A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
The total numbers are small compared to the U.K. and Germany, but e-commerce in Central and Eastern Europe is growing nearly twice as fast, according to data in the Europe 500.
As an e-commerce market, Poland isn’t anywhere near as large as the online retail markets in the United Kingdom, Germany and France. In the U.K., the 148 web merchants ranked in Internet Retailer’s newly published 2014 Europe 500 generated combined web sales of 31.03 billion euros ($42.84 billion), which is 47 times bigger than the combined sales of 653.0 million euros ($901.4 million) of the five Polish Europe 500 online retailers.
In comparison the 63 German merchants ranked in the Europe 500 and their combined sales of 18.26 billion euros ($25.71 billion) were about 28 times larger than the Polish Europe 500 companies and the 14.38 billion ($19.75 billion) in collective e-commerce revenue generated by the 79 French retailers ranked in the 2014 edition was 22 times bigger.
But as an e-commerce market the Polish Europe 500 merchants grew at a much faster annual pace of 28.2% than the U.K. Europe 500 merchants at 14.7% and the Germans at 15.1%; the growth of the Polish e-retailers was just slightly more than that of their French counterparts in the Europe 500, whose sales grew 23.5%. Online retail sales in Central and Eastern Europe are growing much faster today than European e-commerce as a whole, according to trade group and research organization Ecommerce Europe.
In Eastern Europe, which includes Russia, Ukraine, Romania, Bulgaria and other nations, overall e-commerce sales, reached 19.30 billion euros ($26.38 billion) in 2013, up 36% from 14.20 billion euros ($19.40 billion) in 2012, according to ECommerce Europe. Those estimates include ticketing, travel and value-added taxes, as well as retail sales. In Central Europe, which includes the Czech Republic, Hungary, Poland and other countries, 2013 e-commerce sales totaled about 7.00 billion euros ($9.56 billion), an increase of 24.3% from 5.63 billion euro ($7.70 billion) in 2012.
In comparison, total European e-commerce sales increased 15.1% to 358.6 billion euro ($491.8 billion) in 2013 while the combined sales of all merchants ranked in the 2014 Europe 500 increased 17% to 112.45 billion euros ($155.23 billion) last year from 96.08 billion euro ($132.62 billion) in 2012.
Many countries, such as Poland and the Czech Republic, are home to some of Europe’s most stable, diversified and fastest-growing economies, says ECommerce Europe. Certain Central and Eastern European countries also have many highly educated workers with steadily growing incomes who increasingly shop online, says ECommerce Europe statistical board chair Wijnand Jongen. “There is a lot of potential in the Eastern European e-commerce market,” Jongen says. “Only 27 million of 162 million inhabitants are shopping online, and that number is bound to increase.”
Some Eastern European web merchants have spent a long time building up their e-commerce base and waiting for the online retail market to flourish. It’s been a long and slow climb of a dozen years, but Alza.cz, the largest online retailer in the Czech Republic and No. 68 in the Europe 500, is well positioned to take advantage of the fast-growing Eastern Europe e-commerce market, says general manager Oldrich Kurl. Since 2002 when Alza.cz started selling computers and electronics online, annual web sales have grown from about 11 million euros ($15.1 million) to 334.6 million euros ($460.4 million).
The same can be said for e-commerce in the Czech Republic where e-commerce sales grew 19.3% in 2013 to 2.10 billion euros ($2.89 billion) from 1.76 billion euros ($2.42 billion) in 2012, according to Ecommerce Europe. In recent years Alza.cz has morphed from an online electronics retailer into a mass merchant with an inventory of nearly 50,000 products. In the past year Alza.cz also launched its own delivery service in order to fulfill and deliver orders the same day as they are ordered in and around Prague, and its own private-label credit card. “Key factors including stock availability, extensive product range, the expansion and enhancement of our sales, and after-sales services have contributed to our success and help us satisfy the most demanding shoppers,” Kurl says.
Alza.cz in April 2014 opened its 40th showroom in the Czech Republic where online shoppers can arrange for a pick-up, return unwanted merchandise, and talk with a sales associate to place orders for more complicated and specialized products.
“In 2014 we will continue to strengthen the branch network in the Czech Republic and the Slovak Republic,” says Alza.cz director of sales networks Tomas Richter.
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