How the FIC creates hitherto unsolvable problems for online food retailers
The European Union’s Food Information to Consumers (FIC) Regulation No. 1169/2011 is one of the central legal frameworks that govern food retailing. Since December 13, 2014 it has regulated for all EU member-states the product information with which retailers are required by law to provide the consumer. Online food retailers in particular, however, are not yet able to comply with all of the FIC’s requirements in detail.
The FIC has been in force for nearly three years. Over this period it has made a valuable contribution toward creating the transparency that is required in the food sector to enable consumers to make a soundly based purchasing decision. Food retailers are obligated, for example, to notify their customers before they buy of the composition of ingredients, possible allergens, the net quantity and the manufacturer. For some consumers the resulting transparency can, provided that the allergen information is correct, be of vital importance.
In over-the-counter business the FIC requirements do not pose any real problems for retailers. After all, customers can see on the packaging the mandatory information required for prepacked articles and price labels display the information required for unpacked goods. For distance selling, however, which includes mail order, telephone or email as well as online sales, the regulation gives retailers considerable cause for concern. In these channels too, customers must be made aware of the mandatory information before they sign the purchase contract.
For distance selling the regulation gives retailers considerable cause for concern.
In an online shop the customer cannot check the information on the packaging, so this role is played by the product data that the customer can see on the detailed product page. Reconciling this product data with the product that the consumer actually receives after placing his order can be an extremely complicated task, as the two following examples demonstrate.
Case No. 1: A manufacturer changes the ingredients of his product
Food manufacturers, like other business enterprises, are keenly interested in selling their products as effectively as possible. That is why optimizations of the formulation that can affect the list of ingredients are far from unusual even for articles that are already in the market. In these cases the manufacturer can update the details on the packaging immediately, thereby ensuring that customers knows exactly which ingredients the product they hold in their hand contains, whereas updating the product data in online shops can involve pitfalls for the retailer. They are mainly due to the fact that the retailer and the manufacturer are different enterprises and that the retailer must first be notified of the change in the list of ingredients.
That can take place in different ways. For one, intermediary third parties like Tradebyte can process changes of this kind and inform retailers in such a way that they appear automatically on the detailed product page. That, however, presupposes that both the manufacturer and the retailer are connected to the third-party system by suitable interfaces. This means that by no means all retailers receive all of the information via this channel. As a result, manufacturers must notify retailers of these changes separately. Retailers can then update their product data manually.
With so many food manufacturers and retailers it is not unusual for this information to fail to reach a retailer or for the retailer to fail to update his product data. The consequence is inaccurate product data that no longer tallies with the products sold and does not comply with FIC requirements. And it does not end there. As existing errors often go unnoticed for longer periods and further inaccuracies join them, the totality of an online shop’s product data will gradually become increasingly inaccurate.
Case No. 2: Different batches contain different ingredients
Changes in mandatory details need not only be the result of decisions by manufacturers. They can also vary between individual product batches. Mineral water is a case in point. Many food retailers now offer their own brands in this product group for which they source water from different wells with, of course, different ingredients. As the ingredients are not linked to the product brand they can change with every batch the retailer buys from his suppliers.
Here too the regulation’s objective is clear. The customer must know prior to the purchase the composition of the water that he receives. So the retailer may only supply the customer mineral water with the product data specified in the online shop at the time of purchase. This means that the retailer must update the product data for each batch and first sell off the batch specified in the online shop before offering customers the next batch with its updated product data.
That would be highly inefficient, and not just in process terms. On closer scrutiny it is clear that it would still be almost impossible for retailers to comply with the provisions of the EU regulation. What, for example, happens if there are only three crates of the old batch left and the customer orders four crates? In that case the customer would inevitably receive one crate of mineral water the product data of which was unable to check before buying it. A totally FIC-compliant procedure cannot yet be mapped in processes and logistics.
The breakthrough has yet to be achieved
These problems with FIC implementation in online retailing do not just affect the occasional retailer; they affect the entire industry, from the large-scale retailer to the startup and the niche specialist. The result is a highly unsatisfactory situation to which, as matters stand, there is no solution.
This justified entitlement of the FIC does not alter the fact that online retail cannot currently comply with the regulation technically down to the smallest detail.
In spite of the difficulties with implementation a softening of the FIC for online food retailers is not an option. Effective consumer protection, especially with the consumer’s health as its top priority, is one of the central tasks of politics. The customer’s entitlement to detailed product information prior to shopping for food on the World Wide Web is thus understandably non-negotiable.
This justified entitlement does not alter the fact that online retail cannot currently comply with the regulation technically down to the smallest detail. Retailers would gladly comply with it. I can state from personal experience that retailers have no interest in maintaining the status quo. The legal gray zones in which online food retailers now operate expose them to many unsatisfactory risks. That is why retailers repeatedly work on scenarios to resolve the problems of implementing the FIC with the necessary efficiency – but so far without making the requisite breakthrough.
Until further notice legislators, retailers and consumers will have to live with the gray zones described above. Whether future technical progress will solve the problems remains to be seen.
Image source: Fotolia – Tyler Olson