It’s the Friday of Halloween weekend and the scariest story I can think of is watching the old ecomm stats take a hammering for the weekend, but isn’t that every Friday. I was asked to follow on my look at the UK market with a comparative analysis of the US market. The granular differences I am continuing to analyse, but a look at the macro situation paints an interesting picture. I will get into finer detail in the coming weeks too as the data is big. I am seeing increasing interest from US companies looking into the EU, indeed we work with some and also the converse is true. The simplicity of English language conversion is terrific and makes life easy. Then you meet sales tax in the US, now there is a scary Halloween story worth a thought.
To qualify the ecommerce opportunity, here are some headlines.
Although my focus is not Asia, I thought it interesting to paint the picture emerging there. Asia had the highest B2c ecommerce sales in 2014, yet it has the lowest penetration rate (39%) of the population buying online. The market size at this level is already 2 times the size of the active buyer market in the EU and US combined. One can only surmise that as penetration increases, so too will the levels of activity. To me this does not necessarily mean we need to access these markets, YET. However the saturation and maturity of western markets will continue to be a draw for our Eastern partners. The free movement of goods also makes the large English speaking portion of the market easy to access. In the ever expanding world of Omni-channel, this is just an extension of the type of trade that is building in the EU and US.
Expanding your footprint
Growth rates are slowing globally, the triple digit growth days are slowing, not for everybody, but they are slowing. In the 4 years since 2011, Global ecommerce turnover grew from $1,014bn to $2,251bn or 121% for the period, underpinned by growth rates hovering around 25%, this year growth is coming in around the 15% mark. Now ask yourself, is your growth, underperforming, ahead of the market or where you expect it should be. The saturation of core markets and the complexity of engaging in global ecommerce will see growth steady off & the focus will come back to technology enabling change. In the EU, we have been laggards at this. Change is driving us.
The EU market size is double that of the US – are you listening out there in Idaho? Double. The size of the prize is not the problem; it’s the complexity within the EU that is continuing to be a struggle. There are increasing moves to harmonise the Single European Market, but the reality is that this will not happen to the degree required to make the transition seamless. The EU is, however a market place hungry for ecommerce. 15% of the 28 EU countries have purchased a product/service online through the internet from sellers outside of their country. Given our ease of mobility across the EU, we expect this to happen. There are many small countries with relatively small domestic supply for products/services and they have been high subscribers to Cross Border Trade (CBT). Detailed in the image below for reference:
Recent changes to VAT surely play into the hands of US companies looking to file VAT returns here and at a high level should continue to see investment from there filter through into the EU. If this is beyond their capacity, it is time to consider who has this capacity for them. An engaged market waits. However, we do have umpteen languages, a mix of mature and emerging economies, global uncertainty in economic stability and the decisions on the UK participation in the EU are surely topics, we should watch with one eye open. The opportunities to trade profitably with euro partners right now are exceptional, given the FX rates. We are seeing increasing sales rates in the UK where suppliers trading on the Euro have to give up margin to compete against the currency change. This is not a short term fluctuation you would think also. Soundings of a UK split continue to hold a grip on the EU, not to mention the current lack of cohesive policy consideration across members.
More EU Headlines
46% - The share of e-commerce in the EU GDP in 2014.
4M – the number of jobs currently held by B2C e-commerce sector
715,000 – the estimated number of B2C websites
4bn+ - the number of parcels sent in Europe in 2014
Did you know?
Belgians mostly use Safari as a mobile Internet Browser (57.5%)
10% Of all groceries bought in France last year were bough online
1% of all purchase in IT category from the Netherlands were purchased in a foreign country
Massively interesting is the cognitive persuasion required to challenge a UK customer to buy abroad. It is actually quite a counter intuitive point when we see the main reason for engaging in CBT.
Some Specifics – EU and US
The kicking cousins share some interesting similarities. When I looked at the mobile penetration in the UK, we could see a clear trend that tablets were dominating the mobile sales stats. The ratio of sales through tablet in the US is even higher than in the UK. See the graph left.
How have you designed your mobile strategy?
Interesting stat to point out - mobile sales increased by 48% in the western world, but by a whopping 164% in emerging countries. What does this tell us? This does not mean automatically everyone converts to online shoppers, however, as technology becomes more ubiquitous in everyday life others problems can be helped – simple things little more frequent customer communications can happen, advertising becomes more localised and customers will become more demanding and more distracted. Having not suffered the same saturation before, I believe gaining loyalty or point of difference with these markets will be even more challenging. The customer model will be different because the expectations of customers will be set by the customer and as online retailers, we will have to follow. This will undoubtedly create opportunities for new companies or parts of industry to emerge.
Given it is the week on the eve of the web summit, I would like to raise a point, I believe to be key and it is in relation to the above. We will see, I think 4,000 exhibiting companies this week in Dublin. IN my experience NONE of them have ever pitched a product to me. Imagine this, an ideal testing ground, clients, with data, with products who already have market knowledge and I cannot find someone to sell me a product. They are there to sell their companies, which to me is fine, but they are missing the point, build a case, build revenue, understand the problem you are solving for and prove it, prove it repeatedly until the point there is no doubt as to your “elevator pitch”, would there even be a need. I implore those going to engage with partners and look to the bigger picture of leveraging that industry. In return we may unlock the keys to delivering a seamless tax experience in the US for EU retailers; we might even find a human level translation tool or partner that can become part of a SaaS suite. The opportunities in this space are endless, the open mind approach works best and then let us do what we do and deliver your product to users. Sorry, I always have a Web Summit rant.
I have not gone too far into the challenges as I believe the opportunity is the most compelling part of the data. As the world continues to flatten and technology continues to enable all the we do or cannot do, we are not better positioned, really speaking, to solve the key problems. The power of storytelling and an ability to articulate how and why is still the key driver to solve these challenges as they arise. The global trends continue to emerge and our understanding of them is getting greater, as is the challenge. We respond better to people than technology, let’s not forget that. Our ability to bring a conversation to life is what drives everyday life and in general, business too. Since the days of barter, our ability to understand and facilitate motivation has always been a requirement. As we move onto new territories, our understanding needs to improve, our pencils need sharpened, and as our mothers told us, we need to keep our ears clean, for the need to listen has never been more important. Thank you Mom.