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What American Ecommerce Businesses Should Know About European Customers


November.18.2014 0 Comments

india-ecommerce

In the old days, expanding your business abroad was a lot harder than it is now. Ecommerce has removed some of the most important hurdles, and it actually facilitates crossing borders.

However, as most of the more experienced international ecommerce businesses might have realized, there’s still a lot to keep in mind when selling abroad.

In this blog post, I’ll discuss topics that ecommerce businesses considering selling their products online in Europe will need. I’ll also provide some useful insights for American ecommerce businesses already selling their products in Europe that wish to grow their businesses.

 

European Ecommerce Metrics

First, let’s take one step back and compare the key European market metrics with those of the U.S. to get a better understanding of its potential for American ecommerce companies. The two metrics I will compare here are market growth and maturity.

European Growth Compared with U.S. Growth

Research shows that online sales will continue to grow in both Europe and the U.S. While growth is declining in the U.S., Western Europe expects a stable 12% growth between 2012 and 2017, from $140 billion (€112 billion) to $239 billion (€191 billion). That’s a really great prospect for ecommerce businesses that are active in the European market.

Even better growth rates are expected in Southern Europe, with 18% per year between 2012 and 2017. Unfortunately, similar statistics could not be found for Central and Eastern Europe, but Statistica.com does say that B2C ecommerce sales for this market are expected to grow from $41.5 billion in 2012 to $73.1 billion in 2017, which is still pretty good.

growth-online-retail-sales-europe-vs-US

The big leaders in the European market are the U.K., Germany, and France, which will continue to account for around 75% of online retail sales in Europe.

online-retail-sales-in-top-european-countries

Much of the European growth is due to the rise of mobile payments, according to the Adyen Mobile Index. Europe is the region with the highest percentage of mobile payments, which are currently 24% of all payments. The U.K. leads with 41%; followed by the Netherlands and Spain, both with 26%; France with 18%; and Germany with 16%. In North America, mobile payments are 16.7%.

Maturity of European Markets

Growth rates indicate the potential of a market, but potential is not the only important factor when considering a foreign market. Readiness of the market is at least as important, if not more so.

Forrester has developed an “Ecommerce Readiness Index” by country, measuring a 360-degree view of a region’s online retail readiness, which includes factors such as consumer payment behavior, courier infrastructure, and disposable income.

The index measures the following pillars:

  • Consumer pillar. This pillar measures the sophistication level of consumer behavior to adopt online purchasing. Things like online tenure and usage of different payment types are considered.
  • Vendor pillar. This pillar measures company adoption and industry development to adopt Internet retailing. Some variables from this pillar include fragmentation of Internet retailing and the percentage of businesses selling online.
  • Infrastructure pillar. This pillar measures the overall economic and technological advancement within a country and includes factors such as broadband penetration, urban population, and parcel volume per capita.
  • Retail opportunity pillar. This pillar measures the potential retail dollar volume. It is calculated using the potential near-term retail sales and the percentage of the population buying online.

The fact that these countries score lower than the U.S. but still fall within a very acceptable range can actually be a benefit for American ecommerce businesses. After all, customers in these countries will have lower expectations than your American customers, so you will be able to impress them with your high standards. Doesn’t that make these countries sound a lot more interesting?

maturity-of-ecommerce-europe-vs-US

So, now you know that some European countries (especially in the south like Italy and Spain) have greater growth rates than the European average, while other countries (like the U.K., Germany, the Netherlands, and Norway) have a more mature ecommerce market. The question is which countries should you invest in if you want to start selling your products online in Europe?

The answer depends on the products you sell and the people you want to sell them to. Since the products of all of you readers are diverse, and since the discussion on how to do competitor analysis in Europe should be a separate article (which I’d be happy to write for you one day), I’ve decided to focus on the people you are selling to. Therefore, the next part of this article will be about Europeans and their ecommerce needs.


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