The e-commerce picture in Europe is varied, but not just because we’re talking about a group of countries with their own traditions and habits. Some countries are miles ahead in e-commerce usage, while in others consumers seem to barely acknowledge its existence, if buying habits indicate anything. Habits aside, there are bigger reasons that e-commerce is sluggish in much of the region.
As described in this Harvard Business Review piece, ease of travel between member countries extends to people but not to packages, content, and transactions. Costs – shipping and taxes – and languages are among the barriers.
Simplifying e-commerce with law change and mobile
In the U.K., e-commerce is up by 44% since 2005, with 79% of U.K. residents ordering online in 2014. Second place goes to Germany, and third to France. In fact, when European consumers do use e-commerce, it’s usually with English and German companies. They’ve got the technology, customer-centric policies, and supply chain management that makes e-commerce easy for shoppers. What is changing in the U.K. is the emergence of mobile shopping, or m-commerce, which has been on a steady increase each year.
But after the top three e-commerce countries, the figures fall off a cliff, with remaining large European markets not coming close in per person digital sales.
Recognizing that there are too many barriers, the EU Commission recently announced a public consultation in an effort to discover ways that the Value-Added Tax can be simplified to make cross-border commerce simpler, with an emphasis on measures that will help small business.
Consumers in France, which has a healthy e-commerce market of EUR65 billion in 2015 and is third in e-commerce spending after the UK and Germany, will likely place more orders via their smartphones next year. Already, one-fifth of online purchases in France are made with mobile, and that number is predicted to increase.
Western Europe has taken the global lead in fashion e-commerce with companies such as FarFetch and Yoox. Recognizing the challenges of operating in a fragmented market with multiple languages and currencies, Europe’s fashion e-commerce entrepreneurs say that the continent’s history of fashion creation, and Silicon Valley’s lack of interest in the industry, has left the door wide open for innovation and global dominance.
E-commerce went through a significant growth spurt in Eastern Europe recently. Russia led the way to a 60% increase in 2013, but that slowed considerably the following year. Russia is the fourth largest e-commerce market in Europe. Still, the numbers are looking up for 2016 and beyond. A large barrier for many consumers in these markets is that local retailers don’t offer digital shopping options, but that’s changing.
The questions facing European e-commerce in 2016 and beyond will be whether the logistics challenges can be solved to make cross-border shopping easier and less expensive for the consumers. Apart from the EU digital economy initiatives, private enterprises are also stepping in with their own solutions. For example, Google and Belgium-based e-payments company Ignecio recently partnered up on a pilot project to enable cross-border shopping. Whatever the solutions, Europe looks to be heading into one big e-commerce environment.
Customers appreciate the speed and convenience of digital transactions, but to earn their long-term loyalty, enterprises must build emotional affinity. Learn how to make that happen in Customer Relationship Status: It’s Complicated.