The US e-commerce market has achieved enormous growth in a few years, reaching $165.9 billion in 2007, 21.8% more than in 2006.

 While the e-commerce market have great opportunities ahead, considering for instance the continuous increase of gas prices, the cut in direct marketing costs, or the added flexibility in the commercial policy, we have to face a reality : this tremendous growth numbers won’t last forever. No need to be an expert to see that while the market will continue to grow in the years to come, this growth will not remain double digits.

 Why? Because the market is getting mature, because the majority of the big players now have put the web channel in their top priorities, with huge investments, because the consumer is more demanding and volatile, and because the online marketing efforts will need a boost to emerge among your competitors and to convince new customers. Some indicators already show that the e-commerce market is about to slow down. According to Comscore, the US retail e-commerce industry posted a 11% growth in June 08 versus June 07, which is less than half the growth between June 06 and June 07 (was 25%). Also, the financial crisis as stretched to most of the domestic markets and all the analysis tell us that the situation will not improve in the short term. The crisis is here to stay, and retailers have to deal with it.   

 Then, the American retailers need to find new markets in order to achieve their ambitious goals. In a word, they need to get global. The internet has no frontier, it is much more easy to launch your brand in new markets online than in the physical retail. Twenty years ago, launching a brand overseas was very costly and hazardous, now the web allow the retailers to launch quickly a merchant site, driven by a small local team, at a reasonable cost.

 Target markets are Europe, South America, Asia… For many reasons, we think that Europe is the best choice for American e-tailers, because it shares a lot of similarities with the American market and the growth of the online retail is stronger.

 Europe is an almost 500 million people market. The internet usage is very mature, since 28% of the internet users in the world are Europeans. The online retail market is as big as the US market with 106 billion € ($163 billion), and it is expected to reach 330 billion € by 2011.

 Moreover, Europeans share the occidental way of life and consumer behavior with Americans, meaning that the demand for the American brands and products is important, and that the marketing strategies to succeed are almost the same. A lot of online pure players already operate in Europe, with strong market shares like Amazon, Dell, Expedia…

 There are great opportunities in Europe, since most of the market is by now concentrated in Germany, UK, France and northern countries, with 60 to 80% of internet users buying online. Some countries can see huge growth, like in Spain, Italy, which have between 35 and 50% online buyers among the internet users, but are growing very fast. Also, we can talk about the emerging markets in eastern Europe, which will contribute more and more to the expansion of the European market in the future.  

 Did we mention the euro/dollar conversion rate? With a currency stronger than ever (1 euro > 1.50 dollar), the european market is very appealing for US retailers, with higher revenues.

 In this huge market just across the Atlantic, the American e-tailers have the keys to succeed because on the web they are still two to three years ahead in terms of technology, user experience, and ROI optimization process. Their ability to deal with CRM techniques also makes the difference with the European actors. Meanwhile the main challenge remain to put the brand in the consumer’s mind against the current actors, it can be done with less costs, using word of mouth techniques and local influencers for instance.

 Go to Europe!

Michael AMAR
Founder

Agorad