Ulf Weihbold

E-Commerce: is Europe behind or just different?

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This is a guest post by Ulf Weihbold, Head of Profit Development and SEM Analyst for Smarter Ecommerce, in Linz, Austria.

When it comes to e-commerce there is a general understanding that Europe by far is not as advanced as the US. Sometimes you even hear that Europe is several months or even years behind. This might not actually be entirely true. Maybe a better question to ask should be: are these two big markets even comparable?

How big are the markets?

The European e-commerce market was estimated to be worth about 106 billion Euros in 2006. According to the US Census Bureau e-commerce counts for about 4.1% of all retail sales (78,426 Mio. USD in Q1 & Q2 of 2010) in the United States. In 2006 e-commerce retail sales were 113,936 Mio. USD.

The European e-commerce can’t be seen as a one big market itself since there are major differences from country to country. Basically it could be categorised ias the following markets:

  • A very mature market in northern Europe, including the United Kingdom, Germany and the Nordic countries, where between 60% and 80% of all internet users are e-shoppers
  • A growing market in France, Italy and Spain, where the total number of e-shoppers is lower compared to the numbers of internet users, but the number of new e-shoppers is growing very fast.
  • An emerging market is found in Eastern Europe, for which statistical data is lacking or unreliable.


This categorization does make sense, especially when specific data is compared on a country-level: In the UK 66% of individuals ordered goods over the internet for private use in  2009, almost the same number is shared by countries like Germany, Denmark and the Netherlands. The most impressive numbers come from the Scandinavian countries like Denmark, Sweden, Norway, Finland and Iceland, where about 91% of internet users had traded over the internet in the last 6 months. In contrary to these high percentages are figures from countries like Bulgaria or Romania, where only 2% to 5% of Internet users are e-shoppers.

The border problem

The main difference between these fragmented markets in Europe and the one very big market in the US are the borders within Europe.

In 2009 51% of all EU27 retailers sold via the internet, but only 21% of all European retailers were selling and advertising across all borders. Going into detail the numbers get even more scary: The main percentage of retailers only sold to one or two countries and only 4% of all retailers who conduct cross-border trade usually only trade with 10 or more EU member states. Advertising is closely connected: Only 21% of cross-border retailers advertise in more than one country.

These facts have a big impact on consumer awareness: 55% of all Europeans have never come across advertisements from sellers in other EU countries, but over half of those who have come across advertisements from other EU countries have also made a cross-border purchase. That sounds like a big business opportunity, but this opportunity comes with a couple of challenges (Source: EU).

While e-commerce is generally growing in Europe, it is still very uncommon for consumers to purchase goods or services in other countries. It can be generally said that this gap is widening: from 2006 to 2008 the percentage of e-shoppers in the EU rose from 27% to 33%, but cross-border e-commerce remained stable at about 6%. Still the numbers vary from country to country: 38% of all e-shoppers in Luxembourg have bought goods or services from an e-tailer in another EU country. In Portugal only 2% have done so (source: EU).

What are the biggest barriers for not conducting cross-border sales?

The most common barriers for European e-tailors are, as always in Europe, the big differences in language and culture.

Especially when it comes to advertising differences in culture and language often require completely different marketing campaigns or approaches. This is not only valid for print or TV advertising, but also for PPC and online display advertising. One might think that a good performing PPC campaign in Germany would perform equally well in Austria (same language) but in fact it is not. Country specific factors for advertising always have to be strongly considered for creating and undertaking successful marketing undertakings, especially since the complexity of understanding customer demographics outside of the home market is very high.

The challenges for SEO are also very big: Google has country-specific domains for every European country, so good rankings for one TLD doesn’t necessarily imply good rankings for other domains. Also price comparison websites do not generally operate on a cross-border basis.

So for conducting cross-border sales an e-tailor has to maintain website(s) in multiple languages, invest in country and/or language specific SEO and run multiple marketing campaigns which are also different for every country or language.

Other country specific factors cannot be influenced by e-tailers themselves, like internet broadband penetration. According to a study from McKinsey broadband access can drive sales significantly:

The broadband penetration rates are very different from one country to another. According to data from the OECD the percentage of broadband subscribers (DSL, Cable and Fibre/LAN) per 100 inhabitants in the Netherlands and Denmark is 37%. In UK, Germany, Switzerland, Norway and France about 30%. The lowest rates are Czech Republic, Slovak Republic or Poland with roughly 10%. The rate for the US about 26%.

Although here also cultural differences come in to play: France for example, while matching Germany’s broadband penetration rate, the rate of online retail sales are no more than half as high. This is just another example which shows very clearly that the different markets in Europe are not really or hardly comparable with each other.

Other challenges for e-tailers are providing after-sales support and possible problems concerning logistics like increased costs of delivery (the “border effect”) or the difficulty to set up reverse logistics for returns. Not to forget different legal requirements in every country and different efficiency levels of postal or payment services.


Costs for European e-tailers for reaching a number of potential customers which is nearly comparable to the the US market are significantly higher. These costs and associated risks are often too high for smaller e-tailers and SMBs.

So I think it is fair to say that these two markets are not comparable, that it is not possible to say that Europe is behind: Europe is different!

  • Gabriela

    Just to point out 78.426 in german is 78,426 in english.

    • Steve O'Hear

      Fixed. Thanks.

  • http://everydaypanos.com everydaypanos

    The Berlin Wall of Languages is the single most important thing. It’s the holy grail of e-commerce in different cultures.

    It is very disappointing that very few, I can think of only 1, EU e-commerce platforms that take multiculture/multilingual as a their No1 priority. More important even than “prices, selection and shipping” as Bezos puts it.
    And no, a little flag that translates ‘Account’ into ‘Konto’ is not enough. What about product description? Product titles? Customer service? VAT and billing in general? And all the above have to be local-perfect and be fast.

    SEO is also very important because Google, as 90% of all(!) Silicon Valley companies, just don’t get what multilingual really is. HTML5 is broken because it also doesn’t provide a standard, not even a best-practices tip, of making multilingual SEO perfect websites. Sad Day. Really.

    Or maybe not… http://anamo.eu/m/personalize

  • http://Twitter.com/Ulef Ulf Weihbold

    Totally agree with you! Perhaps we will once have a european lingua franca…. but that’s gonna take ages..

    • http://everydaypanos.com everydaypanos

      I’m sorry, but No.
      Europe is special. Because it does not steamroll everyone who doesn’t speak English. People don’t like to speak/think/read in foreign languages. They LOOOOVE their mother lang and technology should serve that purpose. What ever he cost.

      United in Diversity is the motto. E-Commerce startups should get a clue.

      Besides, who would like to live in Cupertino, speak English, and the most cultural thing in their lives to be Police Academy, and Shakespeare. Boring. So.

      • http://everydaypanos.com everydaypanos

        *Shakespeare* #epicfail

  • http://www.medialinkzone.com Mediaman

    Hmm. I’m not sure it does seem that US is better but the article seems to give good reasons as to why Europe is behind.

  • http://www.paybymobile.net Liam

    Hi Ulf – the major problem is the one that you only touched lightly on – logistics, being the cost of deliveries & returns.

    This is doubly so for the multi-channel titans who dominate in national markets. e.g. Argos in UK is #1 high street retailer & #2 online. Their results to Feb 2010 report sales at £4,347 million of which 31.7% was online but within that –
    £413 million (9.5%) was online for home delivery
    £965 million (22.2%) was online to collect in store powered by their “check & reserve” solution.

    It is this fire power that Argos lacks if it attempts to sell outside of its UK base – the ability for 1/5th of all sales to collect their online order in the bricks & mortar store.

    • Geert

      Agree, delivery costs often defeat the advantage of buying online even from another country in Europe. European e-commerce will get a boost once it is possible to offer EU-wide free or cheap deliveries.

  • http://www.jumpb.dk Anders Andersen

    I agree. Europe is loosing the advantage of “the long tail”, why the benefit of cost of scale is less in Europe.

    Also it is very difficult to enter and conquer an forging market. Many etailers try, but very few succeed. I believe the solution is to enter one market at the time, and focus firmly on becoming a success, before doing the next European market. Many try to launch on all European markets at once, with a English site, but that will never make you market leader.

  • http://www.etailinvestor.com Etailinvestor
  • Ves

    Europe isn’t behind but more different. Because of much skepticism around using credit cards it’s harder to penetrate the market like in the US, where having a credit card is most common.

    During the times when the Euro was almost equal to the Pound, you could see a major boost in e-commerce sales. Showing price is also the factor it looks like Europe is behind, but it actually isn’t.

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  • http://www.arekskuza.com mrskuza

    I like that: Europe is different so it has great advantage as we are not easy to win the start up game here. I love it. So wrap up your sleeve and conquer Europe.

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  • http://www.thewebserviceblog.co.uk Jim Williams

    Interesting article with lots of pertinent facts. Europe is of course a patchwork of varied cultures. Broadband may be bridging the gaps technologically, but there are myriad differences making cross-border e-commerce a tricky proposition. They can be overcome! Here’s a white paper discussing the issue of international address formats: http://www.postcodeanywhere.co.uk/assets/Pdfs/international_white_paper.pdf

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  • http://www.enterprise-ireland.com John Smith

    Surely one of the big issues is the difference in post and packing charges from many e-tailers when asked to ship cross borders. Maybe the Commission should look into this if they truly want a Single Market. I can’t see any justification for the scale of increased charges, seems a bit like the old mobile phone roaming problem.

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  • http://www.mediashop.tv Ernst Krippl

    Hi Ulf,

    many thanks for your article! – Actually I have the problemes you are talking about. We are an Austrian based company selling our products online – only into german speaking countries: Germany, Austria, Switzerland. The different currency in Switzerland is the smaller problem – Switzerland has many different laws concerning importing products from other countries. Germany has special laws for packaging. But the real problems are starting now: We try to enter the turkish market. Now I try to summarize the things I am confronted with: Translation into a language which I do not know. After we have thought that we are ready which translation, some turkish employees who are working for our company told me that it is a bad translation. Ok who can I trust employees or the translator? – SEM is a much bigger problem: you have only very small space to write ads. When you do this in your mother language it is easy – but in an foreign language it is nearly impossible. SEO – :-) :-) :-) you have to be a masochist. But thats not all: Mastercard and Visa is a “worldwide payment option”?. Yes, but not everywhere in the same way. In Turkey these cards are bank branded and combined with bonus points. Nobody will use Visa and Mastercard when he can buy the product in an other onlineshop where he can pay with “Bank Asya”, “Bonus Card”, “Maxxum”, etc… and get additional “bonus points”. (Finding a PSP who can opperate these cards is impossible) – Next thing: The turkish nic – registry. You only can register a domain name if you have the trademark. We have a lot of trademarks – but they are already registered from turkish companies??? Now I am looking for an turkish lawyer who is familiar with the turkish domain and trademark laws. Ulf you are right – e-business in europe is much much different from homogeneous markets like the US. By the way – I had a look to your website – very interesting software. Please contact me I want to test it. Does it support different language?



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