Ecommerce in Bosnia and Herzegovina

With a population of 3.5 million, Bosnia and Herzegovina (B&H) is an emerging consumer market with a growing e-commerce sector. Unlike the global market, there is no accurate data on the volume of e-commerce in B&H, but based on the balance sheets of all companies registered in this industry, it is possible to see the development of this industry as a whole. Business performance trends are analysed through the largest e-commerce companies in the country (olx.ba, ekupi.ba, ebay.com, amazon.com, aliexpress.com) and according to this data, B&H is no exception regarding dynamic growth in e-commerce. Local and regional companies are experiencing growth in the ecommerce sector, and in addition to pure ecommerce companies, many brick-and-mortar retailers have introduced online sales channels. 

This growth has been driven by several factors. Firstly, growth comes from a low base. Secondly, there is a growing increase in internet activity in B&H. There are 2.37 million internet users in Bosnia and Herzegovina and internet penetration is 72%. Thirdly, growth has been further boosted by the COVID-19 pandemic.

According to relevant data, the top products and categories for Bosnian e-commerce buyers include clothes/footwear/accessories, computers/mobiles, cosmetics, books and food. In addition, internet users in B&H are more willing to purchase goods/services not only in local e-stores but also in e-stores outside the country. 

According to Euromonitor’s data, internationally recognised third-party merchants are a big factor in the e-commerce market in B&H, and in aside from the benefits of being internationally recognised and proven vendors, these players carry the most extensive product range, offering products that are otherwise not carried by other retailers in the local market. 

Given this, entering the Bosnia and Herzegovina market is worth considering for many local and international e-commerce merchants. 

According to the applicable laws, a foreign company is not required to have a local presence to start selling online. However, products intended (active sales) for local customers must have a declaration in accordance with the law and technical and other regulations, or standards, written in one of the languages in official use in B&H. Foreign companies that do not actively sell into the country are not obliged to provide documentation in accordance with local laws

E-commerce businesses are treated the same as a brick-and-mortar store when it comes to licences and permits, which means licence/permit requirements are not needed for a business entity to participate in e-commerce. However, specific rules may apply in the case of certain product categories, but these rules apply to all sales channels.

In today’s competitive market, running an online store can broaden the overall range of products and services, but in order to do so, some specifics must be addressed before starting an e-commerce business.

• Domain Name and extension : A suitable domain name and domain extension will help a brand to transform brick and mortar sales to online. A good domain name is a valuable marketing and search tool that should successfully lead customers to the website. The most common domain extensions in B&H are: .ba, .com, .net, and .co.
• Hosting services: Web hosting is the process of renting or buying space to house a website on the internet and is the is the backbone of websites running in today’s competitive business world online. There are four main types of web hosting in B&H: shared hosting, VPS (virtual private server) hosting, dedicated hosting and cloud hosting
• IT and Creative services: IT services assist business entities in the creation, management and optimisation of the e-commerce website. This also includes designing the ordering process, which is the time a customer places an order online, right through to fulfilling that order and delivering the product to the customer. The whole process needs to be smooth, fast and simple, and to achieve this, the e-commerce business needs to ensure quality IT services.
  Creative services will further develop the e-commerce website and help attract and retain customers on the website. Creative services develop and design applications and functionalities such as invoicing, accounting, marketing tools and customer relationship management.
• Mobile e-commerce: Mobile e-commerce makes up a significant proportion of the Bosnia and Herzegovina e-commerce market and e-commerce merchants should bear this in mind when setting up their online stores. Mobile optimisation and mobile buying must be core to the e-commerce strategy.
• Logistics: Providing or delivering products on time has always been a challenge in e-commerce but by perfecting the logistics, it can be made possible. The logistics processes include inventory management, warehousing and storage and order fulfilment (picking, packing and shipping orders).
  A new alternative to the traditional logistic process is dropshipping. Dropshipping is a retail fulfilment method where a store does not keep the products it sells in stock. Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party and has it shipped directly to the customer.
• Payments: To operate a fully functional ecommerce website, an e-commerce merchant needs to be able to accept payments from customers. It’s important to provide the (potential) customers with payment methods of their preference. Not supporting common payment methods in a given market will immediately exclude a certain proportion of that market. The top online payment methods in B&H include mobile payment, credit cards and e-wallets.

The difference between B2B and B2C should be clear before the e-commerce merchant steps into the digital commerce business in B&H, and thus it should be defined. The e-commerce merchant needs to consider the target audience’s needs, preferences, and interests to attract their attention, and these considerations differ for B2B and B2C as the target audience changes. 

According to the laws applicable in B&H, if an e-commerce website is a B2C website, all consumer rights that also apply to brick-and-mortar sale must be fulfilled (e.g. product returns, liability for defective goods, etc.). If the website is a B2B website (sales to professionals only), consumer regulations will not apply.

Understanding the differences between B2B and B2C e-commerce websites/apps is imperative before designing and instigating the digital experience.

Companies wishing to establish an ecommerce business in B&H must comply with certain rules under applicable B&H laws. Although there is a certain level of freedom, the website must notify customers of a series of important aspects:

• General information: An e-commerce website is obliged to contain general information about the business entity/e-commerce merchant, such as name or business name, place and address of its registered premise, contact information, registration number, VAT number, etc. An online store must provide unambiguous information so that the average user can be fully protected from any form of fraud. The website should contain a prominent rulebook on pricing, terms of sale and other important information for users.
• Pre-contractual information: An e-commerce website must contain contractual provisions, product information and T&Cs which must be available to the customer, so that the customer can preserve and reproduce them.
• Data protection information: An e-commerce website must contain a statement that the customer data will not be disclosed to a third party, nor to a party acting as a legal entity or individual person within the same group of companies (concern) to which the business entity belongs, unless the customer approves in writing.
• Withdrawal period information: Customers are entitled to withdraw from a contract made online (distance selling) within 15 days of the date of its conclusion, without giving a reason. In the case of withdrawal, the customer reimburses only the cost of returning the product. The seller must inform consumers of their right to do this. If the seller does not inform the customer of this right, the costumer may withdraw from the contract within three months of delivery.

Products intended for customers (active sales) in B&H must have a declaration in accordance with the law, technical and other regulations, or standards, written in one of the languages in official use in Bosnia and Herzegovina. However, there is no obligation for foreign e-commerce platforms to provide the documentation in the local language. 

In B2B relations, there is no obligation for the website information to be provided in the local language. The e-commerce website and communication may be in a foreign language.

According to the applicable laws, the are no such restrictions. However, in general product-specific restrictions may apply that apply to all sales channels. In this regard, there is no difference between e-commerce and brick-and-mortar sales. 

Regarding product returns, please refer to the answer to question number 2 (withdrawal period information). 

Regarding defective goods, the same rules apply to brick-and-mortar sales and online sales. 

The Law on the Protection of Personal Data specifies a general opt-out regime for direct marketing. It makes no differentiation between different forms of direct marketing (email, regular mail, and phone). 

Data subjects have the right to oppose the data controller’s future use or transfer of their personal data for the purpose of direct marketing, and to be notified before their personal data is transferred for the first time to a third party for direct marketing purposes.

As a rule, B&H competition law is substantively equal to and modelled after EU competition rules, although it may lag behind some recent developments. The general approach is that, in principle, every distributor must be allowed to use the internet to sell products and must not be restricted in doing so, unless there are compelling reasons, e.g. health and safety concerns always assessed on a case-by-case basis. However, manufacturers are permitted to impose quality standards for online distribution in certain justified circumstances of selective distribution systems. In addition, as in other distribution channels, suppliers are not permitted to control resale prices.

What is important is that the current B&H rules covering the vertical aspect of online sales (supplier-distributor) were adopted in 2006 and were based on the EU legislative framework from 1999, i.e. the Commission Regulation (EC) No. 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices.

There are no specific legal considerations relevant to the financial services provided to e-store customers. 

Bosnia and Herzegovina has no specialised authorities responsible for legal enforcement regarding e-commerce businesses. 
However, regarding consumer protection (which also applies to e-commerce), the key authority is the Ombudsman for Consumer Protection in Bosnia and Herzegovina. The Ombudsman for Consumer Protection is an independent institution established with the aim of promoting the good and efficient implementation of the consumer protection policy in Bosnia and Herzegovina. 

Regarding data protection, the responsible body is the Personal Data Protection Agency, which is an independent administrative organisation established to ensure the protection of personal data. 

There are no special procedures for private enforcement of consumer rights in the context of e-commerce in Bosnia and Herzegovina.

In general, consumers may seek to enforce their rights before a civil court, either individually or with several claimants. 

A special procedure for claims for the protection of collective interests also exists, whereby associations, bodies, institutions and other organisations established in accordance with the law, which, as part of their registered or regulated activity, protect the statutory collective interests and rights of citizens, may, when such authorisation is expressly provided by a special law and under the conditions provided by law, file a lawsuit (claim for the protection of collective interests and rights) against an individual person or legal entity that, by performing a certain activity or work, or in general by acts or omissions, materially breaches or endangers such collective interests and rights. The interests may be related to the human environment or the general environment, and moral, ethnic, consumer, anti-discrimination and other interests guaranteed by law, and must be materially breached or endangered by the activity or treatment of persons against which the lawsuit is filed. 

As e-commerce in Bosnia and Herzegovina is growing, so is the need for legal development. Policymakers should take this into account and strive to create a favourable economic and legal environment for the development of this type of trade. Some of the legal developments on the horizon with relevance to e-commerce businesses are:

• The Law on E-commerce B&H: B&H is the only country in the region which still does not have a major law regulating e-commerce. According to publicity available information, the draft on the new Law on e-commerce exists and the Law should be adopted in the future.
• The Law on Protection of Personal Data B&H: The Law on Protection of Personal Data (Official Gazette of BIH, Nos. 49/06, 76/11 and 89/11) is the governing law regulating data protection issues in Bosnia and Herzegovina. As part of its effort to join the EU, B&H is obliged to harmonise its legislation with EU legislation. This includes the GDPR. Due to deficiencies and non-alignment of the Law with the GDPR, in 2018 the competent authorities initiated the procedure for adopting a new GDPR compliant data protection law in B&H. The draft of the new Law is expected to be adopted in its current text this year