Insight around the world IRM51
ISABELLE SALLARD, EDITOR, INTERNETRETAILING.FR
According to the annual review of online sales by the French ecommerce association Fevad, internet sales continued to grow strongly in 2014 in France. Despite the strong slowdown in consumer spending, the French spent €57bn on the internet, an 11% growth in one year. These results are slightly better than expected thanks to good Christmas sales – they reached €11.4bn or 13% more than last year over the same period. E-retailers have taken advantage of this exceptional buying period as shown in an excellent 99% satisfaction rate measured in a study conducted by CSA just after the holidays.
France should therefore maintain its position as the third ecommerce market in Europe after the UK and just behind Germany (as ranked by E-Commerce Europe). The ecommerce market in France represents 9% of total non-food retail.
On the other hand, the average basket is still on the decline. It lost 4% in one year to €81.” It is now in its fourth consecutive year of decline. Since 2011, it has dropped by 10%. This decrease is however offset by the arrival of new shoppers and increasing purchasing frequency: 20 online transactions are conducted each year per buyer against 18 a year ago. This purchase frequency also benefits from the increase of site launches which remains dynamic in 2014. 20,000 additional sites have emerged in a year, an increase of 14%. France currently has 157,300 active commercial sites.
Despite a difficult economic environment, 6 buyers out of 10 (61%) believe that it will not affect their consumption on the internet, according to Fevad’s perspectives for 2015. The ecommerce market should therefore continue to grow this year and is expected to exceed €60bn in 2015. “I wish the traditional retail, which faces strong economic changes and technological changes, had easier access to ecommerce,” said Carole Delga, French Minister for Commerce. “This is an opportunity to transform the store and adapt to these changes, particularly in rural areas. The added value of traditional retailers is their physical location and the relationship they have built with the customer in the store.”
FRANK VAN DEN BERG, MANAGING DIRECTOR, SALESUPPLY UK
Throughout the past year, Spain has made significant steps towards economic recovery. Its current annual GDP growth rate of 1.6 outperforms those of Germany, France, Italy and The Netherlands. While consumer confidence and retailer sales have increased in the past year, the economic crisis has left the Spanish buyers very price conscious. When expanding to Spain, a solid competition analysis and a good pricing strategy are smart steps to winning over the customers.
With an online turnover of over €14bn, Spain is the largest ecommerce market in the Southern European region, ahead of Italy (€11.2bn) and Turkey (€8.9bn). Figures released by The National Observatory for Telecommunications and the Information Society ONTSI, 60.6% of the population shop online, up 5% year-on-year, equalling 17.2 million people. On average they spend €848 per year online, a value that is growing at an estimated annual rate of 4%.
However, logistics is an underdeveloped field in the country, and although increasing competition is positively influencing the performance of service providers, consumer expectation in this area are not as high as in other mature ecommerce markets. This means that the longer delivery times of a foreign website might not be an obstacle in the eye of the customer. In Spain, the acceptance of foreign websites is relatively high, especially when they sell popular brands.
63% of Spanish online shoppers buy from foreign websites, in 90% of the cases inside the EU. The favourite destinations include Germany, the UK, the US, China and France. In certain sectors, cross-border sales account for over half of the Spanish online transactions: Online fashion sales for example saw a 90% growth in 2014, amounting to a €180m turnover. According to the CNMC (Spanish Commission for Markets and Competition), 60% of these Spanish online fashion sales are cross-border ecommerce sales.
Furthermore, average costs for online marketing are much lower than in other European countries. A comparison of the search terms Nike, Asics and Head showed for instance that CPC (costs per click) are cheaper in Spain compared to for instance Germany, the UK and the Netherlands, sometimes even up to 10 times.
Close to 30% of ecommerce transactions in Spain are mobile so for foreign retailers, this means that offering a mobile site, App or even responsive design could considerably increase conversion. A very critical factor in m-commerce is payments, which should be convenient and secure.
Localizing for Spain also means an opportunity to test other markets. First of all, many Portuguese clients shop on Spanish language websites; over 21% of Portuguese cross-border online transactions are purchases in Spain. In addition, a Spanish language site may also drive traffic from Latin America where ecommerce turnover has grown 10-fold in the run of the past 10 years and reached €59.4bn in 2013.
YOMI KASTRO, FOUNDER AND CEO, INVEON AND INVENTURES
With its large and young population, fast adoption to new technologies and emerging economy, Turkey is one of the fastest growing markets for ecommerce globally. There are around 35 million internet users in Turkey and, according to 2013 research, 10 million of them use the internet for shopping purposes. High credit card penetration rate, solid logistics infrastructure and increasing use of mobile internet have been main triggers of an average of 40% yearly growth since 2010. In 2013, the Turkish ecommerce market volume was more than $6bn. The huge potential of the market also attracted both foreign and local investors such as eBay, Otto Group, Travas, Hummingbird Ventures, Atomico, Intel Capital, Naspers Group and General Atlantic.
A few years ago, the ecommerce market was driven by internet entrepreneurs. However, over the past 3 years, the big retailers have gained the technical know-how and with their existing experience in ‘merchandising’ they have started to set the rules of the game. In 2014, most of the ecommerce volume came from large retailers. The growth was so remarkable that some big Turkish retail brands expanded their online operations to Europe and the Middle East in 2014.
This year, in addition to conventional retailers’ increasing interest, consumers will continue discovering new ways to use technologies. This trend will re-shape the market. Thanks to ibeacon technologies and the rise of mobile, the borders between online and offline will disappear. We will also see more e-tailers and retailers investing in the Internet of Things and omnichannel approach to enable a higher quality of customer experience in every channel. As many conventional retail brands embark on digital integration, Turkey will take a big step forward to reach global markets. Thus, there is a huge potential in the market for entrepreneurs and investors who are interested in these rather new areas.
Together with the regulation efforts in ecommerce and payment systems and the country’s consistent economic growth, we believe that Turkey offers a profitable market to investors as long as they head out with the right partners.
Turkish ecommerce companies are very aspirational and are looking to expand internationally to become global players – and are thus open to speaking with investors.
On the other hand, Turkey has a large domestic economy which is helping ecommerce companies to prove their model and scalability before taking the short step to nearby economies such as the Gulf region.
JOHN WATTON, DIRECTOR, DIGITAL MARKETING EMEA, ADOBE
The festive period is well and truly over, so it’s a good time to reflect on what turned out to be our biggest ecommerce rush to date, and how we can prepare for 2015.
The future is mobile: Ahead of the holiday season, the Adobe Digital Index Holiday Predictions Report forecast that mobile sales across Europe would increase by 38%, and this upswing proved to be accurate. In Germany 17% of purchases were made on mobile devices, while in the UK 25% of transactions came from mobile. Mobile is a key theme for this year and retailers will increasingly need to look to mobile as the foundation of the customer journey.
Black Friday is here to stay: 2014 saw the American export Black Friday grow in prominence across Europe, smashing sales predictions in the UK with a peak of €427m, beating the €356m spent on Cyber Monday. Whilst consumers got some great bargains, it cannot be ignored that major retailers were unconvinced by the heavy discounting and questioned its profitability. In 2015, Black Friday falls on Friday 27 November, so retailers have plenty of time to consider a strategy that will benefit both shoppers and retailers.
Brick-and-click retailers are ones to watch: In the US, brick-and-click retailers, or those with both physical and online stores, are driving most of the online sales growth. According to our data, the average B&C retailer grew 25% during the Black Friday weekend, compared to 10% for online-only retailers. In 2015, we expect to see a similar trend across Europe. Customers no longer differentiate between online and offline, and brands need to focus on ensuring all channels work seamlessly together.
In just a few years we have seen the ecommerce landscape completely shift and the trends we witnessed over Christmas 2014 tell us even more about what’s to come.