01 EXECUTIVE SUMMARY Europe’s new normal European Ecommerce Report How consumer brands can reach online customers and grow their sales in the UK and continental Europe. October 2020 /1 PATTERN OFFICES Our global footprint SALT LAKE CITY VENLO LONDON MUNICH HONG KONG SHANGHAI To talk to us about how to profitably grow your European ecommerce sales contact us at DUBAI GUANGZHOU MELBOURNE SYDNEY [email protected] INTRODUCTION About this report Much of the thought leadership The work that’s been required that exists about European to keep product flowing to ecommerce is written with customers has been immense. retailers in mind. In this report As a business that sells on Contents we’ve taken a slightly different Amazon in Europe and provides angle, focusing on what the ecommerce consulting to many 4 24 changing ecommerce landscape consumer brands, we’ve felt EXECUTIVE EUROPEAN means for consumer brands. that pain and the satisfaction of SUMMARY CUSTOMER seeing our clients’ online sales EXPECTATIONS Europe’s retail industry has and our own increase. suffered significantly from 6 the measures to contain the In the following pages we’ve KEY COUNTRIES 25 COVID-19 pandemic during tried to do the impossible Profiling the UK, EUROPEAN 2020. However, it has been and condense into 30 pages Germany, France, Italy, ECOMMERCE TEAM a catalyst for online sales. everything that’s important to Spain, the Netherlands, STRUCTURE Europe’s shoppers in more brands selling online in Europe Sweden & Poland. mature markets have bought right now. There’s snapshots of products online much more than the most interesting countries 26 previously, and in the less mature and online marketplaces, as 14 RETAIL CHANNEL markets it has encouraged well as much discussion of what MARKETPLACES OPTIMISATION shoppers to buy online for the consumer brands will need to The rise of first time. do in the coming months to marketplaces in optimise their online sales in Europe, including data 27 In general, marketplaces, online Europe. on Amazon, eBay, THE CHALLENGES OF retailers and omnichannel Zalando, AliExpress, CROSS-BORDER retailers who have been able to As we head into the peak trading Allegro, Cdiscount, pivot to focus on quickly scaling period, we anticipate that the Otto and Real.de. their online operations have online shopping trends seen 30 been the winners. Some brands will further convince consumer ABOUT PATTERN have also been able to build brands that there has been a 23 Our marketplace sales their direct-to-consumer web step-change in the importance of THE ROLE OF DIRECT partner and consulting presence. their online sales channels. TO CONSUMER SITES services proposition. NICOLA HOLLOW, GENERAL MANAGER – EUROPE, PATTERN /3 EXECUTIVE SUMMARY Executive Summary 2020’s pandemic has been a catalyst for online sales growth in much of Europe. This provides opportunities to launch and grow brands online, though understanding the nuances of the continent and its 44 countries has never been more crucial. Europe’s 740 million population agree is that higher ecommerce The result is that brands must “The market is in combined with high internet and penetration rates are here to stay. reassess their European channels online shopping penetration rates The graphic on this page shows to market, and their retail flux, but the one has delivered an online shopping how Amazon’s monthly visits are partners, to ensure their online point on which audience of a size that only China higher now in each of its six main channel strategies matches these can compete with. European markets than at the changes in customer behaviour. most can agree start of the pandemic. The increased importance of is that higher During 2020, severe restrictions ecommerce also brings into ecommerce on physical stores due to the In Western and Northern Europe question how brands’ sales teams COVID-19 pandemic – with - where e-shopping penetration choose to structure themselves. penetration rates non-essential stores closed in rates are highest – consumers are are here to stay” many European markets for buying more of their shopping ECOMMERCE CATALYST several months – has hastened online. In Eastern and Southern The figures for how much the migration of the continent’s Europe, particularly Spain and Europe’s main economies are shoppers to buying online. Italy, the pandemic has prompted expected to shrink by this year more shoppers to try online look scary, but after a much more Sources: Beneath this topline trend, a shopping; behaviour which we substantial contraction in the first SimilarWeb number of interesting factors expect to stick. are at play. Marketplaces are INCREASE IN AMAZON’S TRAFFIC BETWEEN AMAZON.NL growing in popularity, while It won’t be until early 2021, when MARCH AND AUGUST 2020 73.85% many consumer brands are we can compare online shopping simultaneously placing more revenue and penetration for focus on their direct-to-consumer 2020 with the previous year that AMAZON.DE AMAZON.ES websites. Retailers are being we will be able to accurately 9.4% 38.17% squeezed in the middle of this, measure this change, But there is AMAZON.FR and the pandemic has shown already snapshot data to provide 27.33% how crucial their ecommerce hints. For example, in the UK the AMAZON.IT AMAZON.CO.UK operations are to reach their percentage of grocery shopping 8.31% 17.18% customers. bought online rose from 7% of the total in February 2020, to The market is in flux, but the 13.5% in July 2020. one point on which most can /4 EXECUTIVE SUMMARY half of the year, the second half for generalist or specialist vendors Lego Director for Ecommerce PERCENTAGE OF EUROPEANS is all about rebound, particularly to make their ranges visible to a Strategy & Growth Kasper Thams WHO SHOP ONLINE with the peak trading period for much wider set of consumers then says that there are two trends retail. localised footfall traffic.” which mean Europe won’t reach 83% 79% the same high rate of online sales 69% For brands who want to enter “This has been enabled by through marketplaces as occurs in 55% Europe, or grow their sales, improvements in ‘last mile’ the USA and China; the demands Eastern Europe online routes to market seem delivery and the scale of of European consumers and the 36% the obvious choice. More are consumers using ecommerce difference in structure of retail in choosing direct-to-consumer platforms –driven especially by Europe. Western Europe Northern Europe Central Europe Southern Europe or marketplaces as routes to recent necessity,” he adds. expansion, rather than third-party “European consumers are very online or omnichannel retailers. MARKETPLACES VS D2C individual and demanding when PERCENTAGE OF UK GROCERY SHOPPING Assortment and pricing are it comes to the proposition. THAT’S ONLINE Marketplaces have substantial complemented by reliability They request “lifestyle” and traffic, which clearly appeals to and transparency for shoppers broad offerings – not just simple brands. There are nearly 300 buying from marketplaces, says products. Another example is 13.5% million unique users visiting Christos Kalogerakis, CEO of the push for personalisation & Amazon’s six European sites each Greece’s largest omnichannel specialisation. This creates room 7% month. Local players are also retailer Public (PMM). He says for dedicated players and brands February 2020 July 2020 doing well. France’s Cdiscount has it’s no surprise that consumers – and makes it hard for a one-size- an average of 23.3 million unique in countries such as his are fits all approach which Amazon is visitors a month, more than third choosing to buy cross-border still largely leveraging.” of the country’s total population. from marketplaces such as PREDICTED 2020 GDP GROWTH Amazon, because reliability and He adds: “Europe has a much BY MARKET Pernod Ricard Global Ecommerce assortment cannot be taken more fragmented offline retail Leader Stuart Heffernan says: for granted in less developed landscape, and many of the strong “Ecommerce growth has been ecommerce markets. offline players are moving online.” accelerating due to the offering UK Italy Spain of convenience, speed and access However, while marketplaces have So for the majority of brands, France to a wider portfolio of products. become much more important online success in Europe requires Germany Marketplaces, whether they within Europe’s ecommerce a balancing act, with multiple -6.5% are on established platforms landscape, there is still very online channels to service -8.3% -8.2% such as Amazon or on-demand much a belief in the value of both customers who have increased -9.5% -9.4% aggregators such as Deliveroo, omnichannel retailers and brands’ choice about where they spend Sources: offer an unparalleled opportunity own direct-to-consumer websites. their money. Eurostat, Retail Week, European Commission /5 KEY COUNTRIES United Kingdom Since lockdown measures were launched COVID-secure click- POPULATION SIZE PERCENTAGE OF POPULATION WHO imposed in the UK in March and-collect services to overcome BOUGHT ONLINE 2020, there has been a huge the problem of slow delivery shift in traffic and spend towards times. online channels. One such omnichannel retailer, Despite the reopening of non- Argos, saw total sales increase essential physical stores in early by 10.7% in the 16 weeks until the 68M July, continued social distancing end of June, despite many of its requirements mean that online stores being closed, helped by sales are still substantially higher a 78% rise in home deliveries. It than last year. UK online sales became an online-only retailer, 87% in August were up 43.5% on the fulfilling orders via delivery same month in 2019. and with its click-and-collect presence within food retailer In the UK, although marketplaces Sainsbury’s stores. don’t have a majority share of online retail sales, the Since the onset of COVID-19, convenience, delivery and price pessimism about economic propositions of Amazon, eBay recovery has been high TOP THREE SHOPPING PERCENTAGE OF RETAIL SALES and others has proved hugely amongst UK consumers.