Growth forecast of cross-border online sales in Western Europe
According to a recent research report by Forrester, the European online cross-border retail sales will reach the astonishing number €40 billion by 2018. The predicted annual growth rate (CAGR) will be 11% over the next five years. An increasing number of consumers will be buying from across borders, in particular within the European borders, which will be due to a number of factors.
E-commerce professionals will continue to strive for growth across borders and since smaller e-commerce markets have less e-commerce maturity, it will be especially them that are fueling cross-border sales. Furthermore the broader assortment of products and better deals, as well as better value and product availability drives consumers from the smaller e-commerce markets to buy from retailers in foreign markets. Whereas more mature e-commerce markets have access to greater price competition and product availability and will more likely shop within their own online market.
Cross-border e-commerce within Europe
The number of cross-border buyers is rising and will continue to climb. Especially in the smaller e-commerce markets Italy and Spain the highest growth of cross-border buyers is expected. With 42% in Italy the highest percentage of online shoppers will buy goods from another European market. In Spain this will be 41% of all online buyers and in the Netherlands 30%.
Due to the aspects mentioned above these markets are very susceptible to offers abroad. By 2018, 83% of all European cross-border buyers will choose to purchase from another European market rather than from a market outside Europe. It is estimated that 64% of cross-border sales in Western Europe will be within European borders and only 36% outside the European market.
The potential of cross-border sales for e-commerce professionals
With regard to the growth of cross-border e-commerce it has to be taken into account that this is also due to the opportunities cross-border sales offers to e-commerce professionals. Marketplaces allow them to cross borders more easily and are helping to embrace cross-border sales and navigate complex competitive environment. Those marketplace offer fulfillment services to tackle Europe’s varied payments and fulfillment landscape. In addition it enables retailers to use partners to cut through the complexity associated with European cross-border sales in areas like payments, language, fulfillment and pricing.
Retailers and wholesale organizations view the expansion into new markets as a critical part of their revenue growth strategy and increase their efforts to capture cross-border shoppers. Thereby they play a pivotal role in the predicted boost of cross-border sales.
The European market presents obstacles
However, cross-border e-commerce faces enormous challenges and the local market nuances continue to hinder the cross-border buying experience on account of differences in consumer preference in areas such as delivery and payments. Cross-border e-commerce loses its appeal when retailers fail to localize the customer experience by accommodating these differences. The complexity of regulations will persist on the way to a single digital market. Hence, it will be necessary for e-commerce professionals to align their systems and processes to win, serve and retain retail customers across borders.
Consequences of increased cross-border sales
The growth of cross-border e-commerce within Europe will also entail more competition for the eBusinesses, as they will have to count international competitors to the group they are up against. Therefore they have to harness their knowledge of domestic as well as cross-border online buyers to constantly enhance the online shopping experience. Furthermore the need for cooperation with third parties will increase, in order to optimize the flow of inventory, supply chain and logistics. Only a localized approach enables to communicate the appropriate way with the customer abroad.
The digital single market
Even though efforts have been made by the European Commission to create a single digital market and reduce regulatory barriers to European cross-border sales, it will be a long road ahead before these plans will be realized on a broad scale. Thus, the tangle of regulations will thwart the speed of growth in cross-border sales. Retailers must monitor and manage the impact of these different and evolving European market regulations to a single market, therefore mutual support between retailers and assistance from dedicated internal resources will become more and more important.