The acquisition will add more than 300 products to L’Oreal’s lineup.
European online retailers step out of their home countries to tap into sales across the region.
Marks & Spencer plc has big growth plans. The U.K.-based chain retailer aims to grow its international sales by 25% and profits by 40% over the next three years, and it plans to employ its physical and web stores in concert to hit those targets.
The retailer is particularly focused on Western Europe and Russia, with plans to build 20 new stores in Paris alone and 250 stores internationally over the next three years. Those bricks-and-mortar locations will enable more shoppers to buy online and pick up their selections at a neighborhood shop.
"Our strategy of becoming an international multichannel retailer is more relevant than ever before because of the strong growth potential of international markets," CEO Marc Bolland said in April when he announced the plans.
Even before it launched its aggressive push, Marks & Spencer was already a major retailer. It is the 17th largest online retailer in Europe, according to the newly published Internet Retailer 2014 Europe 500, with an e-commerce operation that booked nearly 1.1 billion euros ($1.52 billion) in online sales last year, a 24.1% gain over 2012. And it operates more than 1,200 stores worldwide.
Marks & Spencer is not alone among top-performing retailers in setting its sights on selling more online throughout Europe. Several of the largest and most successful European online retailers are expanding their sales horizons throughout the Continent to capture more e-commerce revenue. In many cases they're expanding from established e-commerce markets like the United Kingdom, France and Germany into higher-growth regions like Eastern and Southern Europe and Turkey. To tap that growth, they're learning how to deal with local language, regulations, payment methods—and competitors.
The top European online retailers' plans are in line with similar trends around the world, says Zia Daniell Wigder, a Forrester Research Inc. analyst who specializes in global e-commerce. "Today it's rare to encounter a large e-commerce organization with purely domestic aspirations," she says.
These retailers are expanding into new markets to try to drive growth at a time when European retail sales are flat. Retail sales fell 0.9% in 2013 in the 17 nations that used the euro that year and 0.2% in the 28-country European Union, according to Eurostat, the EU's statistics agency. But it was a very different story online. The retailers in the Europe 500 booked 112.45 billion euros ($155.23 billion) in European online sales in 2013, up 17.0% from 96.08 billion euros ($132.62 billion) in 2012. Online retail sales for all of Europe excluding value-added taxes, ticket, travel and other non-retail services increased 15.3% to 201.01 billion euro ($275.45 billion) from 174.41 billion euros ($239.0 billion) a year earlier, according to Ecommerce Europe, an umbrella organization representing online retailers across the continent. That means the 500 largest European online retailers accounted for 55.9% of total European e-commerce. To reach that figure several top retailers have gone pan-European to grow their e-commerce operations.
Despite the strong online growth, there remains plenty of room for European retailers to sell more via the web because only 38.9% of European Internet users shop online, according to Ecommerce Europe.
A prime example of a retailer pinning its hopes on further e-commerce growth across Europe is Italian apparel and accessories retailer Yoox Group S.p.A., which is No. 78 in the Europe 500. The retailer's European web sales, excluding Italy, rose 26.7% in the fourth quarter of 2013 to reach 66.0 million euros ($89.5 million) compared with 52.1 million euros ($70.7 million) for the same period in 2012. That's a higher percentage than the 18.3% growth rate the retailer experienced for its North American sales. Overall, Yoox grew its total European web sales 18.7% in 2013 to 284.8 million euros ($390.15 million) last year.
However, it takes research and investment to cater to shoppers in new markets, even when they are in nearby countries, says Ilan Benhaim, co-founder of France-based flash-sale retailer Vente-Privee, which is 12th largest European merchant by online sales. The retailer, which launched in 2001, began selling online outside of France in 2006 and now sells to European shoppers in the United Kingdom, Spain, Italy, Germany, the Netherlands, Belgium and Austria. It also sells online in the United States via a partnership with American Express Co., but Benhaim says he remains focused on Europe because of its dense population and close proximity to the retailer's home country.
Among the obstacles Vente-Privee has encountered are laws that vary from one country to another. For example, in the United Kingdom it's illegal to sell knives online, so if a home and housewares brand wants to sell its wares via Vente-Privee's U.K. site, it can't market kitchen knives. In Germany, online retailers by law must offer free returns for all purchases over 40 euros ($55.41), Benhaim says. And there are other product considerations. In the United Kingdom, for example, plug outlets are a different shape than in the rest of Europe, which means that the blender it sells on its U.K. site must be different from the one it sells to other European shoppers.
Vente-Privee, which posted 22.4% growth in 2013 to reach 1.6 billion euros ($2.2 billion) in sales, operates unique sites for each European country it sells in. Recognizing that expanding throughout Europe requires more than translation, the retailer negotiates contracts with brands by country to account for issues such as product differences and regulations.