Did you know ,40 of the top 500 e-retailers in Europe are U.S. Based Companies?
Internet Retailer chairman and CEO, Jack Love, says-“Despite its fragmented nature, the European e-commerce market is bigger than the U.S. market and is growing at roughly the same speed”.
With increasing number of U.S. based retailers entering into the European e-Commerce market, what are some of the major differences of selling online in Europe compared to the U.S.?
I have chalked out top 5 Points to compare and contrast your continent-specific e-commerce strategy.
- Marketing strategies :
These are usually developed with a country by country approach. These includes customizations such as site/e-mail language and currency changes. While messaging in the U.S. can be broad and reach the entire country.On the Other hand, a single marketing campaign in Europe may have to be translated in order to be successful throughout the continent. - Right of retraction (product returns) :
These regulations can be very specific .For Instance, different countries have different policies with the right of retraction (product returns) .In the U.S. there is usually one general rule or law everyone must follow. - Call Center Experience:
In Europe , this has been very unique than that in the U.S.In Europe people are more particular, if they speak English they prefer to talk to a British representative, if they are Spanish they prefer to talk to someone with a Spanish dialect, and so on.People in the U.S. are generally fine to talk to others from the U.S. to help with their concerns. - Checkout Experience: Payment and Delivery Methods!
These two factors can also vary by country. E-shoppers have a very clear preference for payment methods tied to their country.For instance in Netherlands, by adding a specific payment such as the IDEAL payment method can lead to a large increase in sales.Along side, in France delivery to “drop points” (I.e. pick-up locations in the U.S.) is very common phenomenon but with some other European countries this delivery service isn’t even an option - Tax Variations:
The VAT tax is also specific per country .It is important that local VAT taxes must be applied to e-Commerce transactions.For example, if you sell to a German e-shopper , you need to apply the German VAT tax to the purchase .As well as , you (the seller) needs to be VAT registered in each of the countries where you are shipping.In Europe, taxation of e-commerce is more universal and well-defined despite of having so many different countries.Whereas In the U.S. it seems to be much more varied because some states collect sales tax for e-commerce transactions and some do not.
However, the fastest-growing e-retailer in the Europe 500 is neither American nor European.It is Tokyo-based Rakuten Inc. grew 650% to $786.4 million in 2012 online sales.
Impact of the Emerging Markets
It’s quiet apparent e-retailers aren’t letting these obstacles get in their way as they expand their eCommerce presence not only to Europe but to Asia and the rest of the world.Investors are not overlooking the slow e-commerce growth in emerging markets.
- Lazada, a South East Asian e-commerce site raised USD100m. It operates across Indonesia, Malaysia, the Philippines, Thailand and Vietnam where the e-commerce opportunity is big, but the market is yet to mature.
- Meanwhile, the online retailer Jumia, which focuses on emerging markets, raised USD35m.This company, which launched last year, is based in Nigeria, but also active in Morocco and Egypt. They sell a wide variety of goods that include from mobile phones, sunglasses, games consoles and cigarettes.
- E-Marketer forecasts China’s e-commerce sales will increase 65% and Indonesia’s will soar 71% this year, helping drive growth in the Asia-Pacific region up 23%.
- India’s rapidly maturing e-commerce activity witnessed Flipkart’s successful raising of $200 million in its fifth round of funding .
In short, this article provides a glimpse of what is changing across the e-commercial world.
Kalpana Dogra
Marketing & Communications @ Avactis
