E-commerce: a Remedy for the Crisis

     The word crisis has become a part of our daily vocabulary. Austerity reigns in Euro zone and all we hear about about is growing unemployment, recession, governments' spending cuts, raising taxes and the collapse of big businesses..

     It seems that every single corner of the market and of society has been seriously affected by the worst economic crisis in the recent years. However, in the middle of all this bad news, there is some good news: e-commerce is the unique sector that continues to grow in nearly all world countries and, according to the European Commission, is a crucial tool in driving job creation and mitigating the economic recession.

     How does e-commerce manage to survive and be the fastest growing sector of our economy?

First of all, it is a business model that is able to pass on lower prices and thus, to attract  customers who want to find bargains and save their money. As the recession continues to squeeze income, consumers want their shopping to be quick, low-cost, and effective. Why drive to a shopping centre on the outskirts of town, queue, spend your money on petrol and on a meal in the restaurant, if you can save all these costs and shop comfortably at home? According to the recent report by the European Comission, in a basket of 100 goods with a median price of €112, it is  estimated that by buying online, across the EU consumers could save up to €745 And when you search for a particular product online, you don't have to pass through other shops offering irresistible sales and then end up buying lots of unnecessary things...

Leading markets: nearly US$ 239 billion from ecommerce sales in 2015

     The reports from nearly all European countries confirm that despite economic recession ecommerce continues to grow. Emarketer estimates that the B2C eCommerce sales in Western Europe will grow from US$36.6 billion to US$51.6 billion between 2010 and 2015. In the UK, which has long dominated Western Europe's ecommerce landscape, 82% of the online population made a purchase online last year and the value of B2C online sales is expected to grow to US$143.6 billion in 2015. France and Germany, which have a strong tradition of catalogue -based home shopping, are not far behind. According to Fevad, total ecommerce sales in France grew 24% in 2011 and the number of ecommerce sites has grown to 104k.  One of the main drivers of ecommerce activity in France is entrepreneurial activity; the number of new ecommerce sites has been growing at a rate of 22% per quarter.

     Fevad confirms that in times of economic crisis French consumers turn to Internet to search for lower prices (lefigaro.fr). While the traditional retail sales continue to drop

(-0,2% in 2011), French ecommerce grows and is expected to achieve US$41.8 billion in 2015.

Where the crisis has destroyed everything...but ecommerce

     The Southern Europe is the region most affected by the crisis. According to Eurostat, the rate of unemployment in Spain has reached 24,3%, followed by Greece (21.7%) and Portugal (15%), and all these countries have asked for a bailout for their cash-starved banks.  The debt-to-G.D.P ratio in Italy and Greece has been increasingly high since 2007, reaching respectively 109 and 103%. All doom and gloom.

     However, as Angél García Castillejo from the Telecommunications Market Research reports, “In the e-commerce market we're not in crisis, but in the time of constant growth”. The statistics confirm that optimistic statement; while the traditional retail sales are in an ongoing recession, Spanish ecommerce has been growing 49% in the last 2 years, which is the fourth highest growth rate in Europe. Ecommerce also enables Spain to develop cross-border trade; in the last trimester of 2011, international online sales reached US$50 million.

     In the stagnant economic scenario of Italy, e-retail increased 20% and m-commerce jumped 210% in 2011, reaching a value of over 8 billion euros (InternetRetailer.com). The leading retail Italian sectors are rapidly exanding online, with the highest growth registered in clothing (+38%), publishing (+35%), and technology (+22%). 

M-commerce boom in Italy is due to the popularity of smartphones; Italians are Europe's leading mobile phone users and 20 million people use their phones to connect to the web. According to the Italian digital marketing firm E-Business Consulting, thanks to the new payment methods the m-commerce in Italy will drive even more, and overall Italy's online sales will double by 2015.

CEE Countries: opportunity for growth

     In the CEE Countries, there is still much opportunity for growth; according to the CEE Telco Industry Report, only 1 in 5 Internet users in the CEE region actually shops online. While in the most developed countries in the region, like the Czech Republic, Slovakia or Slovenia, nearly half of the population buys online, in Ukraine or Kazachstan online consumers are less than 10% of the whole Internet population.

     However, while these countries have still a long way to go to catch up with the Western Europe, they are getting in on the action. Poland leads the European ecommerce growth, with a 24,1% hike in online sales compared to the European average of 17%. A vibrant economy and a growing Internet access are the main drivers of ecommerce growth in Poland; only in 2011, 3000 new online stores were opened in the country, and the whole sector is expected to grow 15% to 20% in the upcoming years. EU supported the creation of online stores in Poland with subsidies of US$520 million between 2009 and 2011.

The EC action plan

Aware of the role of ecommerce in fighting the crisis, the European Commission aims to double online sales and the internet's contribution to the European GDP by 2015.
Therefore, the EC has put forward an action plan, which involves adopting a single strategy on cloud computing and internet security, education for online retailers, and a proper EU intellectual property regime.

The crisis will not disappear overnight, but slow and steady wins the race. Ecommerce will definitely contribute to job creation, economic growth and stability, which is much-needed by Europe.