Europe 500 retailers go pan-European for sales

Internet Retailer Europe 500 merchants that sell online across European borders in three or more nations with dedicated web sites are growing nearly twice as fast as the Europe 500 as a whole. The combined sales of all 27 Europe 500 merchants that operate three or more European e-commerce sites totaled $62.51 billion, up 29.2% from $48.40 billion in 2012. That far outpaces the 17% growth rate for the Europe 500 as a whole.

Katie Evans

The leading online retailers in the 2014 Europe 500 are racking up the miles by moving beyond their home countries and into other European markets to grow sales.

Internet Retailer Europe 500 merchants that sell across European borders in three or more nations on dedicated web sites are growing nearly twice as fast as the Europe 500 as a whole. The combined sales of all 27 Europe 500 merchants that operate three or more national e-commerce sites totaled $62.51 billion, up 29.2% from $48.40 billion in 2012. In comparison the combined sales of all Europe 500 merchants increased 17% to $155.23 billion.

Research suggests more Europe retailers are looking beyond their home countries to boost web sales. In 2013, 12.3% of all estimated European e-commerce sales happened across national borders, according to Ecommerce Europe and the European E-Commerce and Distance Selling Association. That figure is expected to increase to 20.1% of all estimated European e-commerce sales in 2018.

One retailer going across Europe is Germany-based Otto Group, No. 2 in the Europe 500, which owns 60 e-commerce companies that sell a wide variety of items from housewares to office supplies. Otto Group, the largest Europe 500 direct marketer, grew e-commerce sales in its core Germany market by 7.2% to $5.47 billion in 2013. But its remaining international web sales, which are dominated by its other European e-commerce brands, grew nearly four times faster—by 27.5% to $2.81 billion. The retailer sells online throughout Europe, including the U.K., France, Russia, Italy, Austria, Netherlands, Poland and Spain.

Otto Group has ambitious online sales goals for the future. The retailer wants to reach 8 billion euros ($10.96 billion) in web sales by 2015, says Lars Finger, vice president of the E-Commerce Competence Center at Otto Group.“In the long term, we want to strengthen our position to become the largest online retailer for fashion and lifestyle in Europe,” Finger says.

89 merchants, or 17.8%, of all merchants ranked in the 2014 Europe 500 operate dedicated e-commerce sites in two or more European countries and 27, or 5.4%, have dedicated e-commerce sites in three or more European countries. Those include: Amazon, Otto, ASOS, Groupe Auchan, Blue Nile, Brandos, Carrefour, CDON, Decathlon, Dell, Disney, Dixons, Kerig, Hewlett-Packard, IKEA, MacIntosh Retail Group, Lego, Tesco, Marks & Spencer, M & M Direct, Mobile Fun, Nike, Media Saturn, Sony, Apple, Zazzle, and Spartoo.

Italy-based Yoox (No. 78) is another example of a retailer focusing on markets in Europe outside its home country. 2013 web sales in Italy for the retailer grew about 20.2% to 70.9 million euros ($96.9 million) from 59.0 million euros ($80.6 million). Sales for Europe, excluding Yoox’s home country of Italy, reached 218.7 million euros ($298.3 million), a 21.4% increase from 180.2 million euros ($245.8 million). Sales for Yoox in Europe outside of Italy now account for 49.2% of the retailer’s total online sales.

CDON Group, No. 42 in the Europe 500, which has sold for years in Nordic countries of Sweden, Norway, Denmark and Finland, also now sells outside its home European region. CDON, which operates sites that sell items ranging from apparel to sports and outdoors gear, grew its web sales by 28.06% in 2013. It began selling in Germany via its Nelly.com apparel site in 2010 and has since learned lessons about consumer shopping behaviors across countries. For example, Germans on average return about 50% of their online purchases, a far greater return rate than in the Nordic region, says Paul Fischbein, president and CEO of CDON Group. “The German e-commerce market is quite different compared to the other European ones as (German consumers) have had a long tradition of mail-order commerce as well as free returns by law,” Fischbein says.  

The new European Consumer Rights Directive, which goes into effect on June 13, will enable retailers in Germany to charge for return shipping. However, a recent survey from security seal vendor Trusted Shops GmbH found that nearly 60% of online retailers won’t charge Germans for returns despite the change. That means retailers might have to continue to offer free return shipping to remain competitive in Germany.

In CDON’s home Nordic market, meanwhile, many consumers choose to pay for online orders via invoice, which is something other European retailers looking to move into the region should note, Fischbein says. On some of its sites, consumers pay more than 50% of orders via invoice. In fact, invoicing is so popular that CDON is testing its own invoicing payments service on some of its e-commerce sites. What’s more, even in CDON’s home Nordic region, there are differences from country to country. For example, Norway hasn’t joined the European Union, so CDON must prepare customs documents and factor in duties when selling to shoppers in Norway, Fischbein says.

Otto also has worked to understand differences in selling across all of Europe, Finger says. Fulfilling orders to Russian shoppers can be more difficult than in other European countries, he says. “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.”

The Russia postal service, Pochta Rossii, is notoriously unreliable, says Sergei Millian, the Belarus-born president of the Russian-American Chamber of Commerce, which aims to bring together U.S. and companies located in the former U.S.S.R. Parcels are often lost, stolen or delivered to the wrong address, he says. That’s led companies such as 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 Ikea, QVC Inc. and H & M Hennes & Mauritz AB. Otto says Hermes wants to overtake Deutsche Post DHL in Europe. Deutsche Post is one of the world’s largest courier companies.

Despite some hurdles, retail leaders such as Otto in the Europe 500 are pressing forward tapping into new European nations and markets to drive sales. “Trial and error is part of our philosophy,” Finger says. “In past years we launched different business models. Some achieved success, some of them failed. The most important thing is to remain curious.”

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2014 Europe 500, CDON, Ecommerce Europe, international marketing, Internet Retailer 2014 Europe 500, Otto Group, Top 500 European e-retailers, Yoox