If you are thinking of starting your e-commerce venture or entering a new market with e-commerce being your key sales channel you may find this article useful for making the right decision.
E-commerce is rapidly growing in Europe and it represents a central pillar for the Digital Single Market. While some countries are aware of the fact that e-commerce can be a key driver for economic growth, others don’t seem to attribute the deserved attention, therefore e-commerce development ends up having no or low priority on their agenda. E-commerce can increase productivity, create new jobs and decrease inefficiencies. The benefits for the governments, the end-users and the companies are evident – empowered customers, convenience, access to global markets, cost-efficient inventory management are only a few. However, it certainly poses challenges such as security, data privacy, increased competition, constant upgrade as new technologies evolve etc. In order for e-commerce to be able to flourish and prosper there are prerequisites that should be taken care of so that the field for growth is set.
The four key indicators that are part of the UNCTAD B2C E-commerce index(the index developed by UNCTAD that shows the readiness for e-commerce development of a country) are the share of individuals using the Internet, share of individuals with credit card, secure servers and postal reliability score. In addition, there are cognitive barriers that hinder e-commerce growth in developing countries such as cash-reliant societies, lack of digital skills and IT literacy of the population, lack of sophisticated payment solutions etc. The seven policy areas consisted in the eTrade for All initiative taken in consideration when creating a country’s strategy for e-commerce development are: e-commerce readiness assessment; ICT infrastructure; trade logistics and trade facilitation; payment solutions; legal and regulatory framework; e-commerce skills development; and access to finance. A holistic approach is inevitable as e-commerce cuts across various industries and everyone is affected.
If a country wants to create a favorable climate for growth and prosperity of the industry it needs to start by addressing the following three questions: (1) Where are we today? (2) Where do we want to be?; and How do we get there? (3).
While answers to questions no 2 and 3 are tailored to each country, let’s take a look at the basic question and compare the current state of e-commerce across the European countries.
The leader in online shopping is the United Kingdom with 86% of the population with internet access making online purchases, followed by Sweden (84%), Denmark, Germany, Luxembourg, Netherlands, Switzerland (82%). Countries lagging behind the most are Montenegro (18%), Macedonia (20%), Romania (23%), Bulgaria (27%) and Turkey (32%).
YOU MAY ALSO LIKE
The top leading countries in online shopping are also ranked the highest in the B2C E-commerce index (Information Economy Report 2015 “Unlocking the Potential of E-commerce for Developing Countries”, UNCTAD) indicating a strong positive correlation between the readiness for e-commerce development in the country and the actual state of online shopping.
In addition, according to the E-shopper Barometer 2017 – Global Report Europe, a research conducted across 21 European countries and Russia, when it comes to frequency of online purchases the average annual volume of online purchases is also correlated to the share of online shopping.
The UK is extending its lead as the main e-shopping market in Europe and has the highest average number of purchases online (annually) per buyer or 10.8, followed by Polland 7.2 and Russia 6.2. In Europe, e-shoppers declare they make 11,3% of their purchases online. Heavy buyers in the UK make 47 online purchases annually and on average one-third of e-shoppers make up 86% of total online purchases.
However there are some countries that are ranked high in B2C e-commerce readiness, but at the same time have a small share of online shoppers (for example the B2C e-commerce index estimated that 13.5% of the Macedonians should be online shoppers in 2015 but the reality was that only 5.4% of the population had placed online orders). The reasons for this can vary from a low offer from retailers, low digital skills of the population, preference to shop in person and reliance on cash payments. Therefore companies looking for spreading their business with e-commerce in new markets should take into consideration numerous indicators.