The eCommerce market in Europe is in a completely different place to where it was just a little under eighteen months ago. Since the COVID-19 pandemic forced a shift in consumer habits, digital adoption in Europe has accelerated from years to months – growing from 81% to 95%. In the last year, 67% of European internet users have shopped online, and now 70% plan to continue using digital services.
I’ve experienced this growth first-hand. Since the beginning of this year, I’ve signed terms with more than 30 international businesses that are growing their digital marketing teams in Europe. At Lorien, my team of digital and marketing recruitment experts – covering the end-to-end digital and product lifecycle from design to analytics – are fast becoming the leaders in delivering eCommerce strategies into Europe through sheer demand.
The eCommerce market in Europe is on the cusp of change, and as someone who has worked in the industry for over ten years, I am really excited for its future. Here’s my take on the current state of eCommerce in Europe.
The lay of the land: eCommerce in Europe
The eCommerce market in Europe was projected to grow in 2020 by 12.7%, to a value of EUR 717 billion. While country differences in digital maturity, COVID-19 restrictions, and supply chain disruption threw some spanners to growth in the works, there’s no doubt that we’re on the upward swing. In 2019, growth in the market was 14.2%, so the fact that the market grew at a similar (if slightly smaller) rate last year, mid-pandemic, shows real promise. Let’s not forget that last year, amongst navigating changing business needs, many eCommerce industries such as travel were out of operation.
As Europe moves out of lockdown and a lot of hurdles to growth are removed, I think we can expect big things, especially given the positive perception of the eCommerce industry over COVID-19.
A lot of European eCommerce growth is still concentrated in the West. With the highest proportion of online shoppers (83%), Western Europe accounts for 70% of the eCommerce market in Europe. In 2020, eCommerce sales in Western Europe alone jumped by 26.3%.
But this lead may not last forever. The pandemic narrowed the gap in digital maturity between different European countries, with the difference between the countries with the highest and lowest digital adoption closing from 32 percentage points to ten.
Despite having the lowest share of online shoppers (31% and 29% respectively), over the pandemic Romania and Bulgaria experienced the highest growth in Europe in their eCommerce markets – with an increase of 30%. This correlates with Romania’s rapid digital adoption growth, which spiked from 64% pre-pandemic to 89% during. The only country that grew faster in that time was Germany. As a result, we may see the imbalance between East and West even out in the future.
The growth of DACH
Speaking of Germany, DACH is a region to watch. German-speaking eCommerce markets are generating more sales than any other language area in Europe and all DACH markets experienced growth in 2020, including Switzerland (+27.9%), Austria (+17.4%) and Germany (+14.6%). Germany is the second-largest eCommerce market after the UK, and if DACH regions continue to grow, the country’s opportunities will be limitless. Of interest, is that in 2020 almost every second Euro spent in Germany was made on online marketplaces and platforms, showing an appetite for online collaboration which could really open up the eCommerce market cross-country.
The role of the UK
The UK is still Europe’s largest ecommerce market by a longshot; bringing in 200 billion euros in turnover last year. With the entire European ecommerce market representing roughly 717 billion euros; that means the UK is worth more than a quarter of the overall market. Germany, Europe’s next biggest player, is worth 83 billion euros, so approximately half of that.
As one of the most mature eCommerce markets, I often find that European companies use UK models as a template for building their own teams. There’s also a lot of appeal in hiring UK-based talent for this reason – why take time building up the knowledge when you can import it?
Unsurprisingly, the UK also has the highest percentage of online shoppers – 94%. Other countries with a high volume of online shoppers include Denmark (86%), Germany, the Netherlands and Sweden (all 84%).
Of course, Brexit may well challenge the UK’s eCommerce stronghold in Europe. While there’s no doubt that European markets are growing exponentially for eCommerce, and I have noticed an increase in building digital marketing HQs in Europe, I think it’s important to recognise the UK’s contribution to the market in terms of experience, knowledge, and success. Maintaining a presence in both UK and EU markets will be important for both sides, and I expect many eCommerce businesses will find ways to transcend borders (e.g. hiring remote talent) and simplify processes, rather than cutting into their market share.
Which brings me nicely to the rise of cross-country collaboration seen over the pandemic. In Europe, about a quarter (25.5%) of eCommerce happens across borders, and this has been rising steadily every year. In fact, cross-border B2C eCommerce is predicted to reach $220bn by 2022 – an increase of 51% since 2020.
The rise of cross-country collaboration could be linked to the huge variety in the type and severity of restrictions seen during the pandemic (e.g. classification of an ‘essential store’). For example, there was a fragmented approach to click-and-collect in Europe, with 31.6% of countries keeping click-and-collect services open, compared to 15.8% that said yes but with restrictions, 15.8% that said no and 36.8% that chose ‘other’.
Going into the new normal, the EU will want to patch these differences, and has invested in policies to ease cross-country collaboration and boost taxes (such as the Import One-Stop Shop (IOSS) legislation to ease the declaration and payment of VAT on distance sales).
Another important dynamic for cross-country eCommerce is heightened competition. Almost a quarter (23%) of Europeans are thinking about changing where they shop online, with 54% citing better offers. If eCommerce is set to become more Eurocentric, than many digital businesses will need to invest heavily in their user experience – from optimally functioning apps to strong supply chains and effective digital marketing. And this will naturally drive demand for talent in the industry.
Europe is going to be a really interesting market to watch for eCommerce growth over the next few years, especially as the UK settles into its new post-Brexit status. I see a lot of potential in cross-country collaboration and talent migration to strengthen Europe’s eCommerce offering overall and I’m excited to see it all play out. If you’re currently expanding your European operations, please get in touch with me for more information on how we can help you. With dozens of relationships with leading eCommerce and luxury retail brands across Europe – including in the UK, the Netherlands and Germany – we can help you achieve your business strategy.