Ecommerce Euros: which country leads the league online?

which country leads the league online?

ECOMMERCE EUROS:

CONTENTSINTRODUCTION Ecommerce: the beautiful game 3

TRADING ONLINE The ecommerce opportunity 4

THE EUROPEAN MARKET Ecommerce on the bench(mark) 5-8

MARKET SNAPSHOT Ecommerce in Europe: a league table 9-10

OPTIMISATION TACTICS Market entry tactics 11-12

CONCLUSION Looking for support with your European ecommerce? 13

Ecommerce Euros: which country leads the league online? 2

ECOMMERCE THE BEAUTIFUL GAME‘The beautiful game’ might be the tagline for football, but it could just as easily describe ecommerce.

At its best, a well optimised ecommerce platform has many similarities to a top flight sports team, with each element working in harmony towards a single goal. Except, rather than balls and nets, customers and conversions are centre stage. And when just one of these elements is out of place, ecommerce experiences – like a football team – can quickly unravel.

As nations go head-to-head on the pitch for the 2016 European Football Championships, Digital River looks at the vital statistics consumer brands need to know when selling online in key European regions.

This report enables consumer brands to identify key markets for selling online in Europe, optimise their online presence, and drive longer, more profitable customer relationships.

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Let’s kick off…

Ecommerce Euros: which country leads the league online?

THE ECOMMERCE OPPORTUNITYEurope, more than any other region of the world, carries huge ecommerce potential for brands looking to engage directly with their customers.

Almost three quarters (73.5%) of the continent’s residents are internet users, according to internet World statistics. Furthermore, RetailMeNot data reveals 1 in 10 online purchases were transacted via mobile in 2015.

Despite this tremendous potential, many brands are still not transacting directly online in European markets, and those that are selling online in selected regions have yet to expand their ecommerce capabilities to harness untapped opportunities in new markets.

In order to fully capitalise on the lucrative spending power within Europe’s online retail market, brands need to look strategically at which countries offer the best sales potential for their product offering, and build the kind of ecommerce infrastructure needed to support an intuitive end-to-end online shopping experience.

We will investigate this further now.

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1 in 10 online purchases were transacted via mobile in 2015.

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ECOMMERCE ON THE BENCH(MARK)Fundamentally, where and how a brand grows online depends on its individual objectives; there is no such thing as a ‘one size fits all’ solution. However, there are core metrics to consider when sizing up the ecommerce opportunity in new markets, which can help shape a brand’s decisions.

In order to analyse the potential revenue stream available to consumer brands in Europe, Digital River analysed 21 European countries against three key indicators – internet penetration, GDP as a percentage of the world economy, and UNCTAD rating – scoring each region’s ecommerce opportunity based on their performance in these areas. Here are our findings.

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METRIC 1: INTERNET PENETRATION Ultimately, any ecommerce venture is only as successful as the county’s internet penetration, because consumers will not make a purchase if they cannot connect to the web easily.

Europe represents 24.7% of the world’s internet traffic, which is quite high compared to continents like Latin America (7.7%), and the Middle East and Africa (5.6%), but there are distinct variations between markets.

For example, Iceland has the highest internet penetration of any major European country at 98%, Sweden is second with 93%, and the UK is third with 92%. Other countries with high scores include Switzerland (87%), Belgium (84%), France (84%), Germany (86%), and Spain (76%). Also, perhaps surprisingly, Slovakia has a relatively high internet penetration at 80%.

Further down the scale, there are a number of countries that do not have such a mature digital infrastructure. For instance, internet penetration is only 67% in Poland, 68% in Portugal, 71% in Russia, and 58% in Turkey.

Internetpenetration

GDP

UNCTAD rating


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ECOMMERCE ON THE BENCH(MARK)This isn’t to say that brands should avoid expanding online in less connected markets. In fact, it could be the marker of slightly simpler fulfilment requirements, as those that have access to the internet tend to be based in urban areas, with internet penetration lower in rural regions.

At the lower end of the scale, there are a number of European countries that are immature in terms of internet usage. Currently, only 40% of the population in Croatia has internet access, for example, while Ukraine has 44% internet penetration.

These markets may offer ecommerce opportunities in the future, but brands seeking immediate direct-to-consumer results may be better off focusing on more established markets.

METRIC 2: GDP AS A PERCENTAGE OF THE WORLD ECONOMY While online access is the bedrock of ecommerce, internet penetration alone can only tell brands so much. Even if almost all of the population is online, if a country’s economy is relatively small compared to other European markets, the opportunity for profit may be limited.

Limited direct-to-consumer results

immature internet usage

44%

40%

REDUCED INTERNET ACCESS


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ECOMMERCE ON THE BENCH(MARK)Iceland, Slovakia, Hungary and the Czech Republic have between 76-98% internet penetration, but their GDP as a percentage of the world economy ranges from 0.03-0.33% respectively. Compare this to the UK, which has 92% internet penetration and its GDP is 4.82% of the world economy, making it a much more attractive option for brands.

One thing to bear in mind, however, is market competition. The combination of high online connectivity and strong spending power may make certain countries an attractive option, but it also increases the likelihood that other brands have already spotted this opportunity.

The UK is a good illustration of this, as online sales grew by 18.6% from 2014-2015, totalling €185.39 billion, according to the Centre for Retail Research. Any brand entering this region needs to have a strong USP and go-to-market strategy to stand out from the crowd. The situation is similar in France and Germany.

For some brands, a more attractive opportunity might be countries that have slightly lower internet penetration, but great economic potential. For instance, Italy has 65% online connectivity, but its GDP is 3.45% of the world economy. Russia, meanwhile, has 3.0% GDP contribution against 71% internet penetration.

One of the advantages of targeting markets with lower web access levels is room for growth; the internet is only going to become more widely available in those regions.

Finally, at the bottom end of the scale, there are countries with low internet penetration and a small GDP, which may not be an ideal starting point for brands going online in Europe. These include:

63%internet penetration

vs. 0.02%

GDP contribution


vs. 0.09%

GDP contribution


vs. 0.32%

GDP contribution

UK Online sales grew by 18.6% from 2014-2015

ALBANA CROATIA ROMANIA


ECOMMERCE ON THE BENCH(MARK)METRIC 3: UNCTAD RATINGOne other useful indication of a country’s online potential is the United Nations Conference on Trade and Development’s (UNCTAD) global ecommerce rankings. Released every year, UNCTAD’s scores are calculated based on proportion of the population using the internet, share of individuals with a credit cards, secure internet users per 1 million people, and postal reliability score.

Among the top European performers in 2016 are Norway (3rd), Finland (6th), UK (8th), and Switzerland (9th). Sweden, the Netherlands, Denmark, Germany, Ireland and France also make the top 20.

However, this ranking should be considered on balance with other indicators, because it does not look at GDP or other fi gures such as population size to quantify market potential. As a result, UNCTAD’s top two countries globally are Luxembourg and Iceland – both of which present limited revenue opportunities for brands.

TOP PERFORMERS

9TH8TH6TH3RD

SECUREINTERNET

CREDITCARDS

INTERNETCriteria:

8

NORWAY FINLAND UK SWITZERLAND


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ECOMMERCE IN EUROPE: LEAGUE TABLE

Sources: Centre for Retail Research, Dalpay, Ecommerce Europe, Ecommerce News, eMarketer, EUROSTAT, EY, Jeftinije.hr/Valicon, Main Trends in B2C E-commerce in the Slovak Republic, IWS, Netcom Suisse, PFSweb, Royal Mail, TechCrunch, Trading Economics, UNCTAD, Világgazdaság.

Based on the core metrics we have discussed, Digital River has put together a league table of the top eight ecommerce opportunities in Europe. Overall scores are calculated based on each country’s performance across each key indicator, to assist brands in their research

into the most lucrative European online opportunities. It is worth reiterating, however, that these are benchmarks. The exact size of a new market opportunity will depend on infl uences individual to the brand.


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Sources: Centre for Retail Research, Dalpay, Ecommerce Europe, Ecommerce News, eMarketer, EUROSTAT, EY, Jeftinije.hr/Valicon, Main Trends in B2C E-commerce in the Slovak Republic, IWS, Netcom Suisse, PFSweb, Royal Mail, TechCrunch, Trading Economics, UNCTAD, Világgazdaság.

ECOMMERCE IN EUROPE: LEAGUE TABLE


MARKET ENTRY TACTICSNo matter how lucrative a country looks on paper, brands must bear in mind the ease of launching into that market. To be successful, their offering should be localised for the market, taking in consideration five key factors.

Here are some of the initial questions brands should ask themselves in each of these areas, to optimise their ecommerce site for new European markets:

Language• Is it better to create a separate

ecommerce site for each market, or a single site with the option to change language?

• Are there provisions for IP detection, to divert customers to their local site or to translated content?

• Will changing the language negatively impact the design of the current brand site?

• Who will manage content translation for new sites?

• Is the content search engine optimised in each language?

Payments• Are customers going to be able to view

prices and make online payments in their local currency?

• Which global online payment options will work across multiple markets?

• In which regions does the checkout need to include local payment options?

• Can the online payment process support cross-border customers, if launching in a new market attracts interest in neighbouring countries?

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For many brands, just trying to answer these questions can be overwhelming, revealing a conflict between ambition and capability. As a result, many choose to work with an ecommerce partner that knows each market inside-out, who has the experience and resources to localise experiences and ensure online success.

11Ecommerce Euros: which country leads the league online?

MARKET ENTRY TACTICS

Fulfilment• What fulfilment infrastructure will need

to be put in place to manage deliveries in new territories?

• Can that infrastructure support the fulfilment of cross-border orders?

• What is the total landed cost for fulfilling orders in each market, taking into account product price, transportation fees, customs, duties, taxes, insurance, handling fees and currency conversion?

• Is it more cost-effective to handle manufacturing in current locations, or source partner suppliers in local markets?

• How will expanding internationally impact inventory management, and do current systems have the capacity to offer brands a single stock view across multiple geographies?

Customer Experience• How will changing language impact

the formatting and presentation of the brand’s ecommerce site?

• Does the site navigation need to be adapted for the way different European regions interact with online stores?

• Are there any cultural nuances that will impact the online journey, such as product hierarchy, imagery and descriptions, and the checkout process?

• Are there the technical resources in-house to maintain and develop each country’s online store and keep enhancing the customer experience?

Customer Support• Are there resources in-house to respond

to customer queries in their native language?

• Will digital support channels consist purely of email, or will they include a live chat function on the regional website?

• Will there be separate social media channels for each market, or one social media platform for the brand?

• If there is one social media platform, will it include any translated content for overseas markets?

• Will customer support channels be purely digital, or will they have the option to call a telephone enquiry line?

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LOOKING FOR SUPPORT WITH

World-class online commerce demands intensive resources, global reach and local-market savvy, cutting-edge infrastructure, time-tested experience, revenue-driving marketing tools and clear, powerful thinking.

For brands going online, growing online, or looking to optimise their global ecommerce presence, Digital River can enhance their customer journeys to drive digital revenue. Our services include:

YOUR EUROPEAN ECOMMERCE?

Every day, tens of thousands of companies—both large and small—rely on Digital River for the proven expertise and comprehensive cloud commerce, marketing and payment solutions they need to build, manage and grow their businesses on a global scale.

Find out more at our Brands Go Global website: www.brandsgoglobal.comOr contact us at: [email protected] +44 (0)845 634 0638

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Commerce – we have the tools, technology and services to manage, support and power online business growth. We streamline the experience for brands and customers around the world

Payments – we create tailored payment programmes scaled for success, yet flexible enough to use independently or as part of a full-service, fully integrated solution

Marketing – our multilingual and multicultural consultants understand that customers come first, in order to create the right mix of programmes, analytics and networks for brands and businesses
