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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Ecommerce without borders

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Traders that tackle the challenges of pan-European retailing can expect to reap rewards.

TRADE ACROSS EUROPEAN borders offers huge rewards for the traders that overcome the unique challenges this continent presents.

Challenges such as developing logistics strategies that are relevant in the varied markets of the European Economic Area (plus Switzerland) through to managing differing expectations around payment, currencies and, indeed, shopping behaviours, are, and will continue to be, a huge task for the pan-European retailers that we assess in this ranking of the continent’s leading traders.

The challenges are clear from the figures. This is an area of 32 countries, 26 official EEA languages and 13 currencies. The Euro is the leading currency in this region, adopted in 17 countries. Although a digital single market is starting to emerge across the area, the InternetRetailing Europe Top500 (IREU Top500) illustrates that performance is uneven across individual markets.

Setting the context



Turnover from eCommerce across Europe grew to €455.3bn (£359.2bn) in 2015, and will reach €510bn (£402.3bn) in 2016, according to the European B2C E-commerce Report from Ecommerce Europe. That’s forecast to grow to €660bn by 2018, according to the report. It analysed 48 European countries, including the 28 that are members of the European Union, and estimated that 296m online consumers from these markets spent an average of €1,540 (£1,173) over the internet last year.

Retailers in this area’s largest single eCommerce market, the United Kingdom, took an estimated third of all European online sales in 2015, followed by France and Germany. Together, these three accounted for 61.9% of all European online turnover in 2015. Transactions in the UK alone are worth, the report suggests, an estimated €157.1bn (£123.9bn) each year, with consumers spending an average of €3,625 (£2,761) each year. But while these markets are the largest, the Ecommerce Europe report suggests that they are not where the fastest growth is found. That honour is reserved for less mature markets such as Belgium, which grew by 34.2% in 2015, and, beyond the EEA, Ukraine (35%) and Turkey (34.9%).

IREU Top500 research shows that, as a group, leading European retailers are often starting to foster cross-border trade, but have by no means completed the task. The average IREU Top500 trader sells not in 13 currencies but in two, and in three languages, rather than the 26 that are possible in the region. Indeed, many of those listed do not sell in other markets at all but enjoy a large enough footprint in one territory to win a place in this index. Some are well ahead on this, selling in many markets and languages. Spanish fashion brand Zara, for example, sells in 28 EEA countries, serving them in 23 languages, while footwear retailer Deichmann sells in 19 countries and in 18 languages. But the average remains, for the moment, at a relatively low level.

The digital single market



That’s not likely to continue. The European Union is pushing forward the digital single market, with an aim of removing regulatory barriers to cross-border trade and, at a practical level, bringing refund and returns policies into line across markets. It promises that moving from the 28 national markets of the EU to a single market will unlock an annual economic contribution of €415bn a year, creating hundreds of thousands of jobs. Currently, according to European Commission figures, only around 15% of Europeans shop online from another country, and only 7% of SMEs that trade online sell across borders.

New eCommerce rules proposed by the European Commission in May 2016 aim to encourage cross-border eCommerce by tackling geoblocking, making cross-border parcel delivery more affordable and efficient while at the same time encouraging trust among customers through better protection and enforcement.

Launching the proposals, Elżbieta Bieńkowska, commissioner for internal market, industry, entrepreneurship, and SMEs, said: “Discrimination between EU consumers based on the objective to segment markets along national borders has no place in the Single Market. With clearer rules, better enforcement and more affordable cross-border parcel delivery, it will be easier for consumers and companies, especially SMEs, to make the most of the EU Single Market and cross-border eCommerce.”

Will these changes lead to a greater take up of cross-border eCommerce? Just as confidence has risen in individual markets, it seems likely that consumers across Europe will become more willing to buy across borders. It also seems likely that IREU Top500 retailers will continue to improve their international offers as they target new markets in search of growth.

Brands



Retailers selling into new markets within the trading bloc face an uphill battle to compete with brands, many of which now sell direct to the customer. It’s a peculiarity of eCommerce that traditional retailers, standing between the wholesaler and the customer, must become destinations in their own right in order to survive. The recent example of BHS in the UK highlights the idea that retailers cannot survive by being just an outlet for brands, or their customers will increasingly leapfrog them to reach the brand itself online.

The likelihood is that pan-European retail will continue to grow and to flourish over the coming years and decades – and it will be those retailers that make their offer more relevant to the shoppers they serve across a variety of markets that will most benefit as a result.
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