Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
(Page 3 of 3)
Otto Group, which owns 60 online retail brands and is the second-largest merchant by online sales in Europe, has built mobile-optimized sites to complement each of its e-commerce sites. "Our tip is to focus on a clear mobile strategy driven by the ever-increasing importance of smartphones as part of the customer's journey to access our products and services," says Lars Finger, vice president of Otto Group's E-Commerce Competence Center. "We are convinced that mobile is the future."
Otto, which began as a German cataloger, says about 60% of its total sales are online and about 30% are completed via catalog sales where the shopper calls in and places an order from a catalog she received. The rest are completed in stores. The retailer sells online throughout Europe, including Germany, the United Kingdom, France, Russia, Italy, Austria, Netherlands, Poland and Spain. Otto, which did 6 billion euros ($8.28 billion) in online sales in 2013, aims to reach 8 billion euros ($11 billion) in web sales by 2015.
Like other e-retailers expanding across borders, Otto has encountered difficulties, such as in fulfilling orders to Russian shoppers. "The country has an advantage for online trading because of its size," Finger says. "However, the infrastructure is not yet as developed as Western European markets." Indeed the Russia postal service, Pochta Rossii, is notoriously unreliable, says Sergei Millian, Belarus-born president of the Russian-American Chamber of Commerce, which aims to bring together U.S. and former USSR companies. Parcels are often lost, stolen or delivered to the wrong address, he says. That's led companies like Otto to offer their own fulfillment services in Russia. Otto has experience in delivery, as it operates Hermes, a major fulfillment provider throughout Europe that counts among its clients such big-name retailers as QVC Inc. and H & M Hennes & Mauritz AB. Otto says Hermes has ambitions to overtake Deutsche Post DHL in Europe.
"Global expansion is not for the faint of heart," Wigder says. "Ask any group of global e-commerce executives if they found international expansion to be less challenging than they anticipated and you'll get a resounding 'no.'"
Indeed, some retailers haven't yet made the move to sell beyond their home country. Only 3% or $14 billion worth of online sales by retailers in France, Germany, the Netherlands, Nordic Countries and the United Kingdom went to consumers in countries other than the retailer's home country, according to a report from OC & C Strategy Consultants and Google Inc.
Ulmart, No. 25 in the Europe 500, only sells in Russia because it says it's too busy navigating that country's developing online sales market and doesn't have the time or resources to expand right now. The retailer, which generated 730.0 million euros ($1.0 billion) in online sales in 2013, has an ambitious goal to reach 7.29 billion euros ($10 billion) to 10.94 billion euros ($15 billion) in annual sales in the next five years. It is focusing on growing sales in Russia now with projects including adding 1 million square feet of additional fulfillment space in suburban St. Petersburg and Moscow. "We have plenty to focus on here," says Dmitry Kostygin, Ulmart's chairman and majority shareholder.
Indeed, expanding isn't easy. Beyond getting goods into international shoppers' hands retailers need to manage content and marketing across languages and countries, Beeson adds.
"There is a difference between providing international shipping and optimizing your web site for international shoppers such as changing location, language, currency, content and perhaps product assortment by market," she says. "This is not necessarily as simple as translating content, as content and marketing may need to be tailored to specific markets."
Still many of the fastest-growing online retailers in Europe are finding success branching out. Those who are patient, diligent and set realistic expectations are gaining new customers and sales throughout the region.
"Trial and error is part of our philosophy," says Otto's Finger. "In the past years we launched different business models. Some achieved success, some of them failed. The most important thing is to remain curious." That curiosity, and a desire to grow at a time when physical store sales are stagnant, is leading many European online retailers ever further from home.
How to order the Europe 500
The Internet Retailer 2014 Europe 500 is available in a digital format ($89) and as part of an online database ($239). To obtain a copy, visit InternetRetailer.com/top500. Or e-mail a request to Chaz McCrobie-Quinn at firstname.lastname@example.org.