"clicker shock" - the hidden costs of e-commerce.

Can you now imagine a business world without the Internet? Where companies do not have web pages? Where we cannot purchase goods and services with a few clicks of the mouse? No, I didn't think so. There is no getting away from the fact that the role of e-commerce and the Internet in both homes and businesses has become momentous.

In the business world the Internet has had another, less obvious role and that is to level the playing field. For companies of any size and in any location, the Internet is key to transcending physical borders and boundaries. It is easy to buy and sell goods over the Internet, no matter where customers or companies are based. Yet, despite the fact that the Internet allows global access to products and services, behind the simplicity of the look, click and buy process, e-commerce is not without serious hidden costs and pitfalls.

Although our orders can make their way across the world in a split second, we have not yet invented a way to transport goods quite so easily. In fact, it is becoming increasingly clear that if any factor will make or break an international e-commerce company, it is the logistics aspect.

The reason logistics is so complex lies with the 230 sovereign states in the world, each setting their own individual roles and regulations, charges and tariffs when goods cross over their borders. When customers make a purchase from abroad over the Internet, they become the importer of that good, and therefore liable for any of the shipping, duty, tax and other fees applicable.

This means that very often the price of goods quoted on the website is no guarantee that this is the total `landed cost' customers will end up paying. In fact, the `landed cost' of a product can often exceed the value of the goods being purchased. This leads to the phenomenon of `clicker shock'. Whilst not fatal it is certainly frustrating for Internet consumers to find, on receiving their goods, that the cost was a great deal more than they anticipated.

Some online retailers warn their customers of this problem upfront. For example, Jungle.com's web site states: "Please note, that you may be liable for customs duties on your order when it reaches your country. We do not collect or control these charges, and we cannot predict what they will be." Other online retailers, state explicitly that they will not ship to overseas destinations, or that customers overseas must by-pass the web and conduct business in the old-fashioned way over the telephone. Surely this defeats the purpose of the Internet?

It could even be the case that it is illegal to import a particular product into the country. A famous example of this is the recent story of the customer in Germany who ordered a copy of Adolf Hitler's book, "Mein Kampf' from an online bookstore. The book was duly shipped from the US, but when it arrived in German customs, it came to light that the book was in fact banned in Germany. As the small print on the company's website states: "You are considered the importer of record and must comply with all laws and regulations of the country in which you are receiving the goods." How many people really know exactly what they can and cannot import into their countries?

The business perspective is equally important, `clicker shock' is not a phenomenon unique to the consumer market. It affects the business-to-business market as well and the sums of money involved are likely to be a great deal larger. Moreover, `clicker shock' can significantly damage the bottom line of online retailers themselves. If you, as the Internet customer discovered too late that the cheap deal you secured online is not quite the bargain you anticipated, you would almost certainly feel misled by the company you made your purchase from. Would you ever buy anything from that site again? It's unlikely. Worse still, you are likely to tell your friends and colleagues about your negative experiences.

Ultimately, if you return the goods then the merchant ends up paying the charges. For this reason, merchants also need to know the exact landed cost of goods to avoid over or under-pricing of their goods and therefore prevent legal battles when `landed-cost price shock' leads customers to refuse shipment. In fact one of our clients calculated that, in a particular year, the company had spent close to US $5 million in export trade costs that it had not budgeted for. For a company of any size, `surprise' costs of this magnitude are a huge burden to bear and an accounting nightmare.

In summary, clicker shock can lead to low levels of repeat purchases, high return rates and damage to the company's reputation. It is therefore essential that companies adapt to the new world of e-commerce and offer customers realistic quotes, delivery dates and be in a position to state what they can and cannot export to particular countries. There are solutions to address these issues and, before long, online customers will expect this level of information. Those companies that don't will face losing out in the e-commerce race.

ClearCross has developed Internet engines for total landed cost, compliance and export documentation solutions. www.clearcross.co.

David Roots, Clear Cross Europe