The eCommerce Sector in Bulgaria
The Bulgarian eCommerce sector growth in numbers
The E-commerce sector has grown from 21% to 35% in the last 5 years – according to The Bulgarian E-commerce Association, in 2019, more than 1,500,000 people shopped online.
From 2014 to 2020, the share of e-commerce in GDP increased from 0.48% to 1.53%, and the growth trend continued in 2021 and 2022.
Things to note before starting an eCommerce business in Bulgaria
Is a license required?
In general, Bulgarian legislation allows companies to engage in e-commerce freely, and such activities do not entail any additional obligations in terms of licensing requirements.
You do not need to obtain a license or permission to open an e-commerce shop.
However, if you sell food products, for example, then separate rules may apply, including obtaining a license. These requirements apply to each product individually. It is strictly forbidden to offer and sell drugs that are dispensed only by prescription!
What kind of E-commerce agreements should be arranged before starting the activity of your company?
In addition to contracts such as a supply contract, and a logistics contract, there are also observations on the activity on the e-commerce platform itself
Domain Name: This serves as your e-commerce address. There is a wide choice of domain extensions: national (.bg) and international (such as .eu or .com) for cross-border activities. There is also the possibility of trading through marketplaces without using a personal website.
Hosting: Hosting services can be purchased in cloud servers, shared web hosting, private servers, and dedicated servers. A good customer experience is based on a seamless buyer journey, and for that, your business must provide a fast-loading website with zero technical issues.
Building Your Assets: Website development requires services such as design, application and feature development (eg service billing, accounting), marketing tools and customer relationship management (CRM)
Logistics: Logistics processes include product sourcing, inventory management, order management, packaging, shipping, and product returns. E-commerce logistics may be outsourced to a third-party logistics service provider (3PL). Dropshipping can be an alternative to this. The essence of dropshipping is that you receive an order from a client, and transfer this order to the supplier, which then sends the purchased item directly to the customer. Essentially, as a drop shipper, you are an intermediary.
Payments: Payments can be a pain point to new businesses just starting out, but it really depends on your line of business and revenue numbers, in general, opening the option to transact credit cards is open for the majority of entrepreneurs, and using other payment methods like COD (cash on delivery) and wire transfers are also an option, depending on the local market you are addressing and their purchasing habits.
Key aspects of your E-commerce business:
Target Audience: Will your business be for general consumers or professionals?
Target Audience: Will your business be for general consumers or professionals? If you are considering the first option, the important point is observing consumer rights. In accordance with the Bulgarian Consumer Protection Act (the “CPA”), a consumer is an individual who purchases goods and uses them for their own purposes, not for further sale, as well as any individuals acting outside their commercial or professional activities and falling under the CPA.
There are significant differences between trading with the average consumer and B2B trading. For example, the CPA contains a clear list of information requirements that must be provided to the consumer before the consumer signs a distance contract.
What must be provided to the consumer before transacting a digital agreement:
- characteristics of a product or service corresponding to this type of product or service
- seller’s name
- seller’s registered head office or address: as well as his mobile phone, e-mail address, website so that the buyer can contact the seller, and also if the specified address is different from the real one
- the total cost of goods or services (including taxes, characteristics of goods, method of pricing, information about additional freight, shipping and postage, as well as any other costs)
- the procedure for payment, delivery, order fulfillment, and the procedure for handling complaints against the seller
- conditions, term and procedure for the right to withdraw, its consideration, as well as a sample form to fill out
- a description of the existence of a legal guarantee for the conformity of the goods with the contract of sale
- availability and terms of warranty and after-sales support
- legal sources and links to them
- contract time
- the minimum duration of the consumer’s obligations under the contract
- if applicable, the existence and terms of the deposit or other financial guarantees to be fulfilled or provided by the buyer at the request of the seller
- if applicable, the measures taken to protect digital content
- described the possibility of recourse to an out-of-court complaint and redress mechanism and methods of access to it.
What elements are required for an E - commerce business website?
Bulgarian legislation highlights certain obligations that must be marked on the website of your business page. These obligations vary depending on whether the site is intended for consumers or businesses only.
|What are the obligations?||What is needed?||How to comply?|
|Provision of services by electronic means||The Terms and Conditions for services that are provided electronically on this site must be specified. They must allow online purchases and display website content that will allow the customer to create and use an account.||Create Terms and Conditions for providing services. This will help provide a wider range of services on your website.|
|Product information||As we have already mentioned, the law obliges to indicate information about a product or service, and this information must be displayed BEFORE purchasing. The scope of this information may vary depending on the product category and its features.||Position the information so that it reflects the legal requirements that apply to this product category. For example, if you sell food products, then information about the list of ingredients should be displayed, and if the products are related to electronics, then, for example, the efficiency class.|
Is it mandatory to post information on the website in the local language?
Yes. This is provided for in the Bulgarian CPA Act and applies to all information and documents posted on the site, which is binding. On a website that is addressed to a Bulgarian audience, the information must be in Bulgarian, as well as the after-sales service. This obligation is absent in B2B trading. The site and interaction between parties can take place in any language.
What are the restrictions that affect the choice of products for an online business?
There are product-specific restrictions that apply across all distribution channels, such as regulation of food production and marketing. The sale and renewal of prescription drugs by distance contracts are strictly prohibited!
It is important to pay attention to all existing requirements for online sales of any specific product.
What are the rules for returning goods or defects?
The consumer has the right to withdraw from the distance contract within 14 days from the date of conclusion of the service contract, as well as in the case of a sales contract, without giving a reason.
The consumer must be informed by the seller of such right of withdrawal, as well as of the conditions, terms, and procedure. If the seller has not provided such information on the return of the goods, then the right to return expires one year after the original date of expiration of the right to return.
These rules apply to both traditional sales and online sales.
Is explicit consent required for marketing communications?
Subscribing to receive advertising requires the prior consent of the consumer and must comply with the GDPR. This means that the buyer’s consent must be given freely. If the consumer objects to his data processing, then his personal data should no longer be processed for these purposes.
This means that in order for the data to be processed with the consent of the buyer, a notification must be placed on the site (for example, a check box for approval) and the buyer must select technical settings or sign a declaration of consent.
The Bulgarian Commission for Consumer Protection maintains a register of addresses of legal entities that have refused to receive unsolicited commercial offers.
What are the main risks in E-commerce?
Bulgarian competition law is in line with EU law. Each distributor is allowed to use the Internet for the purpose of selling goods and services and cannot be restricted from doing so. Producers are allowed to set quality standards for trading under certain justified circumstances. In some cases, in other distribution channels, suppliers are not allowed to set the resale price.
Competition rules in Bulgaria cover the vertical aspect of online sales (supplier-distributor), which are based on the EU base since 2012.
What are the specific legal aspects of financial services?
Regular e-commerce stores are not subject to financial services regulations. The Act on the Distance Marketing of Financial Services establishes requirements for distance marketing, in particular for distance contracts, provision of information to the consumer, etc.
Processing customer payments is a regulated activity.
Which relevant authorities have the right to exercise their powers in relation to E-commerce enterprises?
At the moment, there is no organization in Bulgaria that specializes only in enforcing E-commerce.
The most relevant body is the Commission for Consumer Protection (the “CCP”), which monitors and controls companies’ compliance with the provisions of the Bulgarian Electronic Commerce Act (ECA) and the CPA.
The CPA is the body that controls the safety of non-food products and services. The Bulgarian Food Safety Agency (the “BFSA”) is responsible for food control in accordance with the CPA and the Foodstuff Act.
Cosmetic products are controlled by the Minister of Health and the State Health Control authorities.
The Commission for Personal Data Protection (the “CPDP”) is the body empowered to provide expert advice and opinions on data protection and to enforce and impose penalties for non-compliance with the law.
What are the possibilities for ensuring private rights in the case of E-commerce?
In Bulgaria, consumers can defend their rights in court by filing an individual or class action in a civil court. Consumer organizations such as the Bulgarian National Association of Active Consumers play an important role in this process.
Arbitration clauses in such a case are not valid.
Alternative Dispute Resolution (ADR) governs the CPA. The resolution of the dispute will be considered binding, provided that both parties have been notified in advance of the binding nature and have knowingly agreed to it. The Minister of Economy is the competent authority for the recognition of ADR subjects and publishes their lists. The CCP conducts alternative dispute resolution activities through conciliation committees. All online sellers must provide an accessible link on their website to the online dispute platform.
Should we expect legal changes regarding E-commerce businesses?
All changes regarding E-commerce are mainly related to changes in EU legislation. The EU Directive introduces several amendments to the consumer directives. For example, it includes new rules on price cuts and restricts the marketing of “double quality” products (goods sold as identical when in fact their quality differs between the respective Member States).
Ready to start doing business in Bulgaria?
Opening a company can be complicated.
Only 30% of our customers go through the online incorporation process completely by themselves. It doesn’t mean the process is cumbersome, it just means that there are many nuances that need clarification before taking a step forward.
If you feel ready, we encourage you to take the online process for opening your company in Bulgaria
We can still offer assistance every step of the way, and nothing is irreversible, so you don’t have to worry about “making mistakes”
Not sure if you’re ready? you can consult one of our experts right away and they can answer all your questions and set you on the right track