E-commerce in Europe 2016: Facts & Figures


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Following the success of our E-commerce in Europe 2015 study last year, Twenga Solutions has analysed the latest online retail trends to anticipate what e-retailers can expect from the industry in 2016. What do European consumers buy? Who are the top European retailers? What are some of the challenges retailers face? Discover all in the 2016 edition of our study and to learn even more, don’t forget to download the complete e-commerce in Europe study!

 

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An overview of e-commerce in Europe

Great online potential for the European market

With a population of over 821 million of which 73.5% use the Internet[1], the potential for e-commerce in Europe is huge. What’s more, these users are certainly fans of the online shopping scene: it is estimated that nearly two thirds made purchases over the Internet in 2015, with clothes and sports-related products being the most popular type of goods and services[2].

Within Europe, we find that Internet use and purchases online vary significantly amongst the different countries. The United Kingdom leads the way with 81% of individuals buying online in 2015, followed by Denmark and Luxembourg with 79% and 78% respectively.

Proportion of individuals who purchased online in the last 12 months

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Continual and regular growth in Europe

The online retail sector is the main driver of growth in European retailing. While e-commerce growth rates hit 18.4% in 2014 and 18.6% in 2015, growth is not expected to cease in the coming years with Retail Research predicting 16.7% growth in 2016 and 15.7% in 2017[3].

The UK, Germany and France dominate the online market in Europe: They do not only hold the largest online share of retail trade in their respective markets, but are also together responsible for 81.5% of European sales.

Online Share of Retail Trade

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Online retailers and their e-commerce strategies

The omnichannel experience in Europe

Providing an omnichannel experience is a clear priority for European retailers and with more and more sales now taking place online, physical stores are taking a on a role similar to a ‘showroom’. When asked if their company has already or planned on linking their online sales channel to their store-based one in the next 2 years (through click-and-collect or in-store online shopping for example), a huge 78% of European retailers replied ‘yes’.[4]

Ninety percent of Spanish and 80% of Dutch retailers have already linked their online-to-store channels.

Multi-channel strategies in Europe

With consumers moving to alternative channels for their purchases, retailers are being forced to adopt a multi-channel strategy. According to Twenga Solutions’ merchant survey, 29% of European retailers sell through 2 or 3 acquisition channels, while half are selling through more than 3 channels[5].

Number of customer acquisition channels per online retailer in Europe

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Europe and cross-border trade

Although 3 percentage points down from 2012, the large majority (88%) of purchases were national  in Europe in 2015. A growing trend on the other hand, is purchases from other EU member states, which increased from 25% in 2012 to 30% in 2015.

Although less popular, purchases from countries outside of the EU are also on the rise, increasing from 13% to 18%[2].

National and cross-border online purchases by EU shoppers

2012 vs. 2015

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When purchasing within Europe, statistics from Postnord[6] show that the UK, Germany and the Nordics are the most popular markets to buy from.

Consumer behaviour and expectations per European market

What are Europeans buying online?

The same study from Postnord[6] also goes into the different types of products European consumers are buying online. Due to their strong tradition of being sold by mail order, clothing and footwear is generally the most popular product category, followed by home electronics and books. The Italian market is the only exception, where home electronics are on the top of the list.

Top product categories in Europe

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Delivery preferences in Europe

In terms of e-commerce deliveries, the Dutch have the highest expectations hoping to receive their purchase within 1-2 days[6]. The Spanish market on the other hand proves to be slightly more patient, with one in four willing to wait up to six working days.

Proportion of respondents who expect deliveries in 1-2 days

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The importance of easy returns

Trouble-free returns are considered as an important factor for online shopping, however the Spaniards and Italians rate this as the most important, despite returning purchases less frequently than their European counterparts.

Proportion of consumers who returned an item in the past year

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Payment preferences in Europe

While paying with a debit or credit card is a popular option in most of the markets, the Germans would rather use PayPal or similar services and the Polish have a preference for direct payments through their banks[6] using services such as DotPay and PayU.

PayPal is the second most popular choice in the UK, France, the Netherlands, Spain and Italy, while the second choice for Germans is to pay for their purchases by invoice in arrears. Payment with cash on delivery (COD) is the second most popular choice for the Polish, and the third most popular for the Spanish and Italian markets.

Preferred method of payment for products bought online

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Online advertising and m-commerce in Europe

M-commerce in Europe

Besides consumer expectations regarding services, the way to reach new clients also varies significantly per country. In our most recent m-commerce study, we studied the importance of mobile and found that while 31.1% of e-commerce traffic is on mobile in the UK, this rate stood at just 8.3% for Poland[7].

Mobile traffic share per country

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Furthermore, while the majority of countries in the study choose smartphones as their preferred mobile device for online shopping, the Netherlands is the only country that prefers to shop on tablet.

Digital advertising spend per European market

The amount retailers are choosing to spend on advertising is increasing year on year. As a percentage of total media ad spending, Western Europe is expected to increase its digital advertising spend from 31.6% in 2015 to 33.3% in 2016. A similar trend is expected in Central and Eastern Europe, where digital ad spending is expected to rise from 29.3% to 31.6%[8].

Of the different countries in Europe, the UK has the largest digital ad spend share at 49.6%, which is expected to increase to 51.9% in 2016.

Digital Ad Spending Share of Total Media Ad Spending

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Advertising channel distribution

According to Twenga’s Q1 online advertising study, SEM is the biggest online advertising channel with a 57% share. What’s more, the average basket size for SEM retailers is 20% higher than the overall average and 35% higher when compared with retailers using Display.

This trend is reflected in the rise of e-commerce solutions for Google Shopping and services to optimise Google AdWords campaigns, both of which are significant platforms for e-commerce digital advertising. Their rise in popularity is also apparent in terms of consumer usage: the latest Digital Advertising Report from Adobe[9] shows that although CPCs declined by 3% on Google between Q4 2014 and Q4 2015, CTR increased by 15% YoY, indicating that consumers are responding to the ads they are seeing.

CPC & CTR growth YoY

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Google remains the dominant search engine and the first choice for the vast majority of users. This, along with improved click-through rates and decreasing CPCs makes Google’s advertising solutions an evident choice for online retailers in 2016.

Conclusion

There is absolutely no doubt that Europe is a key market in terms of e-commerce. With significant year-on-year growth, yet much potential still to come, online retailers should not dismiss the opportunities Europe holds.

While France, Germany and the UK can be attractive markets due to their size and success, emerging markets such as Spain and Poland should not be forgotten about, both of which are expected to see significant sales growth in 2016, with 18.8% and 17.8% growth respectively according to Retail Research[3].

However, no matter the market all e-retailers are set to face a range of challenges in the coming year. Twenga’s 2016 merchant survey recently revealed that European online retailers consider customer acquisition, business profitability and competition with other e-commerce sites as their top challenges[5].

Main challenges as an online retailer

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In terms of customer acquisition in particular, Search Engine Marketing is the most popular channel for acquisition, yet e-retailers are still faced with an array of issues. Bid management, profitability and keyword management are the top 3 challenges in SEM[5].

Main challenges in managing Search Marketing campaigns

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Thankfully the rise of advanced technologies such as real-time bidding are set to tackle such issues. What’s more, the power of SEM is also set to help tackle underlying issues such as basket abandonment and repeat buyer rates.

Want to learn more about e-commerce in Europe? Check out our range of guides and infographics to get a head start on this market!

Sources:

[1] Internet World Stats: Usage and population statistics

[2] Eurostat: E-commerce statistics for individuals

[3] Retail research: Online retailing in Britain, Europe, US and Canada 2016

[4] PAC – Omnichannel retail in Europe

[5] Twenga Solutions: Customer acquisition survey 2016

[6] Postnord: E-commerce in Europe 2015

[7] Twenga Solutions – M-commerce in Europe 2015

[8] eMarketer: How does global digital ad spending vary by region and industry?

[9] Adobe – Digital Advertising Report Q4 2015

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E-commerce in Europe 2016

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