The ecommerce sector in Europe grew by 8% in 2023 and is projected to eclipse the €1 trillion barrier this year. That is according to a new report from FTI Consulting that explores the state of the booming online retail sector.
The growth of the ecommerce sector has been driven by an expanding base of shoppers, with many consumers getting converted to online shopping during strict lockdown periods in 2020 and 2021. The report also reveals a European ecommerce market that is maturing.
Overall, the level of service has been improving for European customers, with fast delivery quickly become standard and next-day delivery being more widely available. Besides that, retailers are increasingly offering options for buying online and picking up in-store (‘click-and-collect’).
European retailers have seen significant growth in cross-border selling, which is driven by changing consumer attitudes, better shipping infrastructure, and the proliferation of online marketplaces. Shipping around Europe is smooth in part thanks to the border-free Schengen Area.
Some of the top online marketplaces in Europe include American giants like Amazon and eBay, but also huge homegrown players like Germany’s Zalando, Poland’s Allegro, and Bol, the largest online retailer in the Netherlands and Belgium. Chinese retailers like AliExpress and relative newcomer Temu are also big players.
The Western European market made up 67% of all European online sales, while Eastern Europe was on the other end of the spectrum, with only 2% of the sales total.
This lagging market in Eastern Europe offers an interesting opportunity for cross-border expansion and homegrown retailers alike, according the report. If the number of users can be increased and shipping infrastructure improved, Eastern Europe’s market share will likely increase.
The ecommerce sector is largely fueled by fashion, which constitutes 56% of all online shopping.
“E-commerce is doing so well that it has become the dominating channel for several sectors,” noted Kurt Staelens, senior managing director at FTI Consulting. “Fashion is the perfect example: the majority of clothing purchases are done online – the highest ratio of all sectors. Logically, physical fashion stores suffer: The sector is also #1 in terms of bankruptcies since the pandemic.”
In general, the ecommerce sector is pretty diverse as far as players in different sectors, as well as different types of enterprises. For example, Amazon is big in France, but local ‘small ads’ website Leboncoin.fr is also a major actor in the French market.
And while some online retailers offer all types of different products, some – like Zalando – focus primarily on fashion. Other major European ecommerce players are actually traditional brick-and-mortar stores which have made successful inroad into online shopping, like Leroy Merlin and Carrefour.
“Our projected sales growth rate for e-commerce in 2024 is more than twice the expected growth rate of total retail sales (excluding auto & gas) and more than three times estimated store-based total sales growth,” said Staelens.
The online second-hand market in Europe is also particularly strong. A report from Tripartie, a startup working in the second-hand retail space, estimated that over 87% of Europeans engaged in ecommerce already participate in second-hand markets.
“Regarding goods and products, a key trend right now is second life,” said Staelens. “Several firms have popped up in this niche, which fits well with today’s concerns regarding circular economy and carbon footprint. More than 80% of online consumers have already bought or sold second-life items online. In France, firms such as Vinted, Backmarket and Pixmania are leading the way.”
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