According to a new report from industry association Ecommerce Europe, the European Union’s ecommerce industry is projected to be worth €602 billion ($685 billion) at the end of 2017. This would translate into a 14% year on year growth. The growth in European Union ecommerce is projected to be higher than that of the USA where the ecommerce sector is projected to grow by 8-12% according to the National Retail Federation.
3 Factors Driving Ecommerce Growth In The European Union
- Some newer members of the European Union in Eastern and Central Europe are seeing rapid ecommerce growth that is outstripping that of their mature neighbours in the West. Countries such as Poland, Romania and the Ukraine have seen ecommerce growth of over 25% in the past 12 months.
- The effect of the European Union’s Single Market Strategy has been significant. This aims to remove barriers to online trade within the EU. The European Union is looking to implement a digital version of its free-trade single market which should promote and increase the amount of cross-border ecommerce in the EU by ensuring that customers are not discriminated against in different parts of the union.
- Ecommerce is big with younger European consumers. More than two-thirds of those young people in the EU between the ages of 16 and 24 make online purchases on a frequent basis, whilst in the age group 55-77, just one-third do so. These figures point to further growth in the future which can only be a good thing for ecommerce in the EU.
However, there are some still issues that remain stifling the growth of European ecommerce from reaching its full potential. In the report, Ecommerce Europe said that issues such as speed of delivery, damaged goods and technical issues still had to be addressed to help ecommerce grow further across the European Union.
However, Brexit will almost certainly be the most pressing challenge to European ecommerce. The United Kingdom is the leading ecommerce nation in the European Union currently with 33% of all ecommerce sales in the EU being British. Potential trade restrictions following Brexit and the UK’s eventual separation from the European Union could complicate cross-border ecommerce between the UK and European Union.
As it stands, the exact terms of Brexit are not known, but a soft Brexit would see the UK remain within (or have access to) the single market which would be good news for ecommerce. However, a hard Brexit would involve the EU and United Kingdom having to negotiate a whole new host of agreements that could include tariffs and surcharges on cross-border shipments. This could have a significant and detrimental impact on ecommerce across the continent. Worryingly, the Multinational bank Société Générale projects the likelihood of a hard Brexit at 70%, and a soft Brexit at just 15%.