E-commerce: in 2020, a turnover of more than 4000 billionWhile traditional retail is characterized by an overall global downtrend, online retail has grown by 23.6% in 2016. By 2020, online sales are expected to increase their shares even more, arriving at 14.6% of global sales for an estimated value of 4,058 billion dollars.
Back in 1998, just three years after the launching of the worldwide web, e-economy was not a foreign concept and word was already being spread about it: although many strived to be present on it from the very beginning, no one could have predicted the impressive development and enormous commercial potential that would emerge in the years to come.
Today we are light years away from this ground-breaking debut, as can be seen from the following statistics regarding this staggering phenomenon: more than 1 billion internet sites, 3.4 billion users globally (46% of the world’s population), and an estimated traffic in 2017 that should be greater than the sum of the previous years combined.
The value of international e-commerce retail sales arrived at 1,915 billion dollars in 2016, which is 200 billion more than 2015, and equal to 8.7% of total retail sales. However, while traditional retail is characterized by an overall global downtrend, online retail instead grew by 23.6% in 2016. Moreover, in 2020, online sales are expected to increase their shares even more, arriving at 14.6% of global sales for an estimated value of 4,058 billion dollars.
Worldwide, the biggest e-commerce markets are China, which is first in the classification with its 899.09 billion dollars spent in 2016 (almost half of the global market, equal to 46%), and the Alibaba group taking in first place in sales. Instead, the USA comes in at second place, with 423.34 million dollars in online sales, thanks also to the presence of the e-commerce giants Amazon and eBay.
And in Italy? The “E-commerce in Italy” report issued by Casaleggio Associati provides a clear picture of Italy as a country that is characterized by an increasingly popular online presence: around 88.7% of the population between 11 and 74 years old, equal to 42.6 million Italians, surfs online above all through mobile devices like smartphones and tablets (Italy in fact is the third country worldwide for the penetration of mobile devices, right after Spain and Singapore).
The B2C Italian e-commerce market, in fact, generated a turnover of 31.7 billion euros in 2016, with a growth of +10% over 2015, and positive results recorded across all sectors… leading the way are the segments of leisure time and tourism, which continue to hold onto the largest share in the market, accounting for 74% of the turnover. The other sectors that recorded the greatest growth trends in 2016 were health and beauty, followed by foodstuffs and by the online sites of big shopping centers. Fashion too experienced growth, thanks to the momentum provided by TV ads and the appearance of new players, but the share of online sales in this segment in 2016 is still only equal to 1.9%, even if the report issued by Casaleggio Associati forecasts a growth of +29% in 2017, and it is clear that in this sector there is still great unexpressed potential.
This is a well-known fact among international players in this industry, who have quickly positioned themselves in the key e-commerce fashion spaces in our country: the only contrast to their presence, besides the few e-tailers like the renowned Yoox-Net-a-Porter, are the e-commerce sites of Italian designer labels, which are often international only in the multiple languages offered on their sites, and those of big shopping centres. Among the e-tailers that have landed in Italy in recent years are included the German giant Zalando, which strongly believes in our country:
For many reasons – explains Giuseppe Tamola, Country Manager of Italy for Zalando – and above all, because in Italy around 50 million euros is spent in fashion: it is a market with enormous potential, when compared, for example, to other countries like Spain, which barely spend 11 million.
Zalando, which ended 2016 with a revenue of 3.63 billion euros, for a 23% increase over 2015, registered 20 million customers in 2016, for an upward trend of 11%. Although separate data regarding Italy is not available, it is a known fact that Zalando records steady annual growth trends in Italy that are close to being triple-digit. What, however, are the characteristics of our market when compared to other countries?
First of all, the widespread use of mobile devices has put the pedal to the metal on the use of our APP. – explains Giuseppe Tamola – The use of mobile phones also explains why in Italy two peaks in purchasing are registered: one in the evening, as is common to all the markets where Zalando does business. The second after mid-day: this means Italians make online purchases during their lunch breaks. Another characteristic of the Italian market is its payment system: the preferred method is cash on delivery. This means that there is little trust in the system of online payments. Moreover, many users do not even have a bank account or credit card….
There are then clear differences in the purchasing habits of men and women: while women spread their purchases out over an extended period of time, men instead have a behaviour that is similar to that of a ‘predator’, pooling all their purchases into one sole transaction.
A big part of the success of Zalando is the strategy adopted by the group that puts the customer in a central place of importance, with a personalized offer: “An aspect that we will increasingly implement in the future”. The activation of a logistics centre in Stradella, from which 60% of the products purchased in Italy are shipped, has allowed Zalando to give its customers instant gratification, thanks to a delivery system that ensures delivery within 24 hours from order placement.
If the customers are at the centre of the Zalando strategy, the brands that are present on the platform also have their very own special advantages. Besides having an additional distribution channel at their disposition, they can make use of a precious service:
Zalando becomes a bona fide partner to its brands – explains Giuseppe Tamola – our platform allows them to access a series of data that is essential to understanding customers and their tastes. For example, thanks to our platform, a small brand distributed in Italy can reach foreign markets and learn about which colours, materials, or shapes are the most successful in any one market, and adjust their offer accordingly.
As is true with other e-tailers, Zalando minimizes the impact that e-commerce has on traditional retail, maintaining an equilibrium between both online and offline sales, as complementary channels. It is not just lip service either: in Germany, Zalando is finalizing a pilot project aimed at its own retailers. Managed by an online tool of order processing, the gax-system allows small retailers to connect to the Zalando platform and use it as an additional sales channel.
While waiting for the new system to be fully functional, so that Italian retail can also take advantage of it, we can confirm that the performance of traditional retail in Italy is quite poor when compared to the rest of the world and, contrary to e-commerce, is characterized by an overall downtrend.
The research into global retail trends conducted by the international consulting firm PwC demonstrates how price is the main driving factor behind the online purchases of Italians, followed by convenience, and selection. It recommends that retailers go up against the e-commerce phenomenon, not so much by focusing on these factors, but by offering innovative communication on social networks, personalizing their offer, and creating a unique purchasing experience, with an effective and functional website and synergy between online and offline moments. And it also recommends:
Expertise also makes the difference: both digital and the operations of your very own teams, which must be capable of managing digital innovation. [What is needed is] an increasingly complex supply chain and the launching of new services to ensure customer loyalty.