serbia

83 249

Belgrade

forconducting

66 69

65+

relevantconclusions

143

55-64 *Small base *Small

78 210

45-54

7 91

216

35-44

0 3

224

25-34

0 0

139 18-24

488 Women

512 Men

1000 Total

Seldom than these Seldom

Once in a month a Oncein

month month

Several times in a a in times Several

Once in a week a Oncein

Several times a week a times Several Everyday Base

Figure 50. Frequency of internet usage

187

Graph 22: Which devices do you use to get online?

(All examinees, N=1000)

Smartphone 90

Laptop/netbook/notebook 45

Desktop computer 45

Tablet 15

Even 9/10 examinees use their smartphone to go online, which puts this device on the first place of the list. Beside young and people with an above average income this statement is also present among people from Belgrade as well from rural settlements. Hence, we could conclude that settlement type is no more an obstacle for availability of new technologies. Something less than a half of all examinees use internet via laptop or desktop computers (both make 45%), and 15% via tablet.

188

92 127

Above Above Average

90% 90%

interval

95 121 Confidence 95% 95%

Average

40 42

309

Bellow Bellow Average

413 Rural

averagethe ow

88 587

Urban 0

Significantly bel Significantly

48 90 Significantly above the average

287 Vojvodi

268

West Serbia

195 East

Serbia

55 94

249

Belgrade relevantconclusions

65+ *Small base *Small for conducting

76 143

55-64

34 92

210 45-54

216 35-44

99 224

25-34

54 98

139 18-24

488 Women

88 512

Men

90 1000

Total

Other

Tablet

computer

Desktop Desktop

notebook

netbook/

Laptop/

Smartphone Base

Figure 51. Devices used for internet access

189

Graph 23: How often do you visit these internet contents? (All respondents, N=1000)

% At least once 0% 20% 40% 60% 80% 100%a weeek

Social Networks (Facebook, Instagram, LinkedIn etc.) 62 13 3212 18

Official websites of other companies (clothes, shoes and sport equipment, baby equipment, cosmetics, fashion 4 14 12 24 12 16 20 accessories, touristic…) Trade chains` official websites (hypermarkets, supermarkets, cash&carry etc) 1 7 10 13 10 22 36

Technique and technology stores` official websites 1 5 9 21 17 24 22

Specialised sites for online trade (Limundo, Kupindo, Ali Express, Alibaba, Amazon etc) 1 5 4 14 10 22 42

E-traders` classical websites 12 3 11 8 22 53

Group purchase websites (where you buy vouchers goods/services), e.g: Grupoman, Kupoman and so on 023 8 7 18 61

Specialised websites for finding, purchase or booking an accomodation (Booking, AirBnb etc) 011 5 6 26 59

Every day Several time a week Once a week Several times in a month Once in a month Seldom than these I don`t visit it at all

By frequency of use, social networks take the lead far from other online content – three fifths of examinees visit them every day, and almost 80% once a week. The youngest examinees are totally expected to be the biggest fans of social media, as some of the older ones, but it was totally unexpected that half the eldest category (65+) visit social media every day.

190

40 83

127

Above Average

90% 90%

5 9

75 121

interval Average Confidence

95% 95%

309 Bellow

Average

78 413 Rural

ow the averagethe ow

31 78

587

Urban

22 27

287 Vojvodi Significantly bel Significantly

Significantly above the average

2 3

268

West Serbia

195

East East

Serbia

81 249

Belgrade

52 69

65+

143 55-64

relevantconclusions

*Small base *Small for conducting

70 210

45-54

83 216

35-44

34 93

224

25-34

11 52

139 18-24

488 Wome

512 Men

78 1000 Total

etc)

Base

websites

LinkedInetc.) Kupoman and so on so and Kupoman

weekaonceleast At

E-traders` classical websites E-traders` supermarkets, cash&carry etc) cash&carry supermarkets,

SocialNetworks(Facebook, Instagram,

Technique and technology stores` official Techniquetechnologystores` and

Group purchase websites (where you buy websitesbuy (whereyou purchase Group

vouchers goods/services), vouchers e.g: Grupoman,

cosmetics, fashionaccessories,cosmetics, touristic…)

Specialised sites for online trade (Limundo,onlineSpecialised for trade sites

booking(Booking,accomodation an AirBnb

Kupindo,AliAlibaba, Express, Amazonetc)

Specialisedfinding, or websites for purchase

shoes and sport equipment, baby equipment,equipment,baby sport and shoes

Trade chains` officialchains` Trade websites (hypermarkets, Official(clothes,companies websitesother of Figure 52. Frequency of visiting certain online contents

191

Graph 24: Did you BUY anything online in a last 6 months? Please take into account all the previous mentioned categories. Since that, we are interested whether you did buy online any kind of goods or services in a last 6 months.

(All examinees, N=1000)

43 57

Yes No

About 4 out of 6 examinees did some online purchase in a last six months. It seems that younger population, those between 18 and 24 years (58%), and those between 25 and 34 years (52%), as well as those with better financial situation (55%) put more trust in this type of trade than other citizens do.

192

127 Above Above 90% 90% Average

interval

Confidence

57 43 95% 95%

121 Average

309 Bellow

Average

60 40

ow the averagethe ow

413 Rural

46 587

Urban Significantly bel Significantly

Significantly above the average

a 59

287 Vojvodin

268 West West

Serbia

195 East East

Serbia

249

conclusions Belgrade

69 65+

*Small base *Small for conducting relevant

26 143 55-64

210 45-54

47 216

35-44

52 224

25-34

139 18-24

46 488

Women

41 512 Men

1000 Total

No Yes Base

Figure 53. Internet purchase in the last six months

193

Graph 25: How often do you do the following activities?

(All examinees, N=1000) Average 0% 20% 40% 60% 80% 100%

Places where I shop goods and services are the 2 4 13 39 41 places where i look information for them

I only look information about products online, but I 13 13 41 28 5 buy them in a classical way

I look information about products on internet and buy 41 18 25 13 2 them online as well

Looking the information about products in classical 61 17 15 5 1 stores, but I buy them online

Never did I do that Rarely do I do that I do that sometimes Often do I do that I always do that

No matter how often do people use internet, when it comes to shopping our citizens still prefer classical way of doing it than online – 80% of examinees states that they do it always or very often. This is especially typical for older people (55 years and more) and Belgrade citizens. Online search about products which will be bought in classical way is done much more by Belgrade citizens and those between 25 and 44 and those with higher salaries than any others. Younger and wealthier examinees search information and buy the products online more often than others.

194

1.8

2.5

3.2

4.2 127

Above Average

90% 90%

1.7

2.3

3.1

4.0 121

interval Average

Confidence 95% 95%

1.7

2.1

3.0

4.1

309 Bellow Bellow Average

1.6

2.1

3.0

4.1 413 Rural

ow the averagethe ow

1.8

2.2

3.0

4.1 587

Urban

1.6

2.1

2.9 4.2

287 Vojvodina

bel Significantly

Significantly above the average

1.8

2.2

2.8

3.8

268

West West Serbia

1.5

2.3

2.9

4.2

195

East Serbia

1.7

2.2

3.3

4.3

249

Belgrade

1.3

1.6

2.2

4.4 65+

1.4

1.6

2.8

4.5

143 conclusions 55-64

1.6

2.0

2.8

4.2 210

45-54

1.8

2.3

3.3

4.1

216 *Small base *Small for conducting relevant

35-44

1.8

2.5

3.2

4.0 224

25-34

1.9

2.6

3.1

3.8 139

18-24

1.7

2.2

3.0 4.2

488

Women

1.7

2.2

3.0

4.1 512

Men

1.7

2.2 3.0

4.1

1000 Total

Base

classical but stores, I buy them online

Looking Looking the information about products in

and buy them online as well

I look informationI look about products on internet

but I buy them in a classical way

I I only informationlook about products online,

places i where informationlook them for Places I shopwhere goods and services are the

Figure 54. Frequency of performing certain online activities

195

Graph 26: Where online do you buy goods/services?

(Examinees who bought something online in last six months, N=434)

Websites 81

Social networks 52

Smartphone applications 9

Websites 81 87 75 78 77 80 83 92 95 85 72 80 85 84 77 73 96 86

Social 52 43 60 69 58 48 44 30 29 56 48 56 45 48 56 60 50 39 networks Smartphone 9 11 7 7 7 12 10 9 5 12 6 4 13 12 4 9 6 11 applications

Confidence interval *Small base for Significantly above the average 95% 90% conducting relevant Significantly below the average 95% 90% conclusions Figure 55. Online place of product/service purchase

Even four fifth of buyers do online shopping on websites. This way of online shopping is done mostly by: men (87%), elder population (55+ years) and examinees with an average income (96%). Shopping via social networks is especially favorite among ladies (60%) and the youngest category (69%). These two categories make half of the examinees.

196

Graph 27: Where do you look information about goods/services on the internet?

(All examinees, N=1000)

Websites 79

Social networks 47

Smartphone applications 7

I do not inform myself 4

Other 1

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average

Base 1000 512 488 139 224 216 210 143 69 249 195 258 287 587 413 309 121 127

Websites 79 84 73 76 80 84 77 76 75 79 77 81 77 79 77 75 85 85

Social 47 41 53 73 61 45 36 28 27 55 47 45 42 45 50 50 48 45 networks Smartphone 7 7 7 5 8 10 6 7 1 7 10 4 8 8 5 6 4 9 applications I do not 4 3 5 0 1 3 7 8 15 2 6 5 5 4 4 5 1 2 inform myself

Other 1 1 1 1 0 0 1 1 1 0 1 0 1 1 0 1 0 1

Confidence interval Significantly above the average 95% 90% Significantly below the average 95% 90% Figure 56. Where shoppers search for information online

As with shopping, 80% of respondents prefer websites to inform about products and services. Male population (84%), people between 35 and 44 years old (84%), as well as those with average and above average incomes are more likely than others to search websites for useful information. Social networks (47% of the total sample) are again the most attractive among women (53%) and young people (18-24 years old).

197

Graph 28: Have you ever heard about blockchain technology?

(All examinees, N=1000)

6 6

88 Yes No Not sure

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 1000 512 418 139 224 216 210 143 69 249 195 268 287 587 413 309 121 127 Yes 6 7 4 6 7 6 4 5 7 5 4 5 7 7 4 5 4 11 No 88 85 91 83 87 87 89 95 90 93 93 82 87 86 91 88 89 83 Not sure 6 8 5 11 6 8 7 0 3 2 3 13 6 7 6 7 6 6

Confidence interval Significantly above the average 95% 90% Significantly below the average 95% 90% Figure 57. Familiarity with blockchain technology

The vast majority of examinees (88%) have never heard about blockchain technology. People with higher income are better informed about this topic comparing with others (11% to 6% in the sample).

198

Graph 29: Could you explain what blockchain is in a simple way?

(Examinees who have heard about blockchain technology, N=57)

Yes No

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 57 37 20* 8* 16* 13* 9* 7* 5* 14* 8* 15* 21* 42* 15* 16* 5* 14* Yes 37 45 24 38 42 62 34 0 20 35 37 13 56 44 20 45 43 42 No 63 56 76 62 58 38 66 100 80 65 63 87 44 56 80 56 57 58

Confidence

interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 58. Level of blockchain technology understanding

Just over a third of the few who know about blockchain think they can easily explain this concept to others (37%).

199

Graph 30: Have you ever heard about Smart contract concept?

(All examinees, N=1000)

8 10

83 Yes No Not sure

Yes 10 10 9 7 9 11 8 10 14 7 11 10 11 11 7 9 7 14

No 83 80 86 82 81 80 83 89 85 88 87 75 83 81 86 83 80 79

Not sure 8 10 5 11 10 9 8 2 1 5 2 15 6 8 7 8 13 7

Confidence interval

Significantly above the average 95% 90% Significantly below the average 95% 90% Figure 59. Familiarity with smart contracts

Similar to the previous case, most of our citizens did not come across the concept of smart contract (83%), while every tenth knows about smart contract.

200

4.2. ONLINE BUYERS – ATTITUDES HABITS, BARRIERS, STIMULI MEASURES

Graph 31: How often do you buy on internet in general?

(Examinees who bought something online in last six months, N=434)

14 24

Rarely 62 Sometimes

Always

Rarely 24 22 26 20 20 26 23 40 29 24 25 26 21 22 27 28 17 16

Sometimes 62 61 63 72 63 56 64 53 52 69 57 63 58 63 60 60 69 64

Always 14 17 11 8 17 19 12 6 19 7 18 11 21 15 13 12 14 20

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 60. Online shopping frequency

Online buyers usually shop occasionally (62%). A quarter do it rarely, and 14% do it regularly.

201

Graph 32: What do you buy the most no matter how frequent do you buy?

(Examinees who bought something online in last six months, N=434)

Clothes, shoes, sport equipment 74 Technique and/or technology (audio, video…) 38

Accessories (jewelry, purses, glasses, smartphone equipment etc.) 26

Car, bicycle or motor equipment 19

Cosmetics, hygiene products 13 Tickets for: cinemas, theaters, concerts, tourist attractions 12 Books 12

Furniture 11 Travel arrangements 11

Kids/baby equipment 9

Flight/other transport tickets 9

In-country or abroad accommodation 8

Food products 2

Home care 1 Other 3

The "targets" of internet buyers by far are most often clothes, shoes and sports equipment (74%). Women (85%), aged between 18 and 34 and lower-income people (81%) opt for buying these products online significantly, more than others. Technique and technology come second (38%), and are significantly more common among men (54%) and older people (55+). A quarter of respondents also buy various accessories and fashion accessories online.

202

76 70

Above

Average

90% 90%

52 Average

interval Confidence

95% 95%

122

Bellow Bellow Average

73 167 Rural

75 267

Urban

ow the averagethe ow

22 40

119 Vojvodina

128

West West Serbia Significantly bel Significantly

Significantly above the average

88 East

Serbia

72 100

Belgrade

38 20*

65+

57 37

55-64

relevantconclusions

*Small base conducting for *Small

43 69

79 45-54

5 4

100 35-44

117 25-34

86 81

18-24

85 223

Women

63 212

Men

74 434

Total

Base Books

Other

video…)

Furniture Home care Home

Food products

tourist attractionstourist Travel arrangements

Kids/baby equipment

smartphone equipment etc.)

Flight/other transport tickets

Cosmetics, hygieneCosmetics, products Clothes, Clothes, shoes, sport equipment

Car, bicycle equipment or motor

Accessories (jewelry, Accessories purses,(jewelry, glasses,

Technique and/or technology (audio, In-country or abroad accommodation cinemas,Tickets for: theaters, concerts,

Figure 61. Most frequent online purchases

203

Graph 33: Which websites do you buy most from?

(Examinees who bought something online in last six months, N=434)

Sites of retailers that have their own retail stores 52

Facebbok or Instagram profile of a boutique or store 39 which do business online

Domestic websites specialized in mediating between 36 sellers and buyers (KupujemProdajem, Limundo….)

Individual sellers on Facebook, Instagram etc. 36

Foreign sites specialized in mediating between sellers 23 and buyers (Ebay, AliExpres, etc.)

Domestic e-reteailers (they don`t have retail objects or 19 you don`t know about them)

Websites specialised for purchases of services (e.g. finding, booking or purchasing an accommodation, flight 12 tickets and so on)

Foreign e-traders 9

Group purchase websites (where you buy vouchers 9 goods/services), e.g: Grupoman, Kupoman and so on

This question confirms what we could already conclude - online shopping is used through the website, and this is usually through the official websites of retail stores (52%). This is followed by Facebook or Instagram profiles of different stores (39%) which is the most popular popular among women (47%), young people (up to 34 years) and those with less material status (48%) . Kupujem prodajem, Limundo and similar specialized domestic websites share third place with individual marketers on social networks (both aspects 36%). And while men opt for the former (45%), ladies have chosen the latter option (43%).

204

61 70

Above

Average

90% 90%

45 52

Average

interval Confidence

95% 95%

122 Bellow Bellow

Average

51 167 Rural

41 53

267 Urban ow the averagethe ow

119 Vojvodina

128

West West Serbia Significantly bel Significantly

Significantly above the average

East Serbia

53 100

Belgrade

67 20*

65+

20 55

55-64 relevantconclusions

base conducting for *Small

79 45-54

100 35-44

50 117

25-34

47 81

18-24

47 51

223 Women

212 Men

434 Total

Base stores

Foreign e-traders

Kupoman and so on

andsellers between buyers

(KupujemProdajem, Limundo….)

or store which or store do business online (e.g. finding, booking or purchasing an

objects or you don`t know about them)

accommodation, flight and tickets so on)

sellers andsellers buyers (Ebay, AliExpres, etc.)

vouchers goods/services), e.g: Grupoman,

Sites of retailers thatretailers of Sites have their own retail

Group purchase you (where websites buy

Domestic websites specializedDomestic websites in mediating

Facebbok or Instagram profile aof boutique

Domestic e-reteailers (they don`t haveDomestic e-reteailers retail

Individual onsellers Facebook, Instagram etc.

Foreign specializedsites in mediating between Websites specialised purchasesfor services of Figure 62. Websites most commonly used for online purchases

205

Graph 34: Regardless of whether you have ever purchased anything from them, please tell me how much you trust the following categories of online marketers and / or e-marketers? Please use the scale from 1 to 5, where 1 means: I don`t believe at all, and 5 means: I completely believe

(Examinees who bought something online in last six months, N=434) Average

Websites of retailers that have their own retail stores 1 5 11 47 34 1

Websites specialised for purchases of services (e.g. finding, booking or purchasing an accommodation, flight 7 7 20 35 21 10 tickets and so on)

Domestic websites specialized in mediating between sellers 8 6 25 46 13 2 and buyers (KupujemProdajem, Limundo….)

Foreign sites specialized in mediating between sellers and 10 8 22 38 17 5 buyers (Ebay, AliExpres, etc.)

Facebbok or Instagram profile of a boutique or store which 9 12 21 44 12 2 do business online

Domestic e-reteailers (they don`t have retail objects or you 5 10 33 35 10 6 don`t know about them)

Group purchase websites (where you buy vouchers 10 7 30 28 11 14 goods/services), e.g: Grupoman, Kupoman and so on

Websites of foreign e-reteailers (they don`t have retail 9 13 33 29 9 7 objects or you don`t know about them)

Individual sellers on Facebook, Instagram etc. 13 13 25 38 9 1

Don`t believe at all Mostly don`t belive Not believe, not believe

Mostly believe Completely believe Doesn`t know/rejects to answer

In line with the previous question, our citizens have the highest confidence in the ones most often they buy, so 81% of respondents consider official retail sites reliable (average 4.1 on a scale of 1 to 5). This opinion is especially common among people with above average income (4.3). Domestic websites specializing in seller-buyer mediation (3.5), as well as those for the purchase of accommodation and travel services, also earn trust (3.6). Other mentioned are especially appreciated by Belgrade citizens and people between 35 and 44 years old (both subgroups 3.9). On the other hand, although goods are relatively frequently ordered by them, individual sellers on social networks are the least trusted by online buyers (3.2).

206

3.3

3.6

3.5

3.7

3.8

4.3 Above

Average

90% 90%

3.1

3.3

3.4

3.7

3.5

3.6 3.8

interval Average

Confidence 95% 95%

3.2

3.1

3.3

3.4

3.6

3.4

3.5

3.6

4.1 122

Bellow Bellow

Average

3.2

3.3

3.4

3.6

3.5

4.1

167 Rural

3.1

3.3

3.4

3.5

3.7

4.1 267

averagethe ow Urban

3.2

3.3

3.4

3.6

3.7

3.6

4.1

119 Vojvodina

3.1

3.2

3.3

3.4

3.6

128

West West Serbia Significantly bel Significantly

Significantly above the average

3.1

2.7

3.2

3.4

3.2

3.4

4.2

East Serbia

3.3

3.4

3.6

3.5

3.7

3.6

3.9 100

Belgrade

conducting

2.6

3.3

2.6

3.1

2.9

3.2 20*

65+

2.9

3.4

3.6 3.5

4.2

relevantconclusions

55-64 *Small base for *Small

3.2

3.3

3.4

3.6

3.6 4.1

45-54

3.2

3.6

3.4

3.5

3.7

3.9

4.2

100 35-44

3.2

3.4

3.5

3.7 117

25-34

3.2

3.1

3.5

3.4

3.3 3.5

18-24

3.3

3.1

3.3

3.4

3.7

3.4

3.6 4.2

223

Women 3

3.2

3.3

3.4

3.1

3.5

3.7

3.6

212 Men

3.2

3.3

3.4

3.5

3.6

4.1

434 Total

Individual onsellers Facebook, Instagram etc.

them)

have retail objects or you don`t know about

Websites of foreign e-reteailers Websites (they foreigndon`t of e-reteailers

Kupoman and so on

vouchers goods/services), e.g: Grupoman,

Group purchase you (where websites buy

objects or you don`t know about them)

Domestic e-reteailers (they don`t haveDomestic e-reteailers retail

store whichstore do business online

Facebbok or Instagram profile aof boutique or

sellers andsellers buyers (Ebay, AliExpres, etc.)

Foreign specializedsites in mediating between

(KupujemProdajem, Limundo….)

between sellers andsellers between buyers

Domestic websites specializedDomestic websites in mediating

accommodation, flight and tickets so on)

(e.g. finding, booking or purchasing an

Websites specialised purchasesfor services of

stores

Websites of retailers Websites thatretailers of have their own retail Base Figure 63. Level of confidence in different categories of online sellers

207

Graph 35: What is the main reason you do your online shopping? Is there any other reason? I will read you some of the reasons that people said why they shop online. Do you agree with some of them?

(Examinees who bought something online in last six months, N=434)

Time saving 30 64 84

It`s practical - I can compare different 19 45 75 offers in short time

Delivery on demanded address 8 35 73

Bigger choice of products and services 15 40 65

Does not require physical effort 6 28 62

Money saving 16 37 49 Listed with reminding I could easily obtain products from 6 18 41 abroad which are not available in Serbia Other spontaneously Anonymity mentioned 1 8 First mentioned Other 4

On the first place every third respondent points out that shopping online saves time, and for 84% this is one of the reasons for online shopping. More often than others, residents of the capital city mention time savings as a major incentive (45%). The practical side of online commerce, in the sense of comparing different offers in a short time, took a second place (19% main reason, 75% one reason). Then this is followed by delivery to the desired address, a wider range of goods and less physical effort.

208

37 70

Above Average

90% 90%

29 52

Average interval Confidence

95% 95%

26 122

Bellow Bellow

Average

167 Rural

20 31

267 Urban

ow the averagethe ow

12 17

119 Vojvodina

128

West West Serbia Significantly bel Significantly

Significantly above the average

East Serbia

45 100

Belgrade

38 20*

65+

19 35

55-64

relevant conclusions relevant

*Small base conducting for *Small

21 27

79 45-54

100 35-44

117 25-34

22 81

18-24

31 223

Women

29 212

Men

16 19

434 Total

Base

Other

Anonymity

Time Time saving in short time Money saving

Main reasons

Delivery on demanded address Does Does not require physical effort

which are not available in Serbia

Bigger choice productsof and services

I I could easily obtain products abroadfrom It`s practicalIt`s - I can compare offers different

209

77 70

Above

Average Average 90% 90%

58 52

interval

Average Average Confidence

95% 95%

74 80

122

Bellow Bellow

Bellow Bellow Average

Average

167 167

Rural

62 267

ow the averagethe ow

267 Urban

Urban

39 49

119

Vojvodina Vojvodina

128

West West West West

Significantly bel Significantly

Serbia Serbia Significantly above the average

East

Serbia Serbia

100

100 Belgrade

Belgrade

20*

65+ 20*

65+

relevantconclusions 55-64

55-64

*Small base conducting for *Small

53 62

79 45-54

45-54

75 76

100

35-44 35-44

117

25-34 25-34

18-24 18-24

223

223 Women

Women

212

Men 212

Men

434

434 Total

Total

Base

Base Other

Other

Anonymity

Time Time saving

in short time

in short time Money saving Money saving

Main reasons

Delivery on demanded address

Does Does not require physical effort

Does Does not require physical effort which are not available in Serbia

which are not available in Serbia

Other Other spontaneous reasons

Bigger choice productsof and services

Reasons Reasons whenreminded

I I could easily obtain products abroadfrom

I I could easily obtain products abroadfrom It`s practicalIt`s - I can compare offers different

It`s practicalIt`s - I can compare offers different

Figure 64. Reasons for internet shopping

210

Graph 36: What is the maximum amount (in RSD) that you are willing to give for a single online purchase?

(Examinees who bought something online in last six months, N=434)

Up to 3500 RSD 25

3501-5999 RSD 25 Average

6000-12000 RSD 24

Above 12000 RSD 22

Doesn`t know/rejects to answer 4

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 434 212 223 81 117 100 79 37 20* 100 88 128 119 267 167 122 52 70 Average 10334 12708 8078 8749 9810 10190 9204 15167 15380 9444 12040 8157 12164 10496 10060 6884 10815 11691

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 65. Maximum amount per single online purchase which the customers are willing to pay

The average online consumer in Serbia is ready to spend a maximum of around 10.300 dinars for one online purchase. Half of the respondents would have spent significantly less (up to RSD 6000) and a fifth even more (over RSD 12,000). The second group is dominated by buyers between 55 and 64 years old. (15167) and members of the male population (average RSD 12708).

211

Graph 37: Regardless that you already buy online, is there anything that bothers you or you don`t like about this type of purchase?

(Examinees who bought something online in last six months, N=434)

42 58

Yes No

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 434 212 223 81 117 100 79 37 20* 100 88 128 119 267 167 122 52 70 Yes 42 39 46 44 37 42 51 41 33 57 47 44 25 42 42 40 43 48 No 58 61 54 56 63 58 49 59 67 43 53 56 75 58 58 60 57 52

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 66. Worries or dislikings of online shoppers regarding e-commerce

Two-fifths of online consumers are concerned about some aspect of this type of commerce. Belgrade citizens are more skeptical than others (57%), and especially in relation to Vojvodina citizens who seem quite relieved in this respect (75% find no shortcomings or cause for concern when thinking about online commerce).

212

Graph 38: What bothers you or you don`t like about online shopping?

(Examinees who are bothered with some aspect of online shopping, N=183)

Fear of receiving a wrong product 43

Low quality of product 33

Incomplete or incorrect information about product/service 30 Fear of not receiving the product 28 Insufficient information about responsible authorities in case of a problem 18 Mistrust to online shopping 18

Not clear rules about reclamation or returnig the product 15

Inreliable delivery/courier office 14 Custom procedures 11

Law regulations and customers` rights ignorance 10

Privacy breach / possible misuse of data 9 Expensive delivery 6

A common shortage of goods in stock 4 Not transparent websites 4

Provision, taxes and other fees 4

High prices of the products in supply 3 Bad supply 3

Offered payment ways 2 Language barrier 0

Other 9

Most of those who are suspicious of online shopping actually fear they will receive a wrong product (43%). One third is insecure about quality of ordered product (33%), and about information that traders provide (30%). Other two reasons are above the average in East Serbia (48%, actually 45%).

213

50 34

Above Above Average

90% 90%

44 22*

Average

interval Confidence

95% 95%

49 Bellow Bellow

Average

34 70 Rural

49 113

Urban

ow the averagethe ow

4 7

29* Vojvodina

West Serbia Significantly bel Significantly

Significantly above the average

East Serbia

50 57

Belgrade

43 7*

65+

27 49

15*

55-64

relevantconclusions

*Small base conducting for *Small

7 2

41 45-54

42 35-44

39 43

25-34

41 35

18-24

48 102

Women

37 82

Men

33 43

183 Total

Other

Offered payment wayspayment Offered

Bad supply Bad

High pricesthe products High of supplyin

Provision, taxes and other feesand taxes other Provision,

Not transparent Not websites

A common shortage of goods in stockin goods of shortage common A

Expensivedelivery

Privacydata of breach possible misuse /

ignorance

Law regulations andcustomers` rights regulations Law

Custom proceduresCustom

Unreliable delivery/courier officedelivery/courier Unreliable

returningtheproduct

Not clear rules about reclamation or or rulesaboutreclamation clear Not

Mistrust to online shoppingMistrust online to

problem problem

responsible authorities in case of a a of case inresponsible authorities

Insufficientabout information

Fear of not receiving theproduct receiving not of Fear

aboutproduct/service

Incomplete or incorrect information incorrect information or Incomplete

Low quality of productquality of Low

Fear of receiving a wrong product wrong a receiving of Fear Base Base

Figure 67. Aspects of e-commerce which online shoppers find worrying/dislikeful

214

Graph 39: Have you had any negative experience with online shopping?

(Examinees who bought something online in last six months, N=434)

Yes No

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average

Base 434 212 223 81 117 100 79 37 20* 100 88 128 119 267 167 122 52 70 Yes 15 16 15 11 18 18 15 9 24 22 18 13 11 17 13 12 21 20 No 85 84 85 89 82 82 85 91 76 78 82 87 89 83 87 88 79 80

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 68. Existance of bad experience related to e-commerce

Despite certain concerns, a significant majority of our citizens have not had a negative online shopping experience so far (85%). As there are no significant differences between the subgroups of respondents, it can be said that everyone agrees with this conclusion.

215

Graph 40: What was the reason for such experience?

(Respondents who had a negative experience with online purchase, N=67)

Low quality of received product 42 The product has never been dispatched/Dispatched 36 wrong product Waiting too much for ordered goods 21

Incomplete/insufficient information about product 18

Custom procedures 9

No reclamation or returning the goods 7

Unreliable courier office 7 The package was delivered during my working hours so 5 no one could pick it up Trader`s non transparent website 4

Amount needed to pay 3

Privacy rules breaking/personal data misuse 3

Unreliable trader 3 Language barrier 0

Offered payment options 0

Other 10

Low quality of received product is the reason number one why examinees with negative experience complain (42%), and on the second place is the delivery of wrong product or not receiving the product at all (36%). Then, the list is followed by: Waiting too much for ordered goods (21%) and Insufficient/incomplete information about the product (18%).

216

7 7

48 14*

Above Above Average

90% 90%

9 0

28 11*

interval Average

Confidence 95% 95%

34 27

15* Bellow Bellow

Average

47 22*

Rural

31 40 45

ow the averagethe ow Urban

22 13*

Vojvodina

Significantly bel Significantly

0 6

Significantly above the average

16* West

Serbia

30 16*

East

Serbia

0 9

22* Belgrade

40 65+

relevantconclusions

63 *Small base conducting for *Small 55-64

33 12*

45-54

52 18*

35-44

19 29

21* 25-34

41 18-24

40 34

Women

45 33

Men

42 67

Total

Base Base Other

misuse product

Unreliabletrader

Customprocedures Amount neededpay toAmount

Unreliablecourier office

The product has neverbeenhas product The

Lowofreceivedqualityproduct

Trader`stransparentnonwebsite Privacy rules breaking/personalPrivacy data

wasdelivered package my duringThe

Waiting too much forWaitingordered toogoodsmuch

dispatched/Dispatched wrongdispatched/Dispatched product

No reclamationor No returning goodsthe

Incomplete/insufficientinformation about workinghours soone noitup pickcould Figure 69. Reasons for bad e-shopping experience

217

Graph 41: Please tell us for each of the following factors to what extent it would affect you to shop online more? Use a scale from 1 to 5, where 1 means no affect at all, and 5 means much affect.

(Examinees who bought something online in last six months, N=434) Average

It is possible to return/exchange the product bought 12 8 21 66 1 online in the trader`s nearest shop

Positive experience of close friends 21 7 31 59 1

Possibility to pay only after the buyer see the ordered product, or to give back buyer`s reserved funds (for card 2 3 10 29 55 1 payments)

Better supply 24 12 33 49

Lower delivery costs 7 3 11 21 58

Precise law regulation for online sellers/traders 2 5 15 31 47

Better online supply of classical traders (which do have 2 4 16 32 44 1 retail stores)

Possibility to read a review about product/trader written 3 3 15 36 41 2 by other buyers

No affect at all Mostly would not affect Would not, would have an affect Mostly would affect Much affect Doesn`t know/refuses to answer

Average Existence of a unique trust mark (e trust mark) which would be issued by the government to a traders which 4 3 18 31 43 suits relevant criteria

Defining clear rules and obligations of courier offices 4 6 16 32 41

Shop assistance (e.g. chat) 7 4 16 38 35 1

Additional education and better informing about online 3 8 19 39 31 buyer`s rights through media campaign Possibility of afterward picking up of product in courier 6 5 21 30 38 office

Longer working hours for courier offices 14 7 23 27 28 1

Having an option to remain anonymous 14 13 29 23 21

No affect at all Mostly would not affect Would not, would have an affect Mostly would affect Much affect Doesn`t know/refuses to answer

218

4.4

4.3

4.5

4.4

4.5

4.6 4.6

Above Above Average

90% 90%

4.2

4.5

4.3

4.4

4.4 4.6

Average

interval Confidence

95% 95%

4.1

4.2

4.3

4.4

122 Bellow Bellow

Average

4.1

4.2

4.1

4.2

4.3

4.4

4.5 167 Rural

4.2

4.1

4.2

4.3

4.6 4.5

267 Urban

ow the averagethe ow 4

3.9

4.2

4.3

4.4

119 Vojvodina

4.2

4.3

4.4

128

West Serbia Significantly bel Significantly

Significantly above the average

4.2

4.4

4.2

4.4

4.6

4.5

East Serbia

4.4

4.3

4.5

4.4

4.5

4.7 100

Belgrade

3.9

4.2

3.4

4.2

4.4

4.6

4.5 20*

65+

4.3

4.1

4.3

4.1

4.2 4.5

4.6

55-64 relevantconclusions

base conducting for *Small

4.1

4.2

4.3

4.4

4.4 45-54

4.1

4.2

4.3

4.4

100 35-44

4.1

4.2

4.3

4.4

4.6

4.5 117

25-34

4.2

4.1

4.2

4.3

4.2

4.3

4.4 4.6

18-24

4.3

4.2

4.3

4.5 4.5

223

Women

4.1

4.2

4.3

4.4

4.5 212

Men

4.1

4.2

4.3

4.3 4.5

4.5

434 Total

Base Base

payments)

nearest shop nearest

Better supply Better sellers/traders sellers/traders

deliverycosts Lower Main reasons Main

stores) (whichhaveretail do

Precise law regulation for online online for regulation Preciselaw

buyer`sreserved funds card(for

Possibility to read a review about review a read to Possibility Positive experience of close friendsexperience close Positive of

return/exchange possibleto It is the

Possibility to pay only after thebuyerpay onlyafter to Possibility

productbought inthe trader`s online

Better online supply online traders classical Better of

product/traderwrittenby buyersother see the ordered product, or to give back give product,the ordered to see or

219

4 70

3.3

3.7

4.1

4.1 4.3

Above Above Average

90% 90%

3.4

3.5

4.1

3.9

4.1 4.2

Average

interval Confidence

95% 95%

3.3

3.7

3.9

3.8

4.1

122 Bellow Bellow

Average

3.1

3.5

3.9

3.8

3.9

4.1 167 Rural

3.3

3.5

3.9

3.9 4.1

267 Urban ow the averagethe ow

3.2

3.3

3.7

3.8

3.9

119 Vojvodina

3.3

3.4

3.9

3.8

3.9

128

West Serbia Significantly bel Significantly

Significantly above the average

3.4

3.8

4.1

East Serbia

3.5

3.9

4.1

4.3

4.4 100

Belgrade

3.3

3.5

3.8

3.7

3.8

4.3 20*

65+

3.4

3.6

3.9

4.2

3.7 4.3

4.3

55-64

relevantconclusions

*Small base for conducting base conducting for *Small

3 4

3.4

3.8

3.9

3.9 45-54

3.2

3.7

3.9

4.1

100 35-44

3.3

3.9

3.8

3.9 117

25-34

3.4

3.6

3.9

3.8 3.9

18-24

3.3

3.5

3.9

3.9 3.9

223

Women

3.2

3.5

3.9

4.1 212 Men

3.2

3.5

3.9

4.1

434 Total

Base Base

courier officescourier

productofficecourierin Shop assistance (e.g. chat) Shop(e.g. assistance

reasons Main

Additional education andbetter Additional

Possibility of afterward picking uppicking afterward of of Possibility

government to a traders which traders a suits to government

mark) which wouldmark) beissued by the informing about online buyer`s aboutonline informing rights

of rulesand obligations clear Defining

Having an option to remain anonymous remain to option an Having

Longer working hours officescourier for working Longer Existenceuniquetrust (e a of trust mark Figure 70. Influence of certain factors on e-shopping frequency

220

Overall, most of the stated factors would contribute in the development and increase of e-commerce in Serbia. Returning back or exchanging the product in the nearest trader`s shop is of utmost importance for buyers. About 90% of examinees (in Belgrade even more) see the positive effect of such option, so that is the reason why it is marked with 4.5 on average (on scale from 1 to 5). Also, positive experience of our close friends would convince us to shop online more (4.5). Having an option to pay only after observing the received product would also increase our online shopping habit (4.3), as well as better supply (4.3). These two factors are stressed the most by people with an above average income who are actually the most loyal to e-commerce. Lower delivery costs (4.2) as well as clear law regulation about e-traders` obligations (4.2) would also have a very positive impact.

221

Graph 42: How much are you familiar with you rights during the online shopping?

(Examinees who bought something online in last six months, N=434)

Average

1 13 20 22 36 9 1 3.7

Not familiar at all Mostly not familiar

Neither, nor familiar Mostly familiar Very familiar Doesn`t know/rejects to answer

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 434 212 223 81 117 100 79 37 20* 100 88 128 119 267 167 122 52 70 Average 3.1 3.2 3 3.2 3.3 3.1 2.8 2.8 3 3 3.2 3 3.1 3 3.1 3 3.4 3.1 *Small base for conducting relevant conclusion

Figure 71. Shopper familiarity with costumer rights in e-commerce

Although a majority of examinees consider themselves relatively familiar with their right during online shopping, average grade of 3.1 shows actually different. This is also confirmed by the opinion of the third of the examinees who states that their knowledge about online shopping rights is insufficient.

222

Graph 43: Is there any regulatory barrier which should be solved in term to improve e- commerce in Serbia?

(Examinees who bought something online in last six months, N=434)

33 59

Yes No Not sure

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 434 212 223 81 117 100 79 37 20* 100 88 128 119 267 167 122 52 70 Yes 8 6 11 4 8 10 10 6 19 10 10 4 10 11 5 6 12 15 No 33 37 30 40 34 28 22 51 38 45 26 31 32 31 37 31 33 28 Not sure 59 58 59 56 59 62 68 44 43 45 64 66 58 59 58 63 55 57

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90%

Figure 72. Regulatory barriers whose resolution would improve e-commerce

As expected, most of the customers are not sure whether there exists some regulatory barrier which inexistence would improve e-commerce in Serbia (59%). Third of them are that something like this doesn`t even exist. This percentage is especially high in Belgrade (45%), although they have shown to be pretty mistrustful in online shopping. Obviously, law regulations are not a cause of that.

On the other hand, 8% of examinees believe that e-commerce law regulations should be more precise and better. Number of those who cited the concrete suggestions for e-commerce improvement is not sufficient for statistical analysis. However, received answers are mostly aimed at more strict law control of e-traders, such as: clearly defined name and description of the product/service, clearly defined price tag, possibility of returning the product, and even a registration at APR for every e-trader.

223

Graph 44: Overall, how much confidence do you have in buying online? Use a scale from 1 to 5, where 1 means very little and 5 I have complete confidence.

(Examinees who bought something online in last six months, N=434)

1 1 5 30 54 10

Very little Little Partly Pretty much Complete confidence

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average

Base 434 212 223 81 117 100 79 37 20* 100 88 128 119 267 167 122 52 70

Average 3.7 3.7 3.7 3.6 3.6 3.7 3.6 3.6 3.9 3.7 3.6 3.6 3.8 3.7 3.6 3.6 3.7 3.6

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 73. Level of online shopping trust

Given the fact that almost two thirds of our online buyers (64%) mostly have trust in e-commerce we could conclude that general trust of our citizens is relatively high. In addition, those who express low level of trust represent only 6% of our examinees.

224

Graph 45: Which of the following statements could describe you the best?

(Examinees who bought something online in last six months, N=434)

I rather shop online than in a classical way 15 38

I prefer traditional way of shopping more than online 47

Both are the same for me

Still almost the half of online customers rather do traditional way of shopping (47%). Women are those who are significantly pointed out from such group (55%). On the other hand, 15% of customers prefer online shopping, which is especially often in East Serbia (29%) and among men (20%). About two fifths of examinees do not make any difference between these two ways of shopping (38%).

225

23 70

Above Above Average

90% 90%

23 52

Average interval Confidence

95% 95%

53 12

122

Bellow

Average

52 19

167 Rural

12 267

ow the averagethe ow Urban

15 119

Vojvodina

Significantly bel Significantly

54 10

Significantly above the average

128 West

Serbia

29 88

East Serbia

100 Belgrade

20* 65+

relevantconclusions

37 *Small base conducting for *Small 55-64

18 79

45-54

42 43

100 35-44

117 25-34

14 81

18-24

55 223

Women

20 212 Men

434 Total

Base

classical way classical

Both are the same for me for thesame are Both I prefer traditional way of of way Iprefertraditional

than online shoppingmore I rather shop online than in a shopthan Irather a in online

Figure 74. Certain attributes of online shoppers

226

4.3. EXAMINEES WHO DO NOT SHOP ONLINE – STATEMENTS, BARRIERS, STIMULI MEASURES

Graph 46: Have you ever bought anything online?

(Examinees who did not buy anything in last six months, N=566)

Yes No

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 566 300 265 58 107 115 130 106 49 150 107 141 168 320 246 188 69 58 Yes 26 28 23 33 37 34 19 18 6 36 24 20 22 28 22 26 29 40 No 74 72 77 67 63 66 81 82 94 64 76 80 78 72 78 74 71 60

Confidence interval *Small base for conducting Significantly above the average 95% 90% relevant conclusions Significantly below the average 95% 90% Figure 75. Online shopping

About quarter of examinees which we don`t consider as online buyers due to fact they haven`t made any transaction in last six months had actually done some purchase before. Most of them are young between 25 and 44 years, Belgrade citizens (36%) and wealthier examinees (40%).

227

Graph 47: What is the main reason why you don`t or rarely do online shopping? Is there any other reason? I will read you other people answers why they don`t shop online. Do you maybe recognize yourself?

(Examinees who did not buy anything in last six months, N=566)

I don`t like to buy what I cannot observe, try or check in person 18 44 71

I don`t have such habit, I am not interested 18 41 62

I like to do traditional way of shopping 14 29 52

I don`t trust online shopping in term of quality of product 10 28 44 I don`t have a sufficient knowledge about e-commerce, I`m afraid I will be double crossed 4 20 38 In case of return/exchange the product i would have to wait too long 6 19 37 I don`t know who to contact in case of a problem 3 16 37

I don`t trust to e-commerce in term of payment 3 14 30 Bad experience of other people - negative newspapers` 5 16 29 headlines (received brick instead of laprotp and so on) I don`t trust online traders 3 13 29

I do not have enough of knowledge about new technologies 7 14 25 (internet, computers…) Personal data misuse scares me (name and surname, address, 61 17 payment cards, etc.) I don`t trust courier offices 3 11

Expensive 25 9

4 Bad previous experience 5 6 Mentioned with reminding

Uninteresting offer 2 5 Other spontaneously mentioned Language barrier 21 4 First mentioned Other 12

As the main reason every fifth examinee expresses mistrust or non being interested in online shopping (18%). However, skepticism about something people are not available to observe, try or check in person is the absolute number one (71%). This opinion is usual among younger population, between 25 and 34 years. And as expected, being uninterested in online shopping is the most expressed among the eldest (65+), and in general 62% of examinees claim the same.

Having pleasure with traditional way of shopping takes the third place, and for half of the examinees it is the main reason why they do not practice online shopping. It was expected that ladies will opt for this reason the most (52%), but it also makes pleasure to East Serbian citizens (64%). Suspicious about online products quality (44%) and insufficient information about e-commerce (38%) are following the lead.

228

15 58

Above Average 90% 90%

13 69

interval Average Confidence 95% 95%

188

Bellow Bellow Average

246 Rural

ow the averagethe ow

320

Urban

168 Vojvodina Significantly bel Significantly

Significantly above the average

141

West West

Serbia

107

East

Serbia

150

Belgrade

65+

relevant conclusions relevant

*Small base for conducting conducting base for *Small

19 106

55-64

130 45-54

23 115

35-44

27 107

25-34

29 58

18-24

19 18

265

Women

7 7

300 Men

566 Total

Base

Other

crossed

problem problem

payment Expensive

interested

of shopping of Language barrier barrier Language

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229

5 9

47 58

Above Average

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33 69

Average interval Confidence

95% 95%

5 9

41 47

188

Bellow Bellow

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141

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East

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150

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relevant conclusions relevant

*Small base for conducti base for *Small

106 55-64

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52 58

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Total

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230

74 58

Above Above Average

90% 90%

63 69

Average interval Confidence

95% 95%

62 71

188

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246 Rural

65 70

ow the averagethe ow

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Urban

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141

West

Serbia

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East

Serbia

150

Belgrade

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relevant conclusions relevant

*Small base for conducting conducting base for *Small

106 55-64

54 59

130 45-54

115 35-44

107 25-34

70 58

18-24

70 265

Women

72 300

Men

62 71

566 Total

Base

Other

crossed

problem problem

payment

Expensive interested

of shopping of

Language barrier Language quality of productquality of

Uninterestingoffer

try or check tryor inperson

Bad previous experienceBad

Idon`t trust traders online

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Idon`t havenotsuch Iam habit, Mentioned with reminding

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Bad experience of other people - negative negative -experience people other of Bad

Personal data misuse scares me (name and (name scaresme misuse data Personal It makes me pleasure to do traditional way traditional do to pleasure me Itmakes Figure 76. Reasons for rarely/not shopping online

231

Graph 48: Have you ever recently seen some interesting online offer, but you gave up because of the reasons you just stated?

(Examinees who did not buy anything in last six months, N=566)

Yes No

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 566 300 265 58 107 115 130 106 49 150 107 141 168 320 246 188 69 58 Yes 25 24 28 38 25 25 26 24 15 23 29 20 30 28 22 19 27 28 No 75 76 72 62 75 75 74 76 85 77 71 80 70 72 78 81 73 72

Confidence interval

Significantly above the average 95% 90% Significantly below the average 95% 90% Figure 77. Giving up on potential online purchase

Every fourth examinee admits he/she has recently been tempted to order something online, but had given up because of some reasons. More than others this has happened to the youngest population (18 – 24 years).

232

Graph 49: What are the experiences of people who surround you (family, colleagues, friends)?

(Examinees who did not buy anything in last six months, N=566)

Average

1 1 8 50 38 4 3.4

Very negative Negative Not negative, not positive Positive Very positive

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 374 184 190 31 69 85 84 69 37 90 64 91 129 211 163 120 46 35 Average 3.4 3.3 3.5 3.5 3.3 3.4 3.3 3.5 3.3 3.4 3.3 3.4 3.3 3.3 3.4 3.4 3.4 3.3

Confidence interval

Significantly above the average 95% 90% Significantly below the average 95% 90% Figure 78. Experience of people around you (family, colleagues, friends) related to e-commerce

Although half of the examinees claim that people from their surrounding haven`t had negative, nor positive experience, pretty high percentage rate these experience as positive (42%).

233

Graph 50: Which of the following factors would have an impact on you to start online shopping? Please use the scale from 1 to 5, where 1 means No impact at all and 5 means it would much affect.

(Examinees who did not buy anything in last six months, N=566)

Average It is possible to return/exchange the product bought online 16 5 13 22 44 1 in the trader`s nearest shop

Positive experience of close friends 13 5 19 27 35 1

Possibility to pay only after the buyer see the ordered product, or to give back buyer`s reserved funds (for card 14 11 18 27 30 1 payments) Lower delivery costs 19 10 18 23 30 1

Better supply 15 13 22 24 25 1

Precise law regulation for online sellers/traders 16 11 23 26 23 1

Possibility to read a review about product/trader written by 19 7 24 25 24 1 other buyers Existence of a unique trust mark (e trust mark) which would be issued by the government to a traders which suits 18 9 24 24 24 1 relevant criteria

No impact at all Mostly would not impact Would not, would have an impact Mostly would affect Much affect Doesn`t know/refuses to answer

Average

Better online supply of classical traders (which do have 18 12 20 25 23 1 retail stores)

Defining clear rules and obligations of courier offices 20 10 24 24 21 1

Additional education and better informing about online 20 12 23 25 19 1 buyer`s rights through media campaign

Shop assistance (e.g. chat) 23 9 22 25 20 1

Possibility of afterward picking up of product in courier 23 12 27 20 17 1 office

Having an option to remain anonymous 30 16 25 14 14 1

Longer working hours for courier offices 33 14 25 14 11 1

No impact at all Mostly would not impact Would not, would have an impact Mostly would affect Much affect Doesn`t know/refuses to answer

234

3.5

3.4

3.5

3.9

3.8 3.9

Above Above Average

90% 90%

3.4

3.5

3.4

3.8

3.8 3.9

interval Average

Confidence 95% 95%

3.3

3.2

3.3

3.5

3.4

3.6 3.7

188 Bellow Bellow

Average

3.2

3.3

3.4

3.7 3.6

246 Rural

ow the averagethe ow

3.3

3.4

3.5 3.7

3.8

320 Urban

3.1

3.3

3.1

3.5

3.6 168

Vojvodina Significantly bel Significantly

Significantly above the average

2.8

2.9

3.1

3.7

3.5

141 West

Serbia

3.5

3.4

3.6

3.5

3.9

3.7

107 East

Serbia

3.6

3.7

3.6

3.7

3.8

3.7 4.1

150 Belgrade

2.7

2.3

2.9

2.6

2.7

2.6

2.7

65+ relevant conclusions relevant

conducting base for *Small

3.2

3.3

3.6

3.7

3.7 106

55-64

3.2

3.1

3.3

3.4

3.6

3.6 130

45-54

3.6

3.5

3.6

3.8

3.9 115

35-44

3.2

3.4

3.3

3.4

3.5

3.7 3.9

107 25-34

3.4

3.5

3.4

3.6

3.5

3.6

4.1

3.9 18-24

3.2

3.3

3.2

3.3

3.5

3.6

3.7 265

Women

3.3

3.4

3.3

3.4

3.5

3.7

3.8

300 Men

3.3

3.5

3.7

3.7 566

Total Base

buyers

payments)

nearest shop nearest Better supply Better

sellers/traders Lower deliverycosts Lower suitscriteria relevant

online for regulation Preciselaw

product/traderwrittenby other

Possibility to read a review about review a read to Possibility

the government to a traders which traders a to thegovernment

Existenceunique (e a of trust mark

Positive experience of close friendsexperience close Positive of

see the ordered product, or to give give product,the ordered to see or

It is possible to return/exchange possibleto It is the

Possibility to pay only after thebuyerpay onlyafter to Possibility

productbought inthe trader`s online trust mark) which trustwouldmark) beissued by backbuyer`s reserved funds card(for

235

2.6

2.5

3.1

3.3

3.4 3.3

Above Above Average

90% 90%

2.7

2.8

3.4

3.3

3.2

3.5 3.5

interval Average

Confidence

95% 95% 3

2.7

3.1

3.1 3.2

188 Bellow Bellow

Average

2.5

2.6

2.9 3.1

246

Rural 3

ow the averagethe ow

2.6

2.7

3.2

3.3 3.3

320 Urban

2.2

2.6

2.8

2.9

3.1 168 Vojvodina Significantly bel Significantly

Significantly above the average

2.4

2.5

2.7

2.8

2.9

141 West

Serbia

2.6

2.7

3.1

3.3

3.4

3.3

3.5

107 East

Serbia

3.1

2.9

3.4

3.3

3.6 3.4

150

Belgrade

1.9

2.1

2.2

2.6 2.5

2.5

65+ relevant conclusions relevant

conducting base for *Small

2.6

2.4

2.9

3.1

3.2

3.3

106 55-64

2.5

2.7

2.9

3.1

3.2

130 45-54

2.8

2.9

3.3

3.4

3.5 115

35-44

2.5

2.8

3.3

3.1

3.2

3.2 107

25-34

3.3

3.5

3.3

3.3 3.4

18-24

2.5

2.6

3.1 3.1

3.2

265 Women

2.6

2.8

3.2

3.1

3.2

300 Men

2.6

2.7

3.1

3.2

566 Total

Base

offices anonymous

officescourier

through media campaign campaign throughmedia productofficeincourier

chat) Shop(e.g. assistance

Having an option to remain remain to option an Having

Better online supply online classical Better of Additional education and better Additional

hours courier for working Longer

Possibility of afterward picking uppicking afterward of of Possibility

informing about online buyer`s aboutonline informing rights

Defining clear rules and obligations of of rulesand obligations clear Defining traders (which do have retail stores) (which traders haveretail do

Figure 79. Influence of certain factors on beginning to purchase online

236

The factors that would first motivate someone who does not shop online to start doing so are identical to those that would persuade the average internet shopper to shop more often. This is, first and foremost, the possibility of replacing or returning ordered goods at the retailer's store, which is recognized as a good incentive by two-thirds of respondents (average grade is 3.7 on a scale of 1 to 5). Significance of a such option is above average among Belgrade citizens (4.1) and people between 35 and 45 years (4.0). Right behind are the positive experience of the nearest surrounding (62%, or 3.7). The youngest examinees often rely on the recommendation of close friends (4.1).

Next on the list is the option to pay only after the customer observe or check the product (3.5), and then there are several factors with the same average grade – 3.3 : Lower delivery costs, netter supply, transparent former buyers` reviews, clear law regulations aimed at e-commerce and mandatory criteria for e-traders.

237

Graph 51: How possible is for you to start shopping online in future? Please use the scale from 1 to 5, where 1 means Completely impossible and 5 means Completely possible.

(Examinees who did not buy anything in last six months, N=566)

Average 1 17 22 37 19 5 1 3.4

Completely impossible Impossible

Not possible, nor impossible Possible

Completely possible Dosen`t know/rejects to answer

Figure 80. Likelihood of purchasing online in the future

According to average grade of 2.7 hardly that anything could break the fears and change habits of people who do not shop online. However, one quarter claims they will probably try online shopping in future, and more than third (37%) is still indecisive, but without rejecting such option.

238

Graph 52: Have you ever sold something online?

(Examinees who did not buy anything in last six months, N=566)

Yes No

East West Bellow Above Total Men Women 18-24 25-34 35-44 45-54 55-64 65+ Belgrade Vojvodina Urban Rural Average Serbia Serbia Average Average Base 566 300 265 58 107 115 130 106 49 150 107 141 168 320 246 188 69 58 Yes 18 23 12 20 21 21 15 15 10 20 14 15 21 20 15 15 16 33 No 82 77 88 80 79 79 85 85 90 80 86 85 79 80 85 85 84 67

Confidence interval

Significantly above the average 95% 90% Significantly below the average 95% 90% Figure 81. Personally sold something online

Having in mind that this question was answered by all examinees we could say that among our citizens online sellers (18%) are outnumbered by online buyers (43%). E-traders (online sellers) are the most frequent among people with an above average income (33%) and among men (23%).

239

4.4. SAMPLE STRUCTURE

Income

20 Without income 1 1 Up to 5.000 RSD 1 1 From 5.001 to 10.000 RSD 4 3 From 10.001 to 20.000 RSD 14 11 From 20.001 to 30.000 RSD 16 15 From 30.001 to 40.000 RSD 10 12 From 40.001 to 50.000 RSD 6 9 From 50.001 to 70.000 RSD 6 2 From 70.001 to 100.000 RSD 3 2 Above 100.000 RSD 3 24 Without an answer 37

Figure 82. Interviewees’ income

240

Settlement size

Up to 5.000 citizens 33

From 5.001 to 10.000 5 From 10.001 to 20.000 7

From 20.001 to 50.000 13

From 50.001 to 100.000 12

From 100.001 to 150.000 5

From 150.001 to 250.000 4

Above 250.000 22

Figure 83. Settlement size of the interviewees

Employment status

Employed (full time, part-time) 52

Self-employed 4

Temporary unemployed, but 21 searching for job

Farmer 2

Pensioner 11

Student, pupil 9

Figure 84. Employment status of the interviewees

241

Gender Age

7 14 14 18 - 24 49 Male 51 22 35 - 34 Female 21 35 - 44 45 - 54 22 55 - 64 65+ Region Professional qualifications

4 Unfinished or finished elemntary school 29 25 33 Belgrade High school (3 or 4 years) East Serbia 20 63 West Serbia College or University 27 (including MSc or PhD) Vojvodina

Household size

1 member

1 6 2 members 21 18 3 members

4 members 22 31 5 or more members Without an answer

Figure 85. Data on interviewees’ gender, age, region, professional qualifications and household size

242

THIRD PART: ACTION PLAN FOR STRENGTHENING E-COMMERCE IN SERBIA AND REMOVING EXISTING BARRIERS

243

During the development of e-commerce diagnosis in the Republic of Serbia, key areas have been identified that represent barrierS to stronger development of electronic marketing channels. The key weaknesses and dangers that e-commerce in Serbia faces are identified, alongside the good sides of e-commerce development, as well as the chances that await us in the future. The analysis was performed from the perspective of demand ie. e-commerce buyers, perspective of supply ie. e-merchants, as well as from the perspective of e-commerce enablers (logistics, payments, technology platforms, etc.), with a parallel analysis of legislation. The proposal for measures to strengthen e-commerce was made in accordance with the outlined framework.

I PROPOSALS FOR STRAIGHTENING E-COMMERCE IN THE REPUBLIC OF SERBIA – THE LEGAL PERSPECTIVE

The existing analysis, especially in-depth interviews, has shown that the general position of the key stakeholders on the market is that there are no significant regulatory barriers for the development of e- commerce in Serbia. The position of the key stakeholders (from both, private and public sector) is that the current regulatory framework, including amended E-Commerce Act, the new Trade Act, and other applicable regulations, is adequate and that amendments to the existing legislation could not impact on the further development of e-commerce in Serbia. The key stakeholders are of the opinion that barriers are on the demand and supply side.

Based on the conducted in-depth interviews, it can be concluded that one of the main barriers is the lack of awareness of citizens as consumers, i.e. lack of education of the consumers regarding their rights when shopping online (for example: even though the laws of the Republic of Serbia in case of online shopping offer a refund and return of goods to the customers within 14 days of receiving their goods, i.e. termination of the agreement without stating a reason, consumers are not aware of that right). Moreover, when it comes to the online payments lack of trust is one of the main barriers. Additionally, a high percentage of traders who offer their goods on social networks are not registered. Such fact, i.e. a high level of grey trading is a reason for consumers’ worries regarding the quality of the goods and their rights in case they do not receive expected goods. Therefore, consumers are unable to distinguish online traders who conduct their activities in accordance with the law and those who do not, which results in consumers’ worry about what they have on the internet and what rights they have. In addition, during the last period, the news stating that someone received goods that were not ordered are more common comparing to news regarding the online payment frauds. Therefore, it is necessary to promote e-commerce and to dedicate to barriers such as the lack of education of the consumers, as it is a key cause of undeveloped e- commerce in Serbia. In this way, lack of consumers’ trust could be eliminated and Serbia could approach countries in the region.

244

Bearing mind above stated, in order to eliminate these barriers, our proposal is to conduct a guide or other type of educational material, which would help consumers in Serbia to understand e-commerce as a form of safe commerce and which, in certain extent, offers a higher level of protection, comparing to the traditional commerce.

Additionally, a number of traders who offer their goods and services online is unsatisfactory. Compering to the countries in the region, a number of micro, small and medium-sized legal entities who offer their goods and services online is extremely low. Inability to obtain all the information regarding online trading is pointed as the main reason for this unsatisfactory number of online traders. As stated, the set of laws which regulate e-commerce is comprehensive and traders do not have adequate knowledge to comply with these laws to conduct its business in accordance with the law. Therefore, conducting a guide, which contains all necessary information and steps that traders need to take to start offering their goods and services online, would be crucial to increase the number of micro, small and medium-sized legal entities who offer their goods and services online.

In the previous phase of project, we have analyzed the Draft of the Act on Amendments and Supplements to the E-commerce Act (hereinafter referred to as: “the Draft”) and the Trade Bill (hereinafter referred to as: “the Bill”). Additionally, we have analyzed relevant regulations and e-commerce practice in the EU and other countries in order to determine the most appropriate mechanisms for legislative barriers overcome. Specifically, while analyzing the mentioned regulations, we have particularly focused on how to use already available laws, regulations and procedures to improve e-commerce in the Republic of Serbia.

During the analysis of the Draft and Bill, we have concluded that the current texts introduce new legal institutes and on the other hand, define more precisely provisions that already exist. Both mention mechanisms improve e-commerce in the Republic of Serbia.

Key additional proposals for further e-commerce development include:

1. ONLINE DISPUTE RESOLUTION (ODR) MECHANISMS

Throughout the EU practice analysis, we found out that in the case of a dispute between a consumer and an e-trader, who has obtained the E-Trademark, it can be resolved through the ODR platform (Online Dispute Resolution).

The Online Dispute Resolution (ODR) platform is provided by the European Commission to allow consumers and e-traders in the EU or Norway, Iceland, and Liechtenstein to resolve disputes relating to online purchases of goods and services without going to court. The ODR platform is not linked to any trader. The consumers can use it to send its complaint to an approved dispute resolution body. A dispute resolution body is an impartial organization or individual that helps consumers and e-traders to settle a

245 dispute. This process is known as alternative dispute resolution, and it is usually quicker and cheaper than going to court. The ODR platform only uses dispute resolution bodies approved by national governments for quality standards relating to fairness, transparency, effectiveness, and accessibility.

Having in mind the abovementioned, we are of the opinion that the Ministry of Trade, Tourism, and Telecommunications or other relevant authority could create the ODR platform and to prescribe that mechanism as a new Alternative Dispute Resolution (ADR) Mechanism. On that way, we would create an e-mediators for resolving the disputes related to the online purchase of goods or services.

2. BLOCKCHAIN TECHNOLOGY AND SMART CONTRACTS

We will use the opportunity to promote the introduction of two backbones of the new digital era – blockchain technology and smart contracts.

Blockchain technology offers vast possibilities for business, government, and consumers. Blockchain can be used in many ways, including, among others: facilitating trade finance; supply chain management; securities recordkeeping and governance; healthcare management; insurance recordkeeping; energy distribution; digital identity solutions; consumer banking; international payments; facilitating institutional custody; and voting.

These include the opportunity for extraordinary economic growth and cost efficiencies. The Republic of Serbia should encourage the growth and development of blockchain technology. The first step should be the introduction of the blockchain in our legal system. So far there was no legislative activity inquiring into and supporting the benefits of blockchain technology.

Countries around the world are taking this opportunity to pass legislation and develop regulatory frameworks to encourage blockchain-related companies to relocate to their jurisdictions. The Republic of Serbia should consider the need to foster that interest.

Investment in blockchain companies and projects has skyrocketed globally from millions of dollars in 2014 to billions of dollars in 2018. Demand for blockchain technology has created thousands of jobs, with IBM reporting that it increased the number of employees focused on blockchain projects from 400 to 1,500 in the span of a year. Bloomberg reports that blockchain-related job postings on LinkedIn increased from 1,000 in 2016 to 4,000 in 2017, and the number continues to grow as blockchain continues to develop. TechCrunch estimates that venture capital funds, and other private investors, invested $1.3 billion between January and May of 2018 into “blockchain and blockchain adjacent” early-stage companies.

The blockchain is in its early stages and its development is often compared to the early days of the Internet. It is the next wave of technological development. Adopting blockchain-friendly policies can turn Serbia

246 into FinTech hub. Blockchain has enormous potential for innovation and economic growth, but this potential will not be realized in the Republic of Serbia without the support of policymakers. Policymakers should work with innovators to craft responsible statutes and regulations that provide the clarity and flexibility necessary to stimulate blockchain development.

Smart contracts have come a long way in a short time. They help to realize the many possibilities of distributed ledger technology (DLT). The certainty of the outcome, automation of performance, and efficiencies in the streamlining of processes are reasons enough for smart contracts to be fundamental to the uptake of DLT. Their potential is now being actively considered and developed in sectors as diverse as Financial Services, Life Sciences, and Healthcare, Technology and Telecoms, Transport, Energy, Infrastructure, Mining, and Commodities. In Financial Services, for example, no one will be surprised to see smart contracts being used in areas such as securities clearing and settlement, collateral management, derivatives contracts, securities asset servicing, international money transfers, and perhaps even syndicated lending.

There are still many open issues: When can it be a legally binding contract? Does its electronic nature deprive it of contractual effect? Is it security? Can it transfer assets or perfect a transfer of title to them? These are questions of fundamental importance and will affect the extent to which smart contracts will be deployed beyond a role confined to self-executing, automating code.

We see smart contracts as another possibility to place the Republic of Serbia among a few countries which understand perspectives and inevitable future development of contract law. This project is a great platform for the introduction and presentation of digital technology potentials. Even an introduction in the form of the definition of the above-mentioned terms would represent a massive step towards the acceptance of these categories in our system.

The following text contains measures for strengthening e-commerce in Serbia.

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II MEASURE 1. STRENGTHENING CONSUMER TRUST IN E- COMMERCE

Demands, demographic, socio-economic and cognitive-behavioral barriers have been identified on the demand side, but most of them can be summed up in customers' mistrust in e-commerce and their unwillingness to get involved. Highlighting the benefits of e-commerce, eliminating prejudice against e- commerce and lowering the risk perception of customers towards this type of trading are the focus of measures to strengthen e-commerce in Serbia on the demand side.

The willingness of users to use e-commerce is one of the key conditions for successful development of e- commerce (Alioubi, 2015). It is important to understand that in addition to the economic component, which accounts for a significant portion of the total benefit to e-customers, there is a significant intangible component. Many psychological and social risks associated with e-shopping significantly limit the potential of e-commerce in Serbia. One of the most effective ways to overcome these risks is to take a proactive approach to building trust with potential and existing e-customers in Serbia. The aim is to point out the benefits and ways of using e-commerce to attract new customers, as well as to represent the legal security and protection of e-customers, to increase the e-shopping frequency of existing customers and to increase the value of the average transaction and to expand the product range and services purchased online. It is necessary to create adequate channels of communication with potential and current e-commerce customers.

Bad business practices and the gray economy are a common occurrence and something that buyers face in both traditional commerce and e-commerce. The problem is that bad practices in e-commerce have high visibility. Thanks to the Internet, mass dissemination of information and news is instantaneous and multichannel. Potential buyers have a number of online sources based on negative PR when it comes to e-commerce. Exposure to this information adversely affects the buyer's willingness to engage in e- transactions. While much of the information is accurate, over-emphasis and one-sided reporting focus, which often omits the part about the merchant that led to the problem (most often illegal sales), creates a false image of e-commerce, especially when all the benefits of online shopping are not clearly presented to customers. For this reason, it is crucial to develop a package of measures aimed at breaking down e- commerce biases and raising the willingness of potential customers to use e-transactions.

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Table 4. Summary of activities for strengthening consumer trust in e-commerce

Activity Responsible bodies Partners Deadline

The Ministry of Education, Science 8. Development of the citizens' digital and Technological Development; External 2020. skills in the area of online shopping Ministry of Trade, Tourism, and partners Telecommunications (MTTT)

9. The improvement of the MTTT e- Ministry of Trade, Tourism, and External End of commerce information portal Telecommunications partners 2019.

10. Media campaign to promote e- RTS and commerce (professional TV shows, Ministry of Trade, Tourism, and other 2019. and short promotional videos, guest Telecommunications external 2020. appearances by the e-commerce partners experts in the media, etc.)

External 11. Creating a concise guide for the e- Ministry of Trade, Tourism, and End of partner commerce customers Telecommunications 2019. (USAID)

12. Trustmark – new approach and the Ministry of Trade, Tourism, and External significantly higher recognition by Telecommunications; The End of partners the customers and acceptance by organization that will issue the trust 2020. (USAID) the traders mark

External 13. Training for journalists on electronic Ministry of Trade, Tourism, and partner 2019. commerce Telecommunications (USAID)

Ministry of Trade, Tourism, and 14. An online dispute resolution External End of Telecommunications (Consumer platform partners 2020. Protection Sector)

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1. DEVELOPMENT OF THE DIGITAL SKILLS OF THE RESIDENTS OF SERBIA

In addition to the psychological aspect, which implies willingness and a certain affinity, the e-commerce usage and the participation in e-transactions imply another significant predisposition, the technical- technological competence of the e-transaction actors. At the individual e-buyers, there is a significant positive feedback between these two elements, due to the fact that knowledge of digital technologies and the possession of certain computer skills raise the self-confidence and the safeness of internet users, which positively reflects on their willingness to engage in e-transactions, as vice versa. Positive examples of close friends and the environment, as well as an existing affinity towards digital technologies, are a significant motivator for people to, independently or through a certain type of education, develop their computer skills, which in turn has a positive effect on enhanced security and resourcefulness in the digital world, resulting in a greater likelihood of participating in e -transactions. Out of the total number of companies surveyed, 36% see the lack of technological literacy among the population as one of the two main barriers, on the demand side, for e-commerce development. Therefore, it is necessary to strike a balance between these two significant factors which influence on the readiness of individual customers to use e-commerce. Population digital literacy development activities must be in function of removing the perceived barriers to the e-commerce usage. In order to maximize the effectiveness of this approach, it is necessary to segment the market of potential users (primarily by using the age structure of the population) and to target each relevant segment with a tailored set of activities.

In order to gain access to the internet, citizens over the age of 55 use PCs (59%) significantly more than other age segments, while they use mobile phones and laptops much less. Despite a significant online presence, only 25-30% of members of this segment have purchased something online (an average of 43%). Older citizens rarely use Internet to collect information about specific products, whether they buy the products in stores or online, but much more often they collect information about the products in the store itself. The main reason for avoiding e-shopping for 31% of members of this segment is the lack of habit and disinterest (average is 18%). This suggests that digital skills development activities for citizens over the age of 55 should be focused at raising the level of their interest. Accentuating the benefits of e- commerce, such as the convenience of shopping and the absence of time pressure during the act of shopping, would provide a good basis. It is recommended to create an online educational program in the form of videos (e.g. on the YouTube platform) tailored to the elderly with the basics of e-commerce and the recommendations for online shops. Printed material, with an access link and picturesque explanations, would also be prepared and distributed at places such as the local Post Office.

The situation with the people aged 45-54 is different, 38% of them buy online, which is below the average (43%), but is significantly more than 31%. It is important to note that lack of knowledge of technology (computers, internet) is cited as the main reason for avoiding e-shopping in 13% of respondents of this age, which is significantly higher than the average (7%). It is the same situation when we observe other, spontaneously cited, reasons for avoiding e-shopping, where as many as 27% of these respondents cited lack of technologies knowledge (average is 14%). This suggests that educational programs for these users

250 should be focused on developing key competencies, primarily on how to use the Internet, to identify trusted sites and e-shops, etc. This program could be offered through companies, where employers would suggest to their employees to educate themselves in this regard and encourage them to access a free educational program. This would have multiple positive effects on the employees approaching the end of their working lives.

Young people represent the engine and the future of the e-commerce. These are relevant people, age 18- 24 and 25-34. Almost all members of these segments are daily online and on social networks and more than half of respondents (58% and 52% respectively) have been shopping online in the last six months (average is 43%). Although these are good results, it is clear that there is significant room for improvement that must be utilized. The main barrier to e-shopping is the mistrust that comes from the fact that they do not want to buy something they cannot see (29%, i.e. 27%, respectively). Young people are much more interested in e-shopping (only 10% of respondents cited disinterest as a reason to avoid it) and have the knowledge they need. It is evident that they know what they want, they are difficult to deceive them and they have the analytical skills which they use to compare products and gather information. A significant problem is that 33% of young respondents, on their own initiative, state that they do not know to whom to refer to in the event of a problem. It is therefore necessary to provide adequate support through following measures that will be discussed in more detail. The focus of these activities should be on connecting young people with relevant content, such as e-guides, portals, etc. It is necessary to raise their awareness of these contents, which will be the task of media campaigns, especially through the social network strategy. In primary and secondary school programs, greater emphasis should be placed on digital literacy. This topic is very up-to-date in our education, but there is still room for improvement. What should be included in all digital literacy programs is one segment on e-commerce, i.e. basic elements of secure online shopping and the basic benefits of e-commerce.

Another problem characteristic for all age segments is the knowledge of modern technological achievements that will soon find application in e-commerce, such as block chain technology (6%) and smart contracts (10%). It is necessary to develop specific advanced educational programs, which would complement the aforementioned initial programs, which can be accessed by all interested citizens. This is a good approach because a more iterative approach to the education through knowledge levels has proven to be very effective and efficient. This would allow users to choose to what level they want to develop their competencies, while avoiding overburdening users with too much knowledge or unnecessary knowledge. Another way of organizing courses is thematically, i.e. by modules. This would ensure that each student selects exactly the areas they are interested in without having to waste time on listening to something they already know. The intersection of these two approaches gives the necessary flexibility, where each level, e.g. beginner, intermediate and advanced had a list of recommended modules, which the user could eject or extend at will. The courses would be developed by MTTT and The Ministry of Education, and would be featured on ministry websites, on a newly developed portal and on accompanying social networks.

Organization of seminars and educational programs for the improving digital literacy of people over 45 years, with an emphasis on the older female population, minority groups, residents of less developed areas in Serbia, as well as all those who wish to be digital literate. Under the Digital Literacy Program, one

251 segment should be dedicated to e-commerce. These educational seminars could be organized under the auspices of the Ministry of Trade, Tourism and Telecommunications, as well as the Ministry of Education, Science and Technological Development, in cooperation with regional chambers of commerce or other organizations that have a wide network covering the entire territory of the Republic of Serbia.

2. CREATING E-COMMERCE INFORMATION PORTAL (E-COMMERCE PROMOTIONAL WEBSITES IN SERBIA, MOBILE APPLICATION, SOCIAL NETWORKS AND RELATED CONTENT)

As part of confidence-building measures of existing and potential e-customers, it is essential to develop an adequate digital marketing strategy. A digital marketing strategy would have three essential components: a specialized e-commerce promotion website, a strategy for social networks, and the mobile app development.

Of all respondents who do not shop online, 38% of them has some fear that they will be scammed because they think they do not know enough about e-commerce, while 37% is unsure who should they contact in case of some problems and which institutions are competent for resolving disputes in e-transactions. It is essential to establish a centralized place for informing the public on e-commerce issues. Therefore, the first step would be to develop a website whose mission is be to be a digital hub for all relevant e-commerce content as well as a basis for further activities of this type. It is important to note that as many as 42% of respondents who buy online is concerned and insecure to some extent. Out of these, 28% have fear that the package will not arrive, 18% are not familiar with the jurisdiction of the relevant institutions, 15% have a problem with unresolved complaint rules, every tenth respondent is not familiar with online shoppers' rights and legal regulations, while 9% of respondents is scared of data misusage. The above-mentioned barriers and fears count to one third of the total and represent some of the most significant ones. These are mostly psychological-cognitive barriers that can be influenced by providing relevant information. The goal of a developed internet portal must be to answer the above problems.

The website must have a clear overview of all the rights e-buyers have. A 55% of the respondents who buy online are not well familiar with their rights. This section will clearly outline the most important customer rights, especially those related to the delivery of goods, since 42% of respondents who had a negative e-shopping experience received poor quality products, while 36% received the wrong product or did not receive the product at all. This section will specify the buyer's right to return the product within the two weeks at the seller's expense, and that in the case of e-payment, he/she has the right to request a refund from the bank, which significantly reduce his/her own risk. Bearing in mind that 11% of respondents are concerned about customs procedures, it is important to explain what the customs clearance process looks like and how a potential problem can be solved.

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Another significant part of the website would be dedicated to customers’ advice on how to behave in a digital environment. Bearing in mind that 18% of concerned respondents do not trust e-commerce, it is necessary to explain how to identify a good, reliable website and e-store, how to pay online, how to compare product information and how to analyze relevant customer comments. A special focus would also be on using social networks as an e-shopping platform. This is especially important for the younger population, since as many as 50% of e-shoppers under the age of 35 buy through Facebook and Instagram profiles of boutiques and shops, while 40% buy via the Facebook and Instagram profiles of individual shoppers. This is a potentially dangerous statistic, since most illegal dealers market their goods this way. These are unreliable sellers of products with dubious quality and questionable origin, whose customers do not fall under the veil of legal protection. It is necessary to show what reliable profiles look like, how it is advisable to buy from multi-channel sellers, and how to use criticism of earlier buyers as a tool to check the credibility of sellers.

A separate part of the web portal would be dedicated to the business entities, i.e. to internet marketers. It would as the first item, but B2B, which purpose would be to outline all the legal obligations that e- marketers must abide by. A separate section of the website would be dedicated to current affairs, which would highlight all the relevant legal and regulatory changes that are tangible to e-commerce in Serbia. In addition, access would be made to all the relevant publicly available business statistics, which would be aggregated and grouped within the portal.

A separate section would be the Multimedia Corner. This would include access to the e-Shopping Guide, as well as all the links for social networks and the most important media activities and announcements. In addition, there would be a separate section with competent institutions and an overview of their activities and areas of work, their contacts, as well as the contact and email address of the call center, the arbitration portal, and consumer advisors.

The final part of the site would be organized like a forum, i.e. public chat room. Since the average rating of the impact of other customers' public comments on the likelihood and frequency of e-shopping is 4.1, it is clear that this is an extremely important aspect. In order to prevent possible abuse, only the users with an account could leave comments. A special part would be dedicated to the so-called "A blacklist" listing all proven unreliable e-marketers. This list would be updated both manually and automatically, based on the number of negative reviews and later inputs collected through mobile applications and relevant statistics.

The portal presented should have some significant features in order to maximize its positive effect. Considering that almost the entire population of the Internet users under 45 years uses mobile devices for daily Internet access, while between 45% and 60% of users over 45 use PCs, the Internet portal must be optimized for all platforms. An additional feature of the portal would be flexibility, i.e. adaptability to the user. When accessing, the user would be offered the option, if he had not previously been logged in and does not want to do it, to access the portal as a business user, e-buyer, or in full informational scope. Depending on the chosen approach, the website would show personalized content relevant to the option selected. This would avoid overloading users with too many information. This would imply that all content would be interactive. For example. The guide could not be uploaded as a PDF file, but as a multi-section

253 interactive text that is customizable to the user. The importance of the internet portal is greater this way because it represents a significant source of information for the female population. The survey found that women significantly more visit the official websites of companies (38%) and retail chains (25%) than men (20% and 13%).

The accompanying social media strategy must be well designed and focused on information synergies. We should focus on Facebook, as the social network which is most used in Serbia, Instagram as the fastest growing, especially among the younger population and the YouTube as the best multimedia content platform. In this way, all the relevant content from all the public online channels would be networked, and interested parties could informed themselves by watching videos and reading about the experiences of other e-shoppers from the comments, rather than browsing through extensive legal content, which are for the most part incomprehensible to the average person. The presence of a public official moderator of social networks would provide directional communication and a positive tone in sharing experiences. The focus is entirely on content networking and linking a public e-commerce portal, i.e. its parts, with the official channels on social networks. Active collaboration would be established with all the significant national e-shops and consumer advisors, which have a significant internet presence.

The last development phase in this part would be to create a mobile application. Its goal would be the same as that of a public portal and most content would be identical. The difference would be that the application would be adapted to all mobile software and integrated with other applications on the phone. This is important because 9% of respondents use mobile apps to make a purchase. This number will continue to grow in the coming years, and it is imperative to create a tool that can analytically monitor user activity and send relevant information to the public institutions.

3. MEDIA CAMPAIGN FOR E-COMMERCE PROMOTION (PROFESSIONAL TV SHOWS, SHORT PROMOTIONAL VIDEOS, GUEST APPEARANCES BY E-COMMERCE EXPERTS IN THE MEDIA, ETC.)

The media campaign must be consistent with the earlier given suggestions and conclusions. Generational differences would be the main criterion for customizing the communication mix. For older members of the population (builders and baby-boomers), it is essential to use the above-the-line marketing approach. The focus would be on mass communication, such as television, radio and print media. Bearing in mind the earlier conclusion that this group is not interested in e-commerce, it is necessary to interest potential older of e-users to examine and test certain aspects of the e-commerce, as well as to positively affect their self-confidence, which is mainly threatened by the lack of the necessary computer skills. We suggest short video inserts on TV, thematic newspaper articles, billboards (especially in front or within public institutions), hosting e-commerce experts (especially if they are older people) in news or other TV programs, as well as possibly considering launching a themed show that would touch the e-commerce

254 field to some extent. A significant contribution would also be the creation of mini-promo messages in a short video in which would famous people highlight one or two essential e-commerce related information.

For younger generations (Y and Z generations) the focus would be on highlighting and networking relevant content. In addition to the social media strategy mentioned earlier, certain topics or sections of the E- Buyers Guide would be presented through banners and online advertisements (e.g., Google Ads). It is also important to note that younger generations identify popular peers and influential public figures (so-called influencers) as a significant source of socialization, and often resort to their imitation, such as using their phrases in speech or imitating their clothing style. Because of that, an action would be launched where these persons would discuss specific topics and positive e-commerce experiences within sponsored videos. These multimedia content would be shared through social networks and public portals, but public appearances of these persons would also be used as a kind of promotion tool. The most significantly ranked factor in influencing non-e-commerce persons to start using e-commerce is the positive impressions of people who are close to them. This is especially important for people between the age of 18 and 24 (4.1 point, while the average is 3.7), who see interesting celebrities as close ones. Due to the internet networking, increasing the number of young e-shoppers would have a multiplier effect. It is important to note that among the oldest population this factor is not emphasized (grade 2.6). The benefits of e-commerce should be brought closer to the young population, in order to fully utilize the available potential. In collaboration with higher educational institutions and the Ministry of education, science and technological development there would be the development of educational programs, seminars and lectures in the field of e-commerce. Additionally, MTTT could emerge as a potential sponsor of research and student conferences, if the agenda includes e-commerce. A related measure would be to enable the electronic payment of all financial obligations towards the educational institutions, which would bring electronic payment closer to the younger population.

An important aspect of the media campaigns would be a focus on the development of women's entrepreneurship. All of these activities should mostly represent well-known, influential women, while successful women entrepreneurs that have established a sustainable e-commerce business model would be accentuated by the TV shows. A special addition would be the emphasizing of people from less developed areas of Serbia and the focus of all the thematic events in this region.

It is imperative that a wider range of media is involved in e-commerce promotion. The goal is to deliver information on the benefits of e-commerce to a large number of people in the short term using their exposure to the mass media. This would be accomplished by a TV campaign that would present in a humorous and educational way possible situations in e-transactions, setting up billboards with key benefits of e-commerce, as well as distribute of thematic pamphlets in public institutions. Similar to the VAT campaign conducted ten years ago, in this case it is necessary to develop content in cooperation with RTS.

4. CREATING A CONCISE GUIDE FOR THE E-COMMERCE BUYERS

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It is essential that there is a good guide for the customers in e-commerce. The existing Guide is too extensive as it has 64 pages. In addition, it has been many years since the Guide was created. The situation in e-commerce in Serbia has changed a lot in the last seven years. There are a large number of businesses that trade through the social networks and it is necessary to pay adequate attention to this element. It has already been said that the Buyers Guide would be integrated into the E-commerce Guide and it would represent its interactive part for e-Buyers. The guide itself may be available as a PDF, but the emphasis would be on combining multimedia content into textual tips and recommendations in order to maximize informative content. The user should have the choice of watching a pre-prepared video covering a specific area of the Guide, or reading the text itself, which includes useful links, illustrations, and short video and audio content. The focus is on raising the reader's interest and the Guide itself should not be overburdened with complex information. The guide would include the following parts:

• What is e-commerce - conceptually defining and presenting all possible situations that can be characterized as e-transactions and their components and participants.

• What are my rights and obligations when making an online purchase - a detailed overview of the rights and obligations of e-buyers. The emphasis here would be on the rights regarding the return of goods, payment, data protection, customs procedures, etc. This section would have a separate section with current affairs, showing all the latest legal and regulatory changes that affect the rights and obligations of the e-customers.

• Who is selling online - a description of the sales channel as well as defining the term multi-channel sales. Parallel view of the advantages and disadvantages of pure click, brick and click and brick and mortar concepts. View all intermediaries and their role in the e-transaction.

• What can I buy online - View products that can be purchased online, related purchase restrictions (age, limited advertising, specific administrative and customs requirements, etc.), as well as a list of products that cannot be purchased online.

• How to pay - an overview of all the payment methods, as well as their advantages and disadvantages. Emphasis would be on the positive presentation of the cashless payment methods and emphasizing their advantages over cash payment.

• How to protect yourself in e-commerce - an overview of the most common frauds on the internet, as well as how fraudsters can be identified and reported to the competent authorities. A list of useful mundane tips to increase the safety of online shopping (trusted sites, multi-channel sellers, sites with lots of positive reviews, etc.). The possible misunderstandings that may arise when ordering (wrong numbers or items, terms of delivery, additional costs, foreign exchange differences, customs procedures, etc.) and how to predict or resolve them would be highlighted.

• How to further expand my knowledge - a list of useful thematic links, seminars and programs

• List of trusted e-marketers

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• List of unreliable e-marketers

• FAQ - interactive parts of the Guide where users can browse through frequently asked questions and answer on them, as well as ask a question to a competent public administrator or members of a public forum.

5. TRUST MARK - A NEW APPROACH AND A SIGNIFICANTLY GREATER CUSTOMER RECOGNITION, AND ACCEPTANCE BY THE MERCHANTS

Trust mark is very important in e-commerce, especially for electronic retailers who sell only online and who cannot count on the transfer of trust from a classic store like multichannel retailers can. The confidence mark as a factor in influencing online shopping was rated 3.3. The particular significance of the Trust mark in this regard would be for buyers age 35-44 (rating 3.6). The trust mark is also important for micro, small and medium-sized businesses and drastically affects first-time customer conversion. Also, if it is an internationally recognized certificate, it has a positive effect on foreign buyers.

The trust mark serves as a further assurance to potential buyers that their products or services are offered by an e-seller who is recognized on the market and whose business is in accordance with law and good business practice. It is essential that there is a standardized evaluation and certification process as well as a competent authority. The competent authority should have great authority in the field of e-commerce and should also work in cooperation / under the auspices of the Ministry of Trade, Tourism and Telecommunications when it comes to awarding previously mentioned certificates.

There is an E-Trustmark in Serbia that is issued and can be seen on the e-commerce websites. What should be further enhanced is the level of the importance of the trust mark for the e-commerce customers. The problem is that the trust mark is not sufficiently recognized by the customers. Also, sometimes businesses emphasize this mark of trustiness as a recognition, and often at the bottom of the website, where is not visible enough. It is necessary to significantly raise the level of customer awareness of this trust mark. Regardless of whether the mentioned mark is issued by the organization that has issued it so far or is being transferred to another organization, it is necessary to increase the number of business entities that have a given mark in the compliance with the given standards.

The e-trust mark should have a distinctive logo, which would be exposed to the media, especially in the initial implementation phase, in order to increase the consumer awareness and to get e-shoppers accustomed to the tag and to be able to unambiguously recognize it in e-transactions.

The certificate can be issued to existing pure click and brick & click companies that would meet certain standards, such as the introduction of procedures for efficient response to consumer requests and return logistics, timely settlement of financial obligations, certain % of successfully resolved customer complaints,

257 responsive submission of required business data to the competent bodies for the purpose of forming specialized databases, etc. The key indicators to monitor the implementation of the trust mark after market introduction would be the ratio of certificates awarded and requests received, the percentage of renewed certificates, the annual growth rate of the total number of certificates issued in the Serbian market, as well as certain qualitative parameters that would be obtained by the market research of e- customers' views on the e-trust mark.

It would be good if the trust mark that our e-merchants receive is internationally recognized - that this can be achieved by issuing it in cooperation with one of the recognized institutions in Europe or the world, such as for example trust mark Safe.Shop. Also, a potential solution could be a trust mark that will be recognizable in the Balkans.

6. TRAINING OF JOURNALISTS ON THE ELECTRONIC COMMERCE

Bad experiences of other people, negative headlines in the media ("wooden log arrived instead of…") are the reasons for avoiding online purchases for 29% of respondents. This is a particularly emphasized secondary reason in men (21%, average 16%), as opposed to women (11%). With this information in mind, it is of utmost importance to educate journalists to focus their research efforts on relevant e-transaction participants, depending on the topic of analysis. This means that any journalistic analysis on the topic of e- commerce must have a clearly defined research scope. This ensures the separation of trusted, serious e- merchants from unreliable resellers operating in the gray economy. Journalists are a significant source of information and education for the population, which is why they need to refrain from unrealistic bombastic headlines and focus on a substance, with the aim of raising the awareness and willingness of the population to buy products and services online. With this in mind, it is necessary to organize educational programs and seminars for journalists who write articles and do research in the field of e-commerce. The focus of the training would be to get journalists acquainted with the participants in e-commerce in Serbia and to indicate to them for which participants the level of customer complaints is very low, and which traders (mostly unregistered, on social networks, etc.) are the riskiest.

7. AN ONLINE DISPUTE RESOLUTION PLATFORM

A discussion has begun, from a legal point of view, on alternative dispute resolution mechanisms. Interviews with relevant stakeholders showed that for the direct participants in e-transaction were not profitable to bring litigation for disputed transactions which are worth less than RSD 6,800. Considering that more than 55% of e-transactions in Serbia are worth less than 50 euro, we conclude that there is a

258 significant barrier to the further development and expansion of e-commerce, especially in the initial stages, in the form of significant risk and mistrust of customers. It is important to enable out-of-court dispute settlement in lower value e-transactions. An online platform for the arbitrary dispute resolution could boost e-commerce efficiency. When customers are aware that they are protected and that an official body is actively working to protect them, they will be more willing to participate in e-transactions and spend larger sums of money online, even purchasing certain products or services that they would not otherwise purchase electronically. The arbitral body governing the online platform would need to have state support but would have to be independent.

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III MEASURE 2. STRENGTHENING THE POSITION OF ELECTRONIC TRADERS IN THE MARKET OF THE REPUBLIC OF SERBIA

Table 5. Summary of activities for strengthening the position of e-traders

Activity Responsible bodies Partners Deadline

9. Creating Ecommerce Guides (Shorter External partner MTTT June 2020. and Longer Version) (USAID)

10. Setting up a Call Center for the Ecommerce Association or MTTT June 2020. support of e-traders other relevant institution

11. Incentives to startups and existing MMS businesses in e-commerce (financial MTTT External partners 2020. support, mentoring support ... analyze different options)

12. Tax incentives for electronic traders MTTT, Ministry of Finance 2020.

13. A project to support women's entrepreneurship in one district in MTTT External partners 2020. Serbia

External partners; 14. E-commerce development training An eminent MTTT 2020. courses for the e-traders educational institution

MTTT, E-Commerce 15. Organizing contest for the e-trader of Association, Serbian 2019. and

the Year Chamber of Commerce or 2020. other relevant institution

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16. Development of electronic retail at classic local and regional offline MTTT External partners 2020. retailers in Serbia - Multi-channel approach

1. CREATING ECOMMERCE GUIDES (SHORTER AND LONGER VERSIONS)

A version of the Ecommerce Guide already exists and is available online at HTTPS://EUROPA.RS/IMAGES/PUBLIKACIJE/VODIC_ZA_E_TRGOVCE.PDF. It is a document with a legal focus, intended to be an instrument for informing e-merchants of their legal obligations and rights in e-transactions, depending on the stage of the transaction itself. This material is complex and difficult to understand. The guide should be a comprehensive document that adequately covers the legal, business, financial and technological aspects.

In the conducted research, the importance of the ecommerce guide is clear. As many as 10% of non-e- commerce companies believe that having an e-commerce guide would encourage them to enter into the e-commerce area (especially important for SMEs, not so much for large enterprises (no large enterprises would be stimulated this way)). The importance of the existence of a Guide to Further Ecommerce Development is rated 4.4.

The public portal has already been explained in the previous section. Business users would have the opportunity to access content tailored to their needs on the portal. In addition to the standard informational content, personalization would also be directed to tutorials and educational programs to improve certain e-commerce business activities, successful case studies, a special section for women entrepreneurs and SMEs. Within the website there would be a section for useful links and files, which would contain links or contacts of potentially interesting partners (software providers, e-merchant support banks, and trusted couriers), open source materials, software extensions and files for e-stores, etc. The portal will also include an interactive e-commerce guide. Business users would be automatically redirected to the part of the Guide that directly addresses them and their needs.

E-traders consider that the absence of a clearly defined legal framework (11% of respondents) represents one of the most significant limitations on the part of e-commerce enablers, but on the other hand, they do not know to state what the legal barriers are. From the above mentioned, it is clear that ignorance of legal regulations is a problem for existing and potential e-merchants. The legal part of the Guide should explain everything that is needed to start an e-business. From starting a business/entrepreneurship to fulfilling the legal requirements that e-commerce requires. The legal aspects of customer relations, import- export business, exceptions to certain legal restrictions, etc. would be included here. It is important that all legal and regulatory guidelines are sorted and clearly displayed, both by the part of the business activities

261 that they are related and by the level of significance, so that users have a clear overview and the ability to prioritize. Considering that 7% of respondents see customs regulations as one of the most significant restrictions by e-commerce facilitators, a separate section would be dedicated to the customs operations, regulatory review and the accompanying elements of international business and traffic. A segregate segment would be all the recent changes to the e-commerce laws and regulations. This section would ensure centralization of relevant legal obligations. This is especially important for MSMEs who do not have enough specialized staff and lawyers, nor enough time to scrutinize all the laws while seeking the guidance relevant to their business.

The business-financial part should cover two basic segments. Marketing, which should help e-businesses determine who, what, at what price and where to sell, as well as how to reach the customers they are targeting. Knowing customers is essential and customer data obtained online is a treasure trove of optimizing your digital marketing strategy. In addition to the analytics and the analytical tools like Google Analytics, readers would also be familiar with the importance of being proactive on social media. Networks like Facebook, YouTube, Instagram, Pinterest, Twitter, and Tumblr provide significant segmentation and targeting capabilities, as well as positioning businesses online. It is necessary to explain the character of each network, as well as to give an example of good content posted on those networks. Content networking and multimedia messaging are essential for engaging and animating leads and must be technically explained and linked to the explanation of how to create a website and an e-commerce site. In terms of business management, it is imperative to show business owners how they can measure the financial performance of their business. Assistance with creating business strategy was rated 4.2 as an ecommerce development factor. Linking financial indicators such as ROI, ROA, GMROI etc. with digital operational metrics like customer conversion rate, visits, clicks, views, incomplete transactions, number of website returns, etc. provides a comprehensive understanding of the relationship between business performance and e-customer behavior. Basic accounting requirements for e-businesses would be addressed in the guide as well.

In addition to the internal aspect, advices would be given regarding the provision of the necessary financial resources for further expansion of business. Centralized record of all the national and international funds available to entrepreneurs is a good basis, especially when paired with advices on collecting and writing the necessary documentation, applying for a competition and similar advices. The aim is to show the potential sources of financing to the entrepreneurs and enable them to successfully apply for these funds. The guide would be rounded off by introducing business owners to the basic strategic concepts and tools. Environmental analysis instruments would be presented as tools for understanding the market situation of an enterprise, while the benchmark analysis would be presented as a form of comparison with competition and mapping of enterprises by certain dimensions of business. Also, all the ways to pay for the product online would be explained, as well as the obligations and benefits they bring with them. Businesses would also be given relevant business statistics and studies that they can use when needed in their internal analyzes. The ultimate goal would be to demonstrate the importance of value management and that it is not always right to use a cost focus strategy. Products sold online can be unique and base their market position on delivering superior value to consumers. The focus of the guide itself would not only be on pure click companies, but also on traditional, physical retailers, who are interested in

262 implementing multi-channel sales. Of course, the importance of integration and synergetic effects between channels would be exposed in detail, as well as a process of transition from a multichannel to an omnichannel approach. It is important to note that the study should contain a wealth of case studies and interesting business stories, as well as illustrations and diagrams, etc. The business part of the guide would also include support activities necessary for the e-commerce, such as courier services, financial institutions, etc.

The technological aspects in the guide must be aimed at increasing the understanding of digital technologies as well as explaining what is technologically necessary to do to start an e-business and what the costs are. From the website design to more sophisticated technology solutions. This includes a list of relevant e- commerce platform providers, such as Shopify, but also an up-to-date list of companies in Serbia that may be active partners in this regard, such as Raiffeisen or SoGe Bank, which offer their clients an e-platform for website creation and e-shops.

The guide should be written in a simple language and be a practical tool for starting and running a business. It could be available in PDF format, but it should primarily be an interactive segment of the public portal, with the ability to personalize the presentation of relevant multimedia content. In this way, business users would seek aspects of the Guide which are important to them, by themselves; they could choose the thematic areas, i.e. depth of consideration of individual activities.

2. CREATING A CALL CENTER

Government assistance presents a significant measure of incentives for e-commerce development, according to the 8% of surveyed internet traders. Government assistance involves not only financial subsidies but also active involvement and processes for optimization and improvement of e-commerce. One of the best approaches in this regard is to create supporting content that presents the necessary information and advisory support, as well as education and communication channels. In this context, it involves: launching a call center, creating a public portal, formulating a social network strategy, and developing a mobile application.

The existence of a formal call center dedicated to the advising e-commerce users would affect 3% of companies that do not have online sales to consider this option, while existing online retailers estimate that the importance of the call center on the development of e-commerce is 4.3. This is where businesses could get information on issues of interest in e-commerce or in solving problems they encounter. An ecommerce guide could help a lot to the call center work. The Call Center could be within the E- Commerce Association.

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3. INCENTIVES TO STARTUPS AND TO EXISTING MMS E-COMMERCE ENTITIES

Giving incentives for the business development i.e. the incentives to the existing e-businesses and startups that have good ideas for developing a new or existing business is very important for the further development of e-commerce in Serbia, especially given that 29% of e-marketers see insufficient government assistance as one of the two main barriers for the realization of e-commerce, and 17% of e- traders see financial shortages as one of the two major barriers to e-commerce development. In 5% of cases non-e-commerce companies cite capacity limitations (financial and human) as the main reason for not entering e-commerce (much more important for product traders, 8% than services traders, 0%), while financial subsidies would be an entry ticket to ecommerce for 7% of companies. Because of this, it is necessary to provide financial incentives for startups, especially product sellers. Entrepreneurs would submit a business plan that is adequate for e-commerce. On the workshops they could master how to develop a business plan. Incentives could be in the form of grants for the best business proposals or in the form of favorable loans.

According to e-traders, three major barriers to e-commerce development are lack of previous experience (14%), excessive data security requirements (11%), and monitoring of rapid technological development (5%). All these factors are directly reflected on one of the most important activities of e-business - creation and maintenance of a functional website and e-store. 12% of the analyzed e-marketers are not satisfied with the conditions of technological service providers (creation of website, platform, etc.). The lack of resources to create an adequate website or complete technological solution is often a limitation for starting an e-commerce business. Financing part of the cost / full-service provider support needed to start a business, such as making a website or covering part of the cost of courier services for a certain period of time could encourage the development of e-commerce, because e-traders estimate that the importance of state aid for technology is 4.4. Incentives could be provided from government funds, but also through sponsorships of those who sell services to e-commerce providers e.g. banks or courier services.

A significant proposed educational measure is related to the mentoring support for e-business development in Serbia. Each year, under the auspices of MTTT, an interdisciplinary team of experts would be formed to represent a mentoring committee. Each year a call for proposals will be launched to award consulting and mentoring support to the interested e-marketers. Those with the best proposals and realistic analysis of their needs would be selected (e.g. 10 companies a year) and the mentoring committee would work with these companies over the next year to improve and develop their e-businesses. Support would be in the form of workshops, individual meetings, staff training, the development of a professional analysis of the current state of business, and the development of a short and long-term development plan. Within the scope of this assistance, women entrepreneurs and SMEs would be privileged and this measure would be targeted primarily at them (especially entrepreneurs of less developed countries).

The public portal has already been explained in the previous section. Business users would have the opportunity to access the portal as B2B users or to log in, thereby accessing content tailored to their

264 needs. In addition to standard informative content, personalization would also be directed towards tutorials and educational programs for the promotion of certain e-commerce business activities, successful case studies, a special section for women entrepreneurs and SMEs. Within the website there would be a section for useful links and files, which would contain links or contacts of potentially interesting partners (software providers, e-merchant support banks, and trusted couriers), open source materials, software extensions and e-files -stores, etc.

The social media strategy for business users would rely on a previously elaborated strategy for individual users. In this case, a greater focus would be on creating an official presence on LinkedIn and creating a digital merger of interested e-marketers. When it comes to the YouTube channel, the business part would be focused on creating content related to certain aspects of e-commerce, which e-marketers can download and distribute through their social networks, as well as developing advisory videos with instructions on creating quality online content. Facebook and Instagram public profiles would focus on individual users but would allow e-traders to access discussions and forums, as well as privileged rates for highlighting banner ads and related content.

4. E-COMMERCE TAX BREAKS

An exemption from taxes and contributions for a certain period of time, or payment at a lower tax rate, would make it easier for startups to start operating, since many of them start earning in the second year of business, and start operating profitably after three years. Many of them do not get started, and close their startup due to high initial costs. This is another significant measure of direct state aid. Special reliefs should be defined for women entrepreneurs and startups from Eastern Serbia.

5. A PROJECT FOR SUPPORTING WOMEN'S ENTREPRENEURSHIP IN ONE DISTRICT IN SERBIA

A specific set of incentive measures and education should be created for the development of women's entrepreneurship in e-commerce. Particular attention should be paid to women in less developed areas who may sell certain products on the Internet. The main goal of these programs is to eliminate the technological and business fear of ignorance that exists and to present the benefits of e-commerce. In the case of financial incentives, the preferential treatment should be given to women entrepreneurs, in the form of higher co-financing rates, greater absolute amounts of available grants, wider coverage of financed business aspects, as well as more relaxed competition criteria for the aforementioned funds.

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In addition to the above-mentioned additions for women entrepreneurs in the proposed measures, a set of the following activities would be created:

• Creation of a program to support women's entrepreneurship "Digitize Your Idea" - This is a mentoring-financial support program that would allow interested women from a selected less developed district to apply to the competition in order to participate in the program. The first part of the program would be mandatory for all applicants and would represent a set of specialized educational programs for women entrepreneurs. The focus would not only be on the e-commerce topics mentioned above, but also on the accompanying topics. Skills development would include human resource management, writing business plans, financial analysis basics and basic digital skills. After that, the candidates would have a month to formulate a business plan and submit it to the Evaluation Committee. Selected candidates (focus would be on ideas involving more women entrepreneurs and on those with existing complementarities) would enter into the second phase of the project, which includes mentoring and financial support (exemption from tax payment for two or three years, space usage for performing economic activities, co-financing the procurement of equipment, etc.) and the realization of a business idea. Quarterly meetings would be mandatory, where all the candidates would comment on the activities carried out and advises each other. Participants in this project would be required to participate as speakers at e- commerce and entrepreneurship conferences as well as at the national media campaigns.

• Organization of conferences or summits on women's entrepreneurship in Serbia - in this case the competent institutions would act as organizers and would organize specialized courses and conferences, where women's entrepreneurship would be approached from many different angles. In this way, media awareness would also be focused on the actualization of this topic. Guests at these summits would have the opportunity to present their business stories and the challenges they are encountered. At topics like this, sharing experience is extremely important. An option for consideration is the organization of a women's entrepreneurship fair, which would be held in the first week of March in the city of Nis.

• Co-financing organized economic events, which one of the topics is women's entrepreneurship in e-commerce - this is a good way of indirectly supporting women's entrepreneurship. In this way, conference organizers will do their best to incorporate related topics and relevant speakers into the agenda in order to benefit from it. This would make the topic of women's entrepreneurship current and serve as an encouragement to the future entrepreneurs. The support does not have to be exclusively financial - it may also involve the provision of conference space and other things. Preferential treatment would be particularly provided to the summits in the selected district.

• Creation of educational training programs, as well as reeducation programs for women entrepreneurs - the idea of these activities is to create specialized educational programs for women entrepreneurs. The focus here would be not only on the e-commerce topics mentioned above, but also on the accompanying topics related to the basics of business. The aim

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of the trainings would be to explain to women how they can create e-business based on their ideas, but also to generate new ideas. This measure could be implemented in multiple districts.

• Advising women entrepreneurs and helping them to apply for funding sources - this measure would be there to support women entrepreneurs who did not receive direct financial assistance or subsidies from the state. The focus would be on helping to gather the necessary paperwork and supporting documentation, as well as directing it to the adequate funds and other sources of funding. This option would be offered nationally.

6. DEVELOPMENTAL TRAINING PROGRAMS FOR ELECTRONIC TRADERS

One of the key steps for further development of e-commerce in Serbia is the development of e-traders' business competencies. From the economic experience it has been established that Serbian businesses, especially entrepreneurs, lack the focus and expertise in the field of digital technologies. This was confirmed by the fact that 24% of the observed e-traders highlighted education as a significant factor in the advancement of e-commerce, making it the most common survey answer, with an estimated significance of 4.5. Therefore, it is necessary to develop a good package of educational measures. Educational efforts should be directed both to the strategic level of e-commerce management (help in defining a business strategy is perceived as an e-commerce enhancement factor with a rating of 4.2) and to certain operational aspects, such as optimizing the digital marketing mix in e-commerce (9% of respondents believe that marketing promotion is a significant factor in the further development of e- commerce).

In accordance with the inter-disciplinary nature of e-commerce, cooperation with the relevant higher educational or other professional institutions is necessary in order to create a comprehensive educational program for e-traders. The program would consist of the thematic areas such as: Business tools and models, Business organization, Legal aspects of e-business, Creation and development of the digital marketing tools and instruments, Logistics management and Sales planning and organization, Finance in e- commerce, Accounting Basics for e-traders, etc.

The educational program should have the character of a certified development program where after, for example, the two-month development program, the students would receive a certificate from an eminent educational institution.

7. ORGANIZING THE COMPETITION FOR THE E-TRADER OF THE YEAR

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MTTT, in collaboration with the SCC or other relevant institution, could launch the competition for the e-trader of the year. The idea is to link market inputs to the ratings of professional jury experts. This activity could be aligned with and linked to the annual e-commerce conference. The focus of this competition would be of an educational character, because the presented businessmen would be able to see good examples from Serbia's economic practice, as well as certain innovations from the field of e- commerce. As an added benefit, it can be worked on bringing key players in the field of software development and e-platforms which are relevant to the e-commerce field and on constructively engaging them with a targeted audience- e-trader.

8. DEVELOPMENT OF THE ELECTRONIC RETAIL AT CLASSIC LOCAL AND REGIONAL RETAILERS IN SERBIA - MULTI-CHANNEL APPROACH

Multi-channel retailing has proven to be a successful concept in developed countries. There are a significant number of successful local and regional retailers in Serbia covering the territory of one or more municipalities. Most of them do not decide to enter into electronic retail due to their lack of technological knowledge, lack of knowledge of e-commerce and its advantages and general fear of entering a new sales channel. It has been observed that 6% of e-traders consider poor multichannel sales development as one of the two major barriers to the e-commerce development. This is a direct consequence of the poor development of the e-commerce market in the country (identified by the 20% of e-traders as the most significant barrier and by 11% as the second most important barrier to the development of e-commerce) and lack of previous experience (14% consider it to be one of the two most significant barriers). The aim of educational and incentive efforts in this field should be to identify and present successful national and regional examples of multi-channel vendors for specific product groups (particular focus on footwear and clothing (37% of respondents), technique and technology (17%), toys, books, furniture and flowers (16%) and digital products (12%).

The incentive system for these merchants should also apply, with the appointment of a special mentor who would work with one company to develop electronic retail and educate their staff. These companies would also receive some e-commerce development funds based on the proposal of their new business model which would they develop with a mentor. It should be noted that the development of e-commerce at small and medium-sized retailers of local and regional importance is a way to facilitate access to the market for small and medium-sized suppliers.

It is necessary to foster the creativity and innovative potential of modern disruptive e-businesses. Synergistic effects resulting from specialization in the field of business decision making digitization, as well as certain business functions, such as the digitization of logistics, represent a significant step forward. Global business models like Wolt, GLovo, CarGo, etc. are essential for e-business development, and can represent guiding ideas, as well motors of national e-market development in Serbia. Another significant way to diffuse this kind of innovation and increase market representation, is the integration and / or

268 cooperation with established, traditional multi-channel business systems. As an international example we cite the cooperation between Carrefour and Glovo, aiming to achieve synergistic effects through the collaboration of FMCG hypermarket giant and innovative national product delivery models109. Similar models of business cooperation are necessary in the Serbian market and it is necessary to promote this type of cooperation and to raise the awareness of relevant people in the profession.

109 HTTP://WWW.CARREFOUR.COM/CURRENT-NEWS/CARREFOUR-AND-GLOVO-SIGN-A-STRATEGIC- PARTNERSHIP-IN-FOUR-COUNTRIES-IN-ORDER-TO-OFFER-30

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IV MEASURE 3. DEVELOPMENT AND IMPROVEMENT OF THE LOGISTIC FLOWS IN THE ELECTRONIC TRADE

Table 6. Summary of activities for developing and improving logistic flows in e-commerce

Responsible Activity Partners Deadline bodies

7. Setting up 24/7 pickup External partners End of 2020. This activity MTTT, City locations in big cities (postal service will take longer, perhaps the administration? („paketomati“) operators) first phase in 2020.

8. Standardization of business MTTT External partners 2020. procedures of courier services

9. Subsidizing part of the shipping costs which electronic MTTT 2019. or 2020. merchants have

10. Educational programs for MTTT External partners 2020. courier employees

11. Enabling electronic payment of Customs 2020. customs duties Administration

12. Acceptance of the electronic Customs documentation in customs After 2020. Administration procedures

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1. SETTING UP 24/7 PICKUP LOCATIONS IN LARGE CITIES (PACKAGE MACHINES) (THIS HAS TO BE WORKED OUT WITH THE POSTAL SERVICE OPERATORS)

One of the main reasons for shopping online is the delivery to the desired address (73%), however it is important to note that this is not usually a priority reason (5%), but primarily an additional benefit of e- shopping. Within this analysis, it was observed that delivery to the desired address means most to the e- buyers aged 18-24 (15%). Setting up 24/7 pickup locations in major cities would be another major step in raising e-customer satisfaction. One of the problems noted is that e-shoppers often have a problem receiving packages. Courier services operate and deliver goods during business hours, when there is often no one at the home address (especially a problem with single-member households), which very often discourages potential buyers from the e-shopping. Our survey has confirmed this, as 5% of respondents who had poor e-shopping experience cited it was because of the delivery of parcels during business hours when no one was home to receive it. Regarding the respondents who do not shop online, the ability to pick up packages subsequently in their post office is rated 3.0 as a factor of influence of the usage of e- commerce (especially for people aged 35-44, where the score is 3.3). Setting up checkpoints to pick up packages at a specific city location is the solution. These checkpoints would be automated, would operate nonstop and could be used by all courier services for a fee. This approach raises the courier's competitiveness, while on the other hand it represents an additional source of revenue for the city municipalities. These points should first be set up in Belgrade and other major cities.

2. STANDARDIZATION OF BUSINESS PROCEDURES OF COURIER SERVICES

One of the main obstacles to the development of e-commerce, by service providers, is the unreliability of courier services (in 44% of cases as the main reason and in 7% as the second main reason), while 13% of the surveyed companies believe that a better and more efficient operation of courier services would be a significant incentive for the e-commerce development. It has already been mentioned that courier services are a link between e-traders and e-customers. Although courier services do not form part of an e-traders' business system, their attitude and appearance towards the customer directly affects the customer's perception of the e-trader. Basically, if the courier damages the goods, is unpleasant, late or simply will not deliver the goods at the contracted location, the buyer will be disappointed, but his frustration will most often not be directed to the courier but to the e-trader, who did not participate in the delivery of the goods, nor did make any omission. As many as 7% of respondents who had a negative online shopping experience cited the unreliability of the courier service as the reason, while 14% said that when they shop online, they are concerned about the delivery of the goods.

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When outsourcing logistics activities, unprofessionalism can occur, which can have an extremely harmful effect on the e-traders' reputation and a customer satisfaction. As a result, it is necessary to develop a Code of Conduct for courier service and to establish standardized procedures. It is necessary to provide a high level of courier service, in order to increase the level of trust and satisfaction with e- commerce. Some of the measures would be a mandatory way of contacting and delivering shipments (e.g. to the buyer's apartment), a way of contacting the buyer, as well as creating a portal for reporting courier behavior that buyers can access at any time and submit a report. It is important to note that 28% of respondents who buy online have a fear that their package will not arrive. The reason is a significant lack of confidence in the courier services, a reason why respondents do not buy online (11%), which is especially emphasized in the elderly population (21%, versus 0% in people under 35). Inbound logistics should also not be overlooked, which is why a one part of business standardization would be to optimize relationships with business customers who use distribution services to minimize the risk of erroneous deliveries, data processing errors, damaging goods, and a return logistics which is primarily concerned with the return of goods.

3. SUBSIDIZING PART OF THE SHIPPING COSTS WHICH ELECTRONIC MERCHANTS HAVE

In the 28% of cases, e-traders see the high price of domestic shipments as a barrier on the part of service providers, while for international ones this number is 18%. Cheaper delivery, as a factor influencing more frequent e-shopping, is estimated at 4.2 (this figure is the highest in Belgrade at 4.5, while it is the least significant in Vojvodina at 3.9). It is evident that e-purchases are significantly influenced by the shipping price. This is especially true for highly urbanized areas, such as Belgrade. The problem with e-commerce in Serbia is that the delivery cost is often passed on to the customer, which he/she is often unaware by the time the goods arrive, or it significantly affects the final price of the e-store product, discouraging customers from buying. The solution to this problem, at this stage of e-commerce development, can be to subsidize part of the delivery cost. It is recommended that these subsidies be granted to the final buyers if they pay electronically for the goods. On the other hand, it is important to ensure that there is no abuse of subsidizing by e-sellers, by charging the subsidy amount into realized price differences.

4. EDUCATIONAL PROGRAMS FOR COURIER EMPLOYEES

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Creating educational programs for the employees in courier services is a measure analogous to the proposal for standardization of business procedures for courier services. It is about organizing workshops and professional courses for courier representatives. The aim is to raise awareness of these intermediaries about their importance for the development of e-commerce, as well as to increase business efficiency through education. The courses would be tailored to the hierarchical level they relate to, but the topics would be related to customer relations, communication, developing digital business management tools and optimization of business flows.

5. ENABLING ELECTRONIC PAYMENT OF CUSTOMS DUTIES

Customs is an indispensable element of any international commodity transaction. That is why it is crucial that the import and export of goods from Serbia goes smoothly and efficiently. This is especially important for the development of e-commerce, where timeliness of delivery is a significant component of customer satisfaction.

An activity that would affect the development of e-commerce in Serbia is the electronic payment of customs duties. This proposal is in line with the proposal on the introduction of e-payment option in public institutions and bodies. This possibility should be available to both Serbian citizens and foreign citizens (primarily because of the Serbian diaspora). It would be a measure of speeding up the customs clearance process, which would have a positive impact on the speed of international deliveries. This is a very significant measure, as the survey showed that one in five e-shoppers had a bad experience when shopping online because they waited too long for ordered goods (21%). It is difficult to separate the influence of courier services and customs in this case, but it is clear that slow and inefficient customs clearance has an extremely detrimental effect on the development of e-commerce.

6. ACCEPTANCE OF THE ELECTRONIC DOCUMENTATION IN CUSTOMS PROCEDURES

An additional measure to increase the efficiency of the Customs Administration in order to improve e- commerce in Serbia is to digitize the process of preparation and submission of export-import documents. This activity cannot be accomplished in the short term, according to representatives of the Customs Administration. However, there is definitely more work to be done on this measure. In addition to this measure, it is possible to organize special customs treatment of goods from e-transactions (separate high- speed warehouses, simplified, standardized documentation for repeated operations, etc.) as a simplification of procedures related to the return of goods from abroad (there was a problem of double payment of

273 customs duty if returned the goods are sent in open or modified packaging, or if it is shipped under another number). The Customs Administration must have a partner attitude towards the e-traders from Serbia and provide them with the necessary legal and technical support. Customs inefficiency is a problem perceived from both e-traders and e-buyers, as 7% of e-traders believe that customs regulations are a major barrier on the part of other participants to help / support e-commerce, while 11% of e -customers is worried about customs procedures when e-shopping, which is to be expected, since complicated customs procedures were the cause of poor e-shopping experience in 9% cases of e-buyers. A large number of products purchased online in Serbia come from abroad, which is why it is extremely important to modernize customs procedures and regulations.

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V MEASURE 4. IMPROVEMENT OF FINANCIAL INFRASTRUCTURE IN THE ELECTRONIC TRADE OF SERBIA

Table 7. Summary of activities for improving financial structure in e-commerce

Responsible Activity Partners Deadline bodies

Banks, credit card 2019. and 6. Promotion of card payments and electronic banking MTTT, NBS companies, 2020. etc.

MTTT, Office for Banks, credit IT and card 7. Popularization of paying bills electronically June 2020 eGovernment, companies, NBS etc.

8. Introduction of the possibility that the seller receives 2019. and Banks, NBS payments from foreign buyers in a foreign currency 2020.

9. Increasing the security for the customer - the possibility that payments are made only after the buyer confirms that he/she has received adequate End of MTTT, NBS Banks etc. good/service (banks should enable and offer this 2020. service, and a trader can decide to use it if he/she has a desire and a business interest to use it)

Banks, The 10. Encouraging banks to provide support for starting or MTTT, NBS association of 2020. developing an online business Banks

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1. PROMOTION OF CARD PAYMENTS AND ELECTRONIC BANKING

It has already been established that the shift to cashless payments, especially when it comes to e- transactions represents a global trend. The situation in Serbia is still such that paying with cash upon delivery is dominant and preferred form of payment when e-shopping. 40% of analyzed e-traders claim that the main barriers on the side of demand is the fear of the unknown, while financial illiteracy is present in 6% of cases. As a result, it is necessary to create awareness among consumers that the electronic payment is present and secure and to accentuate all the positives. It has already been mentioned that certain sections of the public portal and the e-Buyers Guide would be dedicated to electronic payment. It would be explained there how these systems work, how to protect themselves, who and how uses data, etc. Another mentioned incentive measure is the granting of subsidies for courier services to the e- customers who make payments electronically. Electronic payment, with an emphasis on card payment, would certainly be one of the topics of the media campaign, as well as in other accompanying media messages. It is necessary for this topic to be present in mass communication channels such as TV, billboards, etc. In this way, awareness is created in a population with insufficiently developed technological knowledge. Banks would also play an important role in this activity, because they could accentuate the benefits of electronic payment and the benefits of using this form of payment in e-commerce, when opening accounts to new customers and they could inform the existing ones about the benefits of the electronic payment.

2. POPULARIZATION OF PAYING BILLS ELECTRONICALLY

As it has already been mentioned, one of the recommended measures is the granting of subsidies for courier services to e-customers who make payments electronically. In addition, as discussed earlier there should be the option of paying customs duties electronically. Additionally, it is proposed to introduce the possibility of electronic payment for all the public services at national and local level, both electronically, e.g. when using eGovernment, and by card, on the location, e.g. in the municipalities. For paying bills electronically, it should be allowed an additional 10% discount, for the period of, for example, 3 months. The aim is to maximize the payment of bills electronically, thus overcoming the fear of cashless transactions.

3. INTRODUCTION OF THE POSSIBILITY THAT THE SELLER RECEIVES PAYMENTS FROM FOREIGN BUYERS IN A FOREIGN CURRENCY

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During the in-depth interviews, electronic traders who sell goods to the international buyers have noted that they receive payments from foreign customers in dinars rather than in foreign currencies. Banks justify this by technical/software inability. Banks should be influenced on in order to allow this form of payment, so that sellers do not suffer from losses due to exchange differences.

4. INCREASING THE SECURITY FOR THE CUSTOMER - THE POSSIBILITY THAT PAYMENTS ARE MADE ONLY AFTER THE BUYER CONFIRMS THAT HE/SHE HAS RECEIVED ADEQUATE GOOD/SERVICE

The primary purpose of this measure is to increase security in e-shopping and to reduce the risk of e- shopping for the customer. As many as 18% of e-shoppers do not have trust in e-commerce, while 71% of respondents do not buy online because they do not want to buy something that they cannot see or try. These are significant constraints on the further development of e-commerce, both in terms of number of users and in terms of average transaction, i.e. people's willingness to buy more expensive, complex products online. One solution of customers' protection is the deferred payment, until buyers are convinced that they have received quality goods. This option is one of the most important for the e- commerce respondents and is rated 4.3 (4.5 for the more affluent respondents), while non-online respondents rated their willingness to start shopping online, if offered this option, with 3.5 (3.8 for Belgrade respondents and 3.9 for more affluent respondents). What is important to note is that this option is particularly significant to respondents with above-average incomes. This is a market segment that is important for the further development of e-commerce, because it is these people who are the most willing to expand the range of the products they buy online, as well as part of their budget. Security and building a positive e-shopping perception with these people is essential.

It is suggested to introduce the possibility of electronic funds transfer realization only after the e-buyer confirms that he/she has received the goods/service and is satisfied, i.e. that they will not use the reclamation. This option would be offered by banks, and interested e-traders would have the discretion to use it if they want to raise their own competitive advantage.

5. ENCOURAGING BANKS TO PROVIDE SUPPORT FOR STARTING OR DEVELOPING AN ONLINE BUSINESS

Banks have an interest in developing e-commerce because that way they expand their customer base. There have already been initiatives that the bank covers all or part of the cost of developing a website or other segment of an e-business concept. It is necessary to stimulate financial institutions to support the

277 start-up and development of online businesses. Banks have multiple influences in this regard. Certan banks, such as SoGe Bank, which offers payment service, monthly online store maintenance for customers (RSD 1000), as well as iPAY services, instant payments, QR codes payments, with certain innovations in the fintech business, as well as Raifeissen Bank, which offers to its clients, but also to interested parties, an opportunity of using their online retail platform, with accompanying digital, advisory and analytics services, represent positive examples when it comes to indirect support for e-business development. In addition, banks can play a more direct role through more favorable financing of such entrepreneurial ventures. It is necessary to actively involve banks in certain activities mentioned earlier, as active partners in the development of e-commerce in Serbia. Banking incentives should be non-financial, such as accessing and participating in media campaigns and advertising efforts.

278

VI MEASURE 5. STRENGTHENING THE CAPACITIES OF INSPECTION AUTHORITIES RESPONSIBLE FOR SUPERVISION IN THE AREA OF ELECTRONIC COMMERCE

E-commerce is very sensitive to question of security. Therefore, it is very important to ensure adequate behavior of bisuness participants in the electronic market game. Further text provides a set of measures for strengthening the capacities of inspection authorities responsible for supervision in the area of e- commerce

Table 8. Summary of activities for strengthening the capacities of inspection authorities responsible for supervision in the area of e-commerce

Responsible Activity Partners Deadline bodies

5. Revision and modification of e-commerce checklists, External End of MTTT taking into account the specifics of e-retail partners 2019.

6. Creating a guide, for market inspection, for the External implementation of regulations in the field of e- MTTT partners June 2020. commerce (USAID)

External 7. Educational program on electronic commerce for the MTTT partners 2020. market inspection (USAID)

8. Formation of e-commerce unit of market inspection MTTT 2020.

279

1. REVISION AND MODIFICATION OF E-COMMERCE CHECKLISTS, TAKING INTO ACCOUNT THE SPECIFICS OF E-RETAIL

E-commerce checklists are very important and should be adjusted / developed so they could to meet the requirements imposed by modern e-commerce. It is imperative that there is an adequate e-commerce control framework in order to reduce the presence of e-merchants that damage the image of e-commerce in Serbia. However, adequate checklists are required which would not slow down/stifle healthy e- businesses.

2. CREATING A GUIDE, FOR MARKET INSPECTION, FOR THE IMPLEMENTATION OF REGULATIONS IN THE FIELD OF E-COMMERCE

A document that would serve as educational material for market inspectors for better and more effective carrying out controls would be created. The document would emphasize the following elements:

• Specificities of e-commerce: here the focus would be on reviewing all potential direct and indirect participants in an e-transaction, as well as the modalities of their interactions. The point is for inspectors to become familiar with all the legal specifics of e-commerce, as well as the real challenges, such as internet scams, data misuse or market position, etc.

• Control implementation: The specifics of e-commerce require a special approach for conducting the inspection itself, from false online identities, delivery control addresses, payment methods and the process of spotting, recording and sanctioning violations. This part of the Guide would focus on reviewing all the key points in this regard.

• Spotting the Problems: In addition to the notifications and reports from citizens or companies, inspectors need to be proactive in identifying problematic e-commerce situations. This refers primarily to spotting retailers in the gray zone, primarily those who sell through social networks, but also controlling consumer reviews and spotting potential negative trends. Another useful element would be to work with consumer advisors.

• Communication: This section would explain the inbound and outbound communication of the Market Inspectorate. Inbound communication is an analysis of how interested users can contact the Inspectorate. The emphasis would be on the formation of official channels on social networks, as well as a part of the public portal intended for this.

All segments would also have multimedia content. This is very important because in this way inspectors can see and feel the dynamics of certain specific situations or challenges.

280

3. EDUCATIONAL PROGRAM ON ELECTRONIC COMMERCE FOR THE MARKET INSPECTION

In addition to the aforementioned Guide, it is necessary to organize specialized courses for E-Commerce Market Inspectors. The emphasis would be on gathering theoretical knowledge and topicality from a dynamically and rapidly changing field, as well as practical skills such as communication with people in a digital environment, sorting reviews, recognizing market signals, spotting the gray economy, and the like. These programs would be organized once or twice a year, but continuously, due to the dynamic nature of the e-commerce field.

4. FORMATION OF E-COMMERCE UNIT OF MARKET INSPECTION

It is necessary to set up a special e-commerce unit within the market inspection. This step would lead to specialization of employees in this unit and an exclusive focus on e-commerce, adequate allocation of necessary resources, avoidance of hierarchical conflicts of jurisdiction, market recognition, efficiency and speed of communication (necessity in the digital environment), as well as to the development of specialized procedures and regulations.

281

VII MEASURE 6. IMPROVEMENT OF COOPERATION BETWEEN THE KEY STAKEHOLDERS - STATE INSTITUTIONS, ECONOMY AND ACADEMIA, WITH THE AIM OF DEVELOPING E-COMMERCE IN REPUBLIC OF SERBIA

Table 9. Summary of activities for improving cooperation between key stakeholders

Activity Responsible bodies Partners Deadline

4. Supporting international and Ecommerce Continuous national conferences on electronic MTTT Association, activity commerce Faculties

5. Analysis of existing academic Universities, The Ministry of programs in order to introduce e- Education, Science and MTTT 2020. commerce into study programs Technological Development

Universities, The Ministry of 6. Inclusion of e-commerce in the 2020. and Education, Science and MTTT university programs further Technological Development

1. SUPPORTING INTERNATIONAL AND NATIONAL CONFERENCES ON ELECTRONIC COMMERCE

Large international and domestic conferences sponsored by the MTTT, the E-Commerce Association or some other significant institution could influence the promotion of e-commerce. The aim of this activity is to actualize e-commerce as a relevant and propulsive economic activity in Serbia. It is necessary to include a large number of official stakeholders, such as state institutions, Chamber of Commerce and Industry of Serbia and similar.

282

2. ANALYSIS OF EXISTING ACADEMIC PROGRAMS IN ORDER TO INTRODUCE E-COMMERCE INTO STUDY PROGRAMS

It is necessary to carry out an analysis of the existing academic programs, primarily in the fields of economics and business management, as well as other programs that cover these fields. The aim is considering the possibilities and possible ways of introducing subjects such as e-commerce, e-commerce, digital marketing, e-commerce management, etc. It is necessary to introduce subjects like these into the study programs, given that there is an evident lack of high-quality, well-educated working staff. In this way, modern business achievements would be updated by academic recognition and adjustment of study profiles.

3. INCLUSION OF E-COMMERCE IN THE UNIVERSITY PROGRAMS

The formation of working staff which is trained in e-commerce is very important for the development of e-commerce. The lack of quality staff who is familiar with e-commerce is evident in the market, especially those who own both business and IT dimensions. Creating and strengthening directions at the universities that have a component of electronic business and e-commerce itself is very important. Here the focus would primarily be on the basic level of studies, with the creation of specialized courses for the certain specific aspects of e-commerce at master and doctoral studies.

283

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288

APENDIX

289

Questionnaire No. ______

I APENDIX A – QUESTIONNAIRE FOR GENERAL POPULATION: ONLINE COMMERCE IN SERBIA

Good afternoon. My name is _____. This survey is a part of the Project for cooperation and development funded by the USAID. We currently conduct a survey among adult citizens, with topic of online trade, i.e. buying and selling over the Internet. It would be very important to us to hear the opinion of your company.

Your answers are confidential and will not be published individually within the research findings. The interview will take between 10 and 15 minutes. Do you have time to answer the questionnaire? Your answers will remain completely anonymous and will be used in statistical purposes only. They will be kept for 3 years. You can refuse to answer a question at any stage or terminate the interview altogether. At any time, you can require deleting your personal data afterwards.

Do you agree with these conditions?

1. Yes

2. No

If there are any comments, please write them down here: 290

Questionnaire No. ______

Section Q – General information- Base: all respondents

Interviewer: Date: Q1 Q2

How old are you?

1. 18 – 24 Gener of the respondent: 2. 25 – 34 1. Male Q3 Q4 3. 35 – 44 2. Female 4. 45 – 54

5. 55 – 64

6. 65+

Do you use the Internet?

Q5 In which municipality do you live?: ______Q6 1. Yes

2. No

291

Questionnaire No. ______

SCRIPTER: If Q06=2 => SCREENOUT

292

Questionnaire No. ______

Section A: Habits in the Internet usage - Base: all respondents

A1 A2 A3

How often do you use the Internet? On what devices do you use the How often do you visit the following content on the Internet? Internet?

INTERVIEWER: READ INTERVIEWER: READ THE ANSWERS ONE BY ONE. INTERVIEWER: READ THE ANSWERS. SINGLE THE ANSWERS. MARK ANSWER. ALL THAT RESPONDENT SAYS.

1. Every day a. Mobile phone _____ Social networks (Facebook, Instagram, Twitter, LinkedIn itd.) 2. Several times a week 3. Once a week b. Desktop computer _____ Official websites of FMCG retail chains 4. Several times a month 5. Once a month c. Lap top/ Netbook/ _____ Official websites of retailers selling technique and technology 6. Less that that Notebook _____ Official websites of other companies (clothes, footwear, sports equipment, baby d. Tablet equipment, cosmetics products, accessories, air companies, travel agencies, movies and theatres, furniture and household equipment etc.) e. Other, what? [O] _____ Group purchase websites (for purchasing vouchers for products/services), such as: Grupoman, Kupoman etc.

_____ Websites specialized in online shopping (Limundo, Kupindo, Ali Express, Alibaba, Amazon etc.)

_____ Websites specialized in searching, booking or buying accommodation (Booking, AirBnb etc.)

_____ Regular websites of electronic traders

1. Every day 2. Several times a week 3. Once a week 4. Several times a month 5. Once a month 6. Less that that 7. I don’t visit at all

293

Questionnaire No. ______

A4 A5

Have you bought ANYTHING over the Internet over the last 6 How often do you practice the following activities? months? Please have in mind all categories we mentioned in the previous question. So, we’re interested to find out have you bought 1. I never do that any product or service online over the last 6 months. 2. I rarely do that

3. I sometimes do that

4. I do that very often

5. I always do that

INTERVIEWER: READ THE ANSWERS ONE BY ONE.

1. Yes _____ I search the Internet for the information on products I’m interested in and also buy them over the Internet

2. No _____ I search the Internet for the information on products I’m interested in, but I buy them in traditional (offline) stores

_____ I search for the information on products I’m interested in in offline stores, but I buy them over the Internet

_____ I search for the information on products I’m interested in in offline stores, and also buy them there

Section A: Habits in the Internet usage

A6- before B3 A7 Base: all respondents A8 Base: all respondents

If A4=1, Where on the Internet do you purchase Where on the Internet do you search for the information on Have you ever heard of blockchain technology? products/ services? products/ services? INTERVIEWER: DON’T READ THE ANSWERS

294

Questionnaire No. ______

INTERVIEWER: READ THE ANSWERS. INTERVIEWER: READ THE ANSWERS.

SCRIPTER: Multiple answers SCRIPTER: Multiple answers

a. Social networks a. Social networks 1. Yes b. Websites b. Websites 2. No c. Mobile application c. Mobile application 3. I’m not sure

A9 Base: all respondents A10 Base: all respondents

If A8=1, Can you explain in a simple way what Have you ever heard of smart contract? blockchain technology is?

1. Yes 1. Yes

2. No 2. No

3. I’m not sure

295

Questionnaire No. ______

Section B: Online customers – attitudes, habits, barriers, incentives IF A4=1

B1 B2 B3

In general, how often do you No matter of the purchase frequency, what do you purchase most often Over which websites do you purchase most often? purchase over the Internet? over the Internet?

INTERVIEWER: READ THE ANSWERS. MARK ALL THAT RESPONDENT INTERVIEWER: READ SAYS. PLEASE READ LISTED OPTIONS CAREFULLY AND TRY TO INTERVIEWER: READ THE ANSWERS. MARK ALL THAT THE ANSWERS. RECORD RESPONDENT’S ANSWER UNDER SOME OF THEM. IN CASE RESPONDENT SAYS. SINGLE ANSWER. IT IS STILL NOT ON THE LIST, WRITE IT DOWN IN THE FIELD “Other”.

296

Questionnaire No. ______

1. Rarely a. Food products a. Individual sellers on Facebook, Instagram, etc. 2. Occasionally b. Clothes, footwear, sports equipment b. Facebook, Instagram profile of store, boutique offering online sales 3. Regularly c. Technique and technology (big and small home appliances, c. Websites of retailers who have offline retail stores audio and/or video equipment, mobile phones, music etc.) d. Domestic websites specialized in intermediation between sellers and d. Products and/or equipment for babies and kids customers (KupujemProdajem, Limundo etc.) e. Cosmetics, products for personal care e. Foreign websites specialized in intermediation between sellers and customers f. Home cleaning products (Ebay, AliExpres, etc.) g. Accessories (jewelry, bags, glasses, mobile phone f. Websites of domestic electronic retailers (they don’t have offline retail equipment, etc.) stores, or you don’t know they have them) h. Travel arrangements g. Websites of foreign electronic retailers (they don’t have offline retail stores, i. Air and/or other travel tickets or you don’t know they have them) j. Books h. Websites specialized in service purchasing (e.g. searching, booking or buying k. Tickets for movies, theatres, tourist attractions etc. accommodation, air tickets etc. - Booking, AirBnb etc.) l. Furniture, household equipment i. Group purchase websites (for purchasing vouchers for products/services), m. Products and/or equipment for car, bike, motorcycle such as: Grupoman, Kupoman etc. n. Accommodation in the country or abroad j. Other, what? o. Other, what?

Section B: Online customers – attitudes, habits, barriers, incentives IF A4=1

B4 B5

No matter whether you have ever bought anything from them, tell me please to what extent do you believe to What is the main reason why you purchase online? the following categories of online sellers, i.e. electronic traders? Use a scale from 1 to 5, where 1 means not at all and 5 means completely believe. SCRIPTER: Top of mind

297

Questionnaire No. ______

INTERVIEWER: DON’T READ THE ANSWERS. MARK THE INTERVIEWER: READ THE ANSWERS ONE BY ONE. FIRST ANSWER OF THE RESPONDENT. a. Individual sellers on Facebook, Instagram, etc. b. Facebook, Instagram profile of store, boutique offering online sales c. Websites of retailers who have offline retail stores d. Domestic websites specialized in intermediation between sellers and customers (KupujemProdajem, Limundo etc.) e. Foreign websites specialized in intermediation between sellers and customers (Ebay, AliExpres, etc.) f. Websites of domestic electronic retailers (they don’t have offline retail stores, or you don’t know they have them) g. Websites of foreign electronic retailers (they don’t have offline retail stores, or you don’t know they have them) h. Websites specialized in service purchasing (e.g. searching, booking or buying accommodation, air tickets etc. - Booking, AirBnb etc.) i. Group purchase websites (for purchasing vouchers for products/services), such as: Grupoman, Kupoman etc. j. Other, what?

1. I don’t believe at all 2. I mainly don’t believe 3. I neither believe nor disbelieve 4. I mainly believe 5. I completely believe 6. Don’t know/ refuse (DON’T READ)

298

Questionnaire No. ______

Section B: Online customers – attitudes, habits, barriers, incentives IF A4=1

B6 B7 B8

Are there any other reasons? I’m going to read some more reasons why people buy online. Do you recognize your reasons among them? What is the highest amount in RSD that you’re ready to SCRIPTER: Spontaneous SCRIPTER: Spontaneous awareness. Don’t show TOM reason, spontaneous reasons allocate for one online purchase? awareness. Don’t show and option “Other TOM reason.

INTERVIEWER: DON’T READ THE ANSWERS. INTERVIEWER: READ THE ANSWERS. MARK ALL THAT RESPONDENT SAYS. MARK ALL THAT RESPONDENT SAYS.

299

Questionnaire No. ______

a. Time saving b. Money saving c. Greater choice of products and services d. It’s practical – comparison of different offers in a very short time e. There is no physical effort f. Delivery to the preferred address g. I can easily obtain products from abroad that are not available in Serbia h. Anonymity i. Other, what? j. None of the above

B9 B10 B11

300

Questionnaire No. ______

Although you already purchase IF B9=1, What do you worry about or don’t like in online purchase? Do you have any negative experience in online online, is there something you purchase so far? worry about or don’t like in this type of purchase?

1. Yes INTERVIEWER: READ THE ANSWERS. MARK ALL THAT RESPONDENT SAYS. TRY TO RECORD 1. Yes RESPONDENT’S ANSWERS UNDER GIVEN OPTIONS. IN CASE THEY ARE STILL NOT ON THE LIST, 2. No WRITE THEM DOWN IN THE FIELD “Other”. 2. No

a. Customs procedure b. Frequent lack of goods in stock c. Distrust in online purchase d. Language barrier e. Poor offer/ assortment f. Low quality of goods g. Violation of privacy / possible misuse of data (name and surname, address, payment card, etc.) h. Insufficient familiarity with competent authorities in case of problems i. Incomplete on incorrect information about product/ service j. Unreliable delivery/ courier service k. Unfamiliarity with legal regulation and online customer’s rights l. Unclear websites m. Unresolved rules of reclamation or return of goods n. Available payment options o. Fees and other similar financial costs p. Expensive delivery q. High prices of goods r. Fear that packet will not arrive s. Fear that wrong packet will arrive t. Other, what?

301

Questionnaire No. ______

Section B: Online customers – attitudes, habits, barriers, incentives IF A4=1

B12 B13

302

Questionnaire No. ______

IF B11=1, What was the reason for such experience? To what extent would each of the following factors affect you to buy more frequently over the Internet? Use a scale from 1 to 5 where 1 means not at all, and 5 means it would strongly affect.

INTERVIEWER: READ THE ANSWERS ONE BY ONE.

303

Questionnaire No. ______

INTERVIEWER: READ THE ANSWERS. MARK ALL THAT RESPONDENT SAYS. TRY TO _____ Possibility of payment non-realization until customer sees the goods, i.e. possibility to get RECORD RESPONDENT’S ANSWERS UNDER GIVEN OPTIONS. IN CASE THEY ARE STILL reserved funds back (in case of payment by card) NOT ON THE LIST, WRITE THEM DOWN IN THE FIELD “Other”. _____ Precise legal regulations about obligations of electronic traders

_____Additional education and better informing about online customer’s rights through media a. Customs procedure campaigns b. Due payment amount c. Language barrier _____Possibility for customer to remain anonymous d. Low quality of delivered goods e. Violation of privacy/ misuse of data (name and surname, address, payment card, etc.) _____ Existence of unique e trust mark issued by the government to e-traders who meet required f. Inability to reclaim or return goods criteria g. Incomplete on incorrect information about product/ service h. Unreliable, untested seller _____Defining clear rules and obligations for courier services i. Unreliable courier service j. Unclear website of seller _____Possibility to take goods afterwards in premises of courier service k. Available payment options l. I waited too long for a delivery _____Lower costs of delivery m. Goods have never arrived/ wrong product arrived n. Packet was delivered in work time, none couldn’t receive it _____Better online offer of regular retailers (those who have offline retail stores) o. Other, what? _____Longer working hours of courier services

_____Available reviews about products/ services made by previous customers

_____Possibility to return or change the goods in the nearest store of the retailer

_____Purchase assistance (e.g. chat)

_____Positive experience of close people

1. It wouldn’t affect at all

2. It mainly wouldn’t affect

3. Neither would, nor would not affect

4. It mainly would affect

5. It would strongly affect

6. Don’t know/ refuse

304

Questionnaire No. ______

305

Questionnaire No. ______

Section B: Online customers – attitudes, habits, barriers, incentives IF A4=1

B14 B15 B16 B17

How familiar are you with your Is there any regulatory barrier whose resolving If B15=1, Please indicate the concrete regulatory All in one, to what extent do you believe in online rights in online purchase? would improve e-commerce in Serbia? barrier whose resolving would improve e- purchase? Use a scale from 1 to 5, where 1 means commerce in Serbia. very little, and 5 means completely.

INTERVIEWER: READ THE INTERVIEWER: READ THE ANSWERS. ANSWERS. SINGLE SINGLE ANSWER. ANSWER.

306

Questionnaire No. ______

1. I’m not familiar at all 1. Yes 1. Very little 2. Little 2. I’m mainly not familiar 2. No 3. Partially 4. Quite a lot 3. I’m neither familiar nor 3. I’m not sure 5. Completely unfamiliar 6. Don’t know/refuse (DON’T READ)

4. I’m mainly familiar

5. I’m very familiar

6. Don’t know/refuse (DON’T READ)

307

Questionnaire No. ______

B18

Which of the following statements describes you the best?

SCRIPTER: After this question, go to C9 and then to Section D.

INTERVIEWER: READ THE ANSWERS. SINGLE ANSWER.

1. I rather purchase online than in traditional way 2. I give priority to traditional way of purchase 3. It’s the same to me 4. Don’t know/refuse (DON’T READ)

308

Questionnaire No. ______

Section C: Respondents who don’t purchase online – attitudes, barriers, incentives

C1 C2 C3 C4

IF A4=2, Have you ever IF A4=2, What is the main reason why IF A4=2, Are there any other reasons? IF A4=2, I’m going to read some more reasons why people don’t bought anything over the you don’t purchase/ rarely purchase over SCRIPTER: Spontaneous awareness. buy online. Do you recognize your reasons among them? Internet? the Internet? Don’t show TOM reason SCRIPTER: Spontaneous awareness. Don’t show TOM reason, spontaneous reasons and option “Other”. SCRIPTER: Top of mind

INTERVIEWER: DON’T READ INTERVIEWER: DON’T READ THE INTERVIEWER: READ THE ANSWERS. MARK ALL THE ANSWERS. MARK THE ANSWERS. MARK ALL THAT THAT RESPONDENT SAYS. FIRST ANSWER OF THE RESPONDENT SAYS. RESPONDENT.

1. Da a. Language barrier b. Poor assortment 2. Ne c. Negative experience of other people, negative media articles (e.g. instead of laptop, log was delivered) d. Negative previous experience e. In case of changing or returning, procedure takes too long f. I wouldn’t know whom to contact in case of problems g. I’m not familiar enough with new technologies (computers, the Internet) h. I don’t want to buy something I cannot see or check i. I’m not enough familiar with online purchase, I’m afraid I’ll be cheated j. I’m not used to that, I’m not interested k. Lack of trust in online sales in regard of goods quality l. Lack of trust in online sales in regard of payment m. Lack of trust in courier services n. Lack of trust in courier in electronic traders o. Fear of data misuse (name and surname, address, payment card etc.) p. It’s expensive q. I love to visit stores, I enjoy traditional way of purchase r. Other, what?

309

Questionnaire No. ______

C6- respondents who didn’t mark C5 C7 option 3 on C2, C3 or C4

IF A4=2 Have you recently seen IF A4=2, What experience in online IF A4=2, To what extent would each of the following factors affect you to start to purchase over the Internet? some online offer that drew your purchase do people in your surrounding Use a scale from 1 to 5 where 1 means not at all, and 5 means it would strongly affect. attention, but you still gave up the have? Use a scale from 1 to 5, where 1 purchase for reasons you means very negative and 5 means very mentioned? positive.

INTERVIEWER: READ THE ANSWERS ONE BY ONE.

310

Questionnaire No. ______

1. Yes 1. Very negative _____ Possibility of payment non-realization until customer sees the goods, i.e. possibility to get reserved funds back (in case of payment by card) 2. No 2. Negative _____ Precise legal regulations about obligations of electronic traders 3. Neither negative nor positive _____Additional education and better informing about online customer’s rights through media campaigns 4. Positive _____Possibility for customer to remain anonymous 5. Very positive _____ Existence of unique e trust mark issued by the government to e-traders who meet required criteria 6. Don’t know/refuse (DON’T READ) _____Defining clear rules and obligations for courier services

_____Possibility to take goods afterwards in premises of courier service

_____Better offer

_____Lower costs of delivery

_____Better online offer of regular retailers (those who have offline retail stores)

_____Longer working hours of courier services

_____Available reviews about products/ services made by previous customers

_____Possibility to return or change the goods in the nearest store of the retailer

_____Purchase assistance (e.g. chat)

_____Positive experience of close people

_____ Other, what?

1. It wouldn’t affect at all

2. It mainly wouldn’t affect

3. Neither would, nor would not affect

4. It mainly would affect

5. It would strongly affect

311

Questionnaire No. ______

6. Don’t know/ refuse

Section C: Respondents who don’t purchase online – attitudes, barriers, incentives

C8 C9 All respondents

312

Questionnaire No. ______

IF A4=2, How likely are you to start to purchase over the Internet in Have you ever sold anything over the Internet? the future? Use a scale from 1 to 5, where 1 means not likely at all and 5 means very likely.

313

Questionnaire No. ______

1. Not likely at all 1. Yes

2. Not likely 2. No

3. Nether likely nor unlikely

4. Likely

5. Very likely

6. Don’t know/refuse (DON’T READ)

314

Questionnaire No. ______

Section D: Demography

D1 base: all respondents D2 base: all respondents D3 base: respondents with code 1 or 2 on D2 D4 base: all respondents

What is your current level of Your employment status? In which industry do you work? Household size including the education (the last completed respondent. school)?

INTERVIEWER: READ THE INTERVIEWER: READ INTERVIEWER: READ THE ANSWERS INTERVIEWER: READ THE ANSWERS ANSWERS THE ANSWERS

315

Questionnaire No. ______

1. Uncompleted or 1. Employed (full-time or part-time job) 1. Construction 1. 1 member completed primary school 2. Self-employed 2. Manufacturing 2. 2 members 2. High school (3 or 4 years) 3. Currently unemployed but looking for a 3. Agriculture 3. 3 members 3. Higher school and job university degree (including MA, PhD 4. Trade 4. 4 members 4. Agriculturist, farmer 4. Don’t know/ refuse to 5. Transportation, communication and other service sectors 5. 5 and more members answer (DON’T READ!) 5. Retired 6. Banking, finance 6. Don’t know/ refuse to 6. Student answer (DON’T READ!) 7. Education 7. Don’t know/ refuse to answer (DON’T READ!) 8. Health

9. Security sector

10. Government

11. Military

12. Other

13. Don’t know/ refuse to answer (DON’T READ!)

316

Questionnaire No. ______

D5 base: all respondents D6 base: all respondents D7 base: all respondents

Personal monthly income. Monthly income per household member. Settlement size.

INTERVIEWER: READ THE INTERVIEWER: READ THE ANSWERS INTERVIEWER: READ THE ANSWERS. ASK FOR ANSWERS APPROXIMATE ESTIMATION. IF RESPONDENT LIVES IN VILLAGE, IT IS ALWAYS CODE 1.

317

Questionnaire No. ______

1. No income 1. No income 1. Up to 5.000 inhabitants

2. Up to 5.000 RSD 2. Up to 5.000 RSD 2. 5.001 to 10.000

3. 5.001 to 10.000 RSD 3. 5.001 to 10.000 RSD 3. 10.001 to 20.000

4. 10.001 to 20.000 RSD 4. 10.001 to 20.000 RSD 4. 20.001 to 50.000

5. 20.001 to 30.000 RSD 5. 20.001 to 30.000 RSD 5. 50.001 to 100.000

6. 30.001 to 40.000 RSD 6. 30.001 to 40.000 RSD 6. 100.001 to 150.000

7. 40.001 to 50.000 RSD 7. 40.001 to 50.000 RSD 7. 150.001 to 250.000

8. 50.001 to 70.000 RSD 8. 50.001 to 70.000 RSD 8. More than 250.000

9. 70.001 to 100.000 RSD 9. 70.001 to 100.000 RSD

10. More than 100.000 RSD 10. More than 100.000 RSD

11. Don’t know/ refuse to 11. Don’t know/ refuse to answer (DON’T answer (DON’T READ!) READ!)

318

Questionnaire No. ______II APENDIX B – QUESTIONNAIRE FOR BUSINESS RESEARCH: ONLINE COMMERCE IN SERBIA

Good afternoon. My name is _____. This survey is a part of the Project for cooperation and development funded by the USAID. We currently conduct a survey among business entities, on topic of online trade, i.e. buying and selling over the Internet. It would be very important to us to hear the opinion of your company.

If there are any comments, please write them down here:

Do you agree with these conditions?

1. Yes

2. No

Section A – General information about a company all respondents

Interviewer: A1 A2 Municipality of company operations:

319

Questionnaire No. ______

What is your position within the company?

1. Owner, Coowner

Date: 2. Director A3 A4 3. Electronic/Online Trade Manager

4. Other employees competent for survey topic

INTERVIEWER: READ ANSWERS.

Section B: General perception of online commerce

B1 all respondents B2 B3

Does your company offer If B1=2, Why doesn’t your company offer online/Internet sales of its products or services? If B1=2, Which of the following measures could convince you to online/Internet sales of its consider launching online sales? products or services? SCRIPTER: Rotate answers except the last one SCRIPTER: Rotate answers except last two of them

INTERVIEWER: DON’T READ ANSWERS. WRITE DOWN EVERYTHING THAT INTERVIEWER: READ ANSWERS. WRITE DOWN RESPONDENT MENTIONS. PLEASE READ LISTED OPTIONS CAREFULLY AND EVERYTHING THAT RESPONDENT MENTIONS TRY TO RECORD RESPONDENT’S ANSWER UNDER SOME OF THE. IN CASE IT IS STILL NOT ON THE LIST, WRITE IT DOWN IN THE FIELD “Other”.

320

Questionnaire No. ______

1. Yes a. General distrust in online sales a. Organized education for potential e-traders b. Distrust in financial service providers and payment methods for online commerce b. Financial subsidies for e-traders 2. No c. The costs of creating and maintaining the site/ platform for online sales c. Help in defining business strategy d. Lack of a clear legal framework on online commerce d. Technology assistance (web site development, e. Unreliability and costs of courier services appropriate platform development, etc.) f. Limited company capacities (financial capacities, human resources, etc.) e. Creating an e-commerce guide g. Small customer demand f. Additional education and better informing of h. We don’t have a need for online sales potential customers through the media B1a. Does your i. High bank commissions g. Defining clear rules and obligations for courier company have sales j. Lack of adequate Internet connection services, banks and other service providers facilities? k. Inability to use online payment options h. Precise legal regulations aimed at suppressing the l. Inability to synchronize and update online offerings and inventory status gray economy in e-commerce 1. Yes m. Problems related to foreign exchange operations i. Existence of a call center supported by the n. Customs barriers Ministry where people will be able to get all 2. No o. Competition does not use e-sales necessary information p. There is too much international competition in e-sales j. Existence of an arbitrary body for out-of-court q. Developed domestic competition in e-commerce settlement of potential disputes in e-commerce r. Other, what? k. Introduction of official certification on quality/ reliability for e-sales l. Other, what? m. None of the above

321

Questionnaire No. ______

Section B: General perception of online commerce

B4 B5

If B1=1, From the perspective of businessman, how would you rate If B1=1, How satisfied are you with the current e-commerce activity of your company? Please use the scale from 1 to 5, the importance of e-commerce in Serbia in general? Please use the where 1 means very unsatisfied, and 5 means very satisfied. scale from 1 to 5, where 1 means very low importance, and 5 means very high importance.

ANKETAR: READ ANSWERS. SINGLE ANSWER. ANKETAR: READ ANSWERS. SINGLE ANSWER.

1. Very low 1. Very unsatisfied

2. Low 2. Mostly unsatisfied

3. Neither low nor high 3. Nether satisfied nor unsatisfied

4. High 4. Mostly satisfied

5. Very high 5. Very satisfied 6. Don’t know

322

Section B: General perception of online commerce

B6 B7 B8

If B1=1, Koje godine je If B1=1, What percentage of your total sales is currently generated If B1=1 vaša kompanija razvila through online sales? Please try to give at least your rough estimation. internet prodaju? How long does your company have online Based on your previous experience, what sales? percentage of online sales is generated in each of the following ways?

SCRIPTER: SUM MUST BE 100%

ANKETAR: READ ANSWERS. SINGLE ANKETAR: READ ANSWERS. SINGLE ANSWER. ANSWER.

1. Up to 1 year 1. Less than 1% 1. Social networks (FB, Instagram etc.) 2. Between 1 2. Between 1% and 5% 2. Web sites and 3 years 3. Between 5% and 20% 3. Between 3 4. Between 20% and 50% 3. Mobile applications and 5 years 5. Between 50% and 99% 4. More than 5 6. 100% of our sales are generated through online sales years

Questionnaire No. ______

316

Questionnaire No. ______

Section C: Barriers to e-commerce B1=1

C1 C2

In your opinion, what is the biggest barrier to further And what is the biggest barrier in regard of demand i.e. What do you consider as the biggest barrier development of e-commerce in regard of supply, i.e. customers? in regard of other participants who e-traders? contribute to e-commerce implementation? inace? SCRIPTER: Top of mind SCRIPTER: Top of mind

SCRIPTER: Top of mind

INTERVIEWER: DON’T READ ANSWERS. INTERVIEWER: DON’T READ INTERVIEWER: DON’T READ ANSWERS. WRITE DOWN THE FIRST ANSWER OF ANSWERS. WRITE DOWN THE WRITE DOWN THE FIRST ANSWER OF THE THE RESPONDENT. FIRST ANSWER OF THE RESPONDENT. RESPONDENT.

317

Questionnaire No. ______

a. Lack of money a. Unreliability of courier services a. Lack of financial resources b. Insufficient technological literacy b. Too expensive parcel services in domestic traffic b. Lack of quality staff c. Distrust c. Too expensive parcel services in international services c. Lack of previous experience d. Fear of the unknown d. Lack of clearly defined legislative framework and d. Inability to track fast technological development e. Socio-demographic indicators such as education and regulations income e. Insufficient support of the e. Poor development of e-commerce market in the state country f. Fear of data misuse (first and last name, address, payment f. Banking conditions i.e. card.) payment systems f. Gray economy in e-commerce g. Terms of technological service g. Insufficient financial literacy providers (web site design, g. Poor development of multi-channel approach platforms) (combination of classic and electronic commerce) h. Language barrier h. Customs regulations i. Internet infrastructure h. Too many requirements in regard of data safety i. Poor representation of tablets and smartphones in e- j. Other commerce i. Distrust of the customers j. Infrastructural barriers, such as the inaccessibility of high- j. Other speed Internet

k. Certain geographic barriers (too expensive delivery to certain parts)

l. Other

C1a C2a C3a

318

Questionnaire No. ______

I’m going to read some barriers to further e- I’m going to read some barriers to further e-commerce I’m going to read some barriers in regard of commerce development in regard of supply, i.e. e- development in regard of demand, i.e. customers. Please other participants who contribute to e- traders. Please indicate another key barrier. indicate another key barrier. commerce implementation. Please indicate another key barrier. SCRIPTER: Maximum 1 answer. Don’t SCRIPTER: Maximum 1 answer. Don’t show TOM show TOM reason reason SCRIPTER: Maximum 1 answer. Don’t show TOM reason

INTERVIEWER: READ ANSWERS. MARK INTERVIEWER: READ ANSWERS. INTERVIEWER: READ ANSWERS. MARK ANSWER OF THE RESPONDENT. MARK ANSWER OF THE ANSWER OF THE RESPONDENT. RESPONDENT.

319

Questionnaire No. ______a. Lack of financial resources a. Lack of money a. Unreliability of courier services b. Lack of quality staff b. Insufficient technological literacy b. Too expensive parcel services in domestic traffic c. Lack of previous experience c. Distrust c. Too expensive parcel services in international services d. Inability to track fast technological development d. Fear of the unknown d. Lack of clearly defined legislative framework and e. Poor development of e-commerce market in the e. Socio-demographic indicators such as education and regulations country income e. Insufficient support of the state f. Gray economy in e-commerce f. Fear of data misuse (first and last name, address, payment f. Banking conditions i.e. card.) payment systems g. Poor development of multi-channel approach g. Terms of technological service (combination of classic and electronic commerce) g. Insufficient financial literacy providers (web site design, platforms) h. Too many requirements in regard of data safety h. Language barrier h. Customs regulations i. Internet infrastructure i. Distrust of the customers i. Poor representation of tablets and smartphones in e- j. Other commerce j. Other j. Infrastructural barriers, such as the inaccessibility of high- speed Internet

k. Certain geographic barriers (too expensive delivery to certain parts)

l. Other

Section E: Incentives B1=1

E1 E2

320

Questionnaire No. ______

In your opinion, what measures would improve further What would be the influence of the following measures on further development of e-commerce in development of e-commerce in Serbia? Serbia? Please use the scale from 1 to 5, where 1 means very small influence, and 5 means very big influence.

1. Very small 2. Small 3. Neither small nor big 4. Big 5. Very 6. Don’t know/ refuse (DON’T READ!)

SCRIPTER: Rotate answers

INTERVIEWER: READ ANSWERS ONE BY ONE.

a. Organized education for potential e-traders b. Financial subsidies for e-traders c. Help in defining business strategy d. Technology assistance (web site development, appropriate platform development, etc.) e. Creating an e-commerce guide (business, legal, technological guide) f. Additional education and better informing of potential customers through the media g. Defining clear rules and obligations for courier services, banks and other service providers h. Precise legal regulations aimed at suppressing the gray economy in e-commerce i. Existence of a call center supported by the Ministry where people will be able to get all necessary information j. Introduction of official certification on quality/ reliability for e-sales k. Other

Section E: Incentives B1=1

321

Questionnaire No. ______

E3 E4 E5 E6

Is there any regulatory If je E3=1, Please indicate the concrete Have you ever heard of If E5=1, Can you explain in a simple way what Blockchain barrier whose resolving regulatory barrier whose resolving Blockchain Technology? Technology is? would improve e-commerce would improve e-commerce in Serbia. in Serbia?

1. Yes 1. Yes 1. Yes

2. No 2. No 2. No

3. Not sure

322

Questionnaire No. ______

Section E: Incentives B1=1

E7 E8

Have you ever heard of Smart Contract? In your opinion, compared to the period of 3 years ago, are status and operations of e-commerce traders in Serbia…?

5. Yes 1. Deteriorated 6. No 2. Remained at the same level

3. Improved

323

Questionnaire No. ______

324

Questionnaire No. ______

F1 F2 F3 F4 F5 F6

Predomina What is the real main business activity The share of Total number of Total income of your How long does nt of your company? company owned employees company (according your company registered ** If a business entity has more than by women %: (according to the to the latest financial exist? business one activity, ask to cite the one that latest financial report, 000 EUR): activity generates the highest revenue in total report): income (4 digit SCRIPTER: NACE): Mark category automatically

INTERVIEWER: READ THE ANSWERS. SINGLE ANSWER.

325

Questionnaire No. ______

1) Clothes and footwear [1] >=50% 1. Up to 1. Up to 1. Up to 9 50,000€ year 2) Sportswear, footwear and [2] 1 - 49% 2. Betwe 2. Between equipment 2. Between [3] = 0% en10 50,000 and 100,000€ 1 and 3 3) Mainly food products and 49 years (FMCG) 3. 50+ 3. Between 3. Between 100,000 and 200,000€ 3 and 5 4) Technique and technology years (big and small home appliances, 4. Between computers, mobile phones, etc.) 200,000 and 300,000€ 4. Between 5 and 10 5) Other goods trade (books, 5. Between years furniture, toys, flower shops etc.) 300,000 and 500,000€ 5. More than years 6) Sports betting 6. More than 500,000€ 7) Sale of air and other travel tickets, tourist arrangements, tickets 1. Don’t know/ for various events, etc. refuse (DON’T READ!) 8) Other service trade (software, information content, various professional services etc.)

326