June 19, 2013, 12:46 PM

Southern Europe poses a unique set of challenges for e-retailers

Europe 500 merchants such as Public.gr enable shoppers to pay for orders in person.

Mark Brohan

Research Director

Lead Photo

Overall European e-commerce continues to grow, with total web sales across the region growing 16% in 2012 to an estimated $302.20 billion from $260.41 billion in 2011, according to the Centre for Retail Research in the United Kingdom.

But selling online in southern Europe—home to some of the Continent’s fastest growing e-commerce markets such as Greece, Italy and Spain—is an entirely different experience from Western Europe.

In such major Western Europe markets as France, Germany and the United Kingdom, e-commerce is mature, in some cases consolidating and dominated by the biggest chain retailers and direct marketers. In 2012, for example, the three biggest British retailers ranked in the 2013 Europe 500—Home Retail Group (No. 4), Tesco Stores (No. 5) and Shop Direct Group (No. 9) —generated combined web sales of $9.72 billion and accounted for 27.6% of all Europe 500 U.K. sales of $35.24 billion. In France last year that country’s three largest web merchants ranked in the Europe 500—CDiscount.com (No. 7), Ventee-Privee.com (No. 11) and Group 3SI (No. 12) —and their 2012 collective sales of $5.36 billion accounted for 29.1% of all Europe 500 French sales of $18.45 billion. In Germany, the $7.53 billion in 2012 web sales of Otto Group (No. 2) singlehandedly represented 36.0% of all Europe 500 German sales of $20.92 billion.

But e-commerce is not as concentrated in Southern Europe, where e-retail sales are growing more rapidly, though from a much smaller base. For example, Europe 500 sales in Italy grew year over year 23.4% to $3.53 billion in 2012 from $2.86 billion a year earlier. Europe 500 sales in Spain grew year over year 32.3% to $2.17 billion from $1.64 billion. In Greece, total e-commerce sales grew about 70% to $3.34 billion in 2012 from $1.97 billion in 2011, according to the Athens University of Economics and Business.

Southern European e-commerce markets are still developing their broadband Internet and mobile Internet infrastructures, and the number of consumers shopping regularly online is still building. Southern Europe also is the part of the continent that’s been hit the hardest by Europe’s lingering economic malaise. As a result, Greece, Italy and Spain continue to cope with government austerity measures, high unemployment and other economic problems. “There is a different mindset for how consumers shop online in Southern versus Western Europe,” says Joshua Bamfield, director of the Centre for Retail Research. “E-commerce is far from mature in the south, but many consumers like to pay in cash and aren’t likely to hand over their business to even a big name like Amazon.com just because they’ve heard of them.”

To develop an effective e-commerce strategy some merchants such as Retail World SA (No. 409), a Greek books, music and consumer electronics chain retailer, are giving local shoppers plenty of ways to pay for their online purchases, get free shipping or pick up their web purchase at a nearby store.

With unemployment that continues to hover around 20% and a recovery that some analysts don't see taking hold until at least 2014, Greece enjoyed little economic success in 2012.

But as Retail World continues to investment in e-commerce, online sales are on track to grow 8.4% to $16.8 million in 2013 and by as much as 50% annually over the next five years, says Retail World group e-commerce and digital manager Nikos Varvadoukas. “We want to be at the forefront,” Varvadoukas says. The Greek retailer is spending more than $400,000 to update its e-commerce program and give Greek consumers, who like to pay in cash and pick up their purchases in person, more ways to shop online. Retail World, which sells online at Public.gr, Multirama.gr, GetItNow.gr and Me&Home.gr, is offering Greek web shoppers free nationwide shipping through agreements with various regional and local delivery services.

Retail World also sees itself as having an edge over other Greek and international online retailers because it’s allowing shoppers to pay in person for online orders. That’s important because about 80% of purchases made on its sites are paid by the customer upon delivery, Varvadoukas says. “It’s popular since many people in Greece no longer use credit cards,” he says.

In addition to a free shipping program, Retail World lets shoppers buy online and pick up purchases in stores, a service known widely across Europe as “click and collect.” Consumers can make an online purchase and pick up and pay for their merchandise at about 40 stores. Retail World also has set up a series of drive-through locations across Greece where shoppers can have the package sent, pick up and pay in person—or reject the sale. “Many Greek consumers like to pay in cash and actually see the merchandise,” Varvadoukas says. “We have an advantage over other online competitors because we are building a national click and collect network.

Going forward, Retail World is also opening a store on Amazon.com that will sell an inventory of 30,000 books, CDs and DVDS from Greek authors and artists. Retail World also recently opened a new e-commerce site for Cyprus. “We are very well poised to grow online,” Varvadoukas says.

More on Public.gr and other metrics and analysis is contained in the 2013 Internet Retailer Europe 500.

The 2013 Europe 500 is available in three formats: print, digital and as part of the all-new and completely updated Top500Guide.com. Information on how to order the new 2013 Europe 500 is available here.

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