An E-Commerce Market At The Heart Of Europe
In Switzerland, the e-commerce sales are outperforming the overall market.Online purchases are becoming more attractive to customers through the use of offers and supporting services. There is a substantial penetration of smart phones and data show that more and more online customers are available and suppliers can engage with them through mobile platforms. The long-term trend of movement towards e-commerce markets is sustained.
Switzerland, at the heart of Europe, contains a big potential with its independence from European Union and its trans-European e-commerce strategies. Its three languages make it a good destination with its inhabitants who are enthusiastic users of e-commerce. When it comes to numbers, Switzerland has an Internet penetration rate of 82% which is higher than the global average rate 78%. The average cost of an e-shopper in one year is 1750 Euros which is one of the highest in Europe. And the trend of growth in sales is continuing which was 12.1% in 2013 and reached total sales volume of 8.36 billion Euros.
The consumers in Switzerland are very comfortable with using e-commerce. Only 6% has never bought anything online. The higher cost of living is also affecting the interest into e-commerce. The main effect behind the e-commerce popularity among the Swiss is the price. They are loyal e-shoppers. The key factors for the customers are 24/7 access, home delivery, convenience, comparing offers, payment, dispatch and shipping. When it comes to loyal e-shoppers of Switzerland, the key factors are trust, availability, a good service and an easy-to-use website.
According to an e-commerce report by the University of Applied Sciences and Arts Northwestern Switzerland, a number of participants, which are market-shaping providers, have achieved at least 20 percent growth rate this year. The competition caused by the dynamic of the e-commerce market is still intense and high. The providers are trying to focus on the cross-linked customers to give their competition some edge. The intense competition has cut down the inflow of the new providers. Providers are spreading and optimizing their goods and service range, creating an identity for their business and customizing themselves according to that identity. The providers also focus on their operational efficiency and their CRM systems. The investment into all of these improvements is more than the previous years.
The energy put into these improvements and projects are paying off. The earnings are rising and the engagement through cross-channels is successful so far. There is a transformation towards the customer and away from the channel. In this approach, unorthodox ideas are believed to make a difference. For example the online orders can be attributed to fixed, physical organizational units to have easier cross-channel cooperation. Many of the Swiss providers consider the foreign providers to be superior to them because of the foreign providers multinational capabilities, growth and earnings.
The size of the market in Switzerland affects the market not only positively but also negatively. Providers from Switzerland find it hard to get onto the international level. But since the countrys market is small sized, capital movements that look for large and attractive market to dominate do not pay that much attention to Switzerland. There can be certain threats coming along with the hunger of foreign providers for new markets, just like in the case of category killing providers such as Media Markt and Zalando. But there are also industry dominators such as Google or Amazon. Amazon acts as a trader in the Switzerland market whereas Google has a more vital position for the providers. The providers need Google, at least to reach customers and with Google services, this one is just a basic one. Swiss providers are incapable of competing with these dominators aggressively. These foreign online providers are concentrated on the growth more than the earnings which make them superior. But in the case of Swiss providers we do not see such investments. Their concern is to maintain a competitive position while investing but their willingness is questionable in this area.
The growth opportunities and a positive economy of scale are the key issues in providers strategies. These strategies help the providers to either start new investments, enable growth or at least maintain the current market position. Providers believe that through growth and multi-channeling, an increase in sales is possible.
In 2014 the providers data show 5 important activities in the market of e-commerce. These are:
- Establish the product and service range,
- A better support system for the mobile-end devices,
- Enhancing the user-friendliness,
- Enhancing the product display in the online shop,
- Improving the search engine rankings using SEO.
Expectations for the future
The digitalization will transform and progress further and this development will create a growth in the importance of network electronic media. Also the e-commerce transactions will continue to increase. This will affect the mail order companies and fixed physical business operations. All the providers will make use of every channel and touch points which will conclude in blurry lines between provider types. This way, trading methods will vary and continue to grow. Mobile will be the strongest trend but in five years Smart TV is expected according to a report on e-commerce in Switzerland. Digital wallets will be a hot topic. The foreign providers in various sectors will increase but not in a destructive way because so far their plans are not laser focused on Switzerland. Service performances will be enhanced in terms of time and location such as the next-day-delivery which is expected to be a standard practice in five years. Two risks are present to the providers in the future possibly. One of them is excessively powerful foreign providers or external performance pressure which might be caused by heightened customer or user expectations. But the conditions of the market are going to be a lot better according to the providers.
Some Major Swiss Online Retailers
- Ricardo: Ricardo has 2.3 million members which trade goods annually which are worth of 660 million and which makes Ricardo.ch the largest online marketplace in Switzerland. The basic function of Ricardo is that it is a market place for everyone to trade which resembles eBay in a way. The daily sales 20,000 items and buyers have a selection of 700,000 offers on average.
- DeinDeal: DeinDeal is an e-commerce company who offers a Swiss online shopping platform. They offer special deals to their customers such as a designer sofa or a good quality massage. Their mission is explained as: “We want to become the most customer-friendly e-commerce group of companies in Switzerland, to supply our users with 365 days a year to present attractive offers and simply create a good mood!”
- Ifolor: The idea which created Ifolor was the idea of photo services directly to the home. Since 1968 Ifolor has been sending photo mail-orders to their customers. It is a service provider for personalized photo products such as photo books, calendars, greeting cards, canvases or digital photos.
- Eboutic: Eboutic is an online outlet shop. There are periods of discounts from famous and good quality brands regularly and to benefit from it the only thing needed is to enroll to the website. They keep updating their customers through regular e-mails. It sells mostly fashion, sports, toy, interior design products and even has a travel agency service. They also offer new brands with promising designers and promote them.
Nil Erden – Marketing Executive – firstname.lastname@example.org – Prisync.com
We, as Prisync team, will be covering e-commerce markets of different countries from all around the world and will focus on the insights that are specific to each respective market.