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Breaking Europe: seven key trends to ensure you expand effectively

By James Butland, VP Global banking at Airwallex (previously at TransferWise)

Looking beyond the UK to European markets is always an exciting time in a business’s growth story. Opening a business up to the potentially huge new audiences across our nearby neighbors can be the key to significant growth, particularly for ecommerce businesses. The barriers to market entry are also constantly falling, meaning it’s more tempting than ever to make the jump into new territories.

This said, expanding abroad for the first time can also be a seriously daunting process. Language barriers provide one obvious challenge, but there’s a lot more to consider than just translating websites and product information into local languages. Perhaps the biggest challenge – and gamble – is first deciding which market, or markets, to focus on and market size certainly shouldn’t be business’s only guide.

Before making this choice, and starting to formulate a launch and growth strategy, businesses need to understand the local nuances that should impact how they approach things and their likelihood of success. Across Europe there are a variety of shopping trends and buying behaviors that are worth understanding in more detail. Any firm entering a new market, would be wise to dig out relevant research and set this against how their products/services are likely to resonate, but here are just a few interesting starters for ten:

        Big spenders: The UK remains the EU’s biggest ecommerce market (€165bn in 2018), but the continent’s other economic powerhouses aren’t far behind, with Germany (€98bn), France (€84bn) and Spain (€24bn). While businesses shouldn’t target growth on market size alone, it certainly provides a useful guide for expansion plans.

        Ecommerce penetration: In spite of regular articles about the ‘death of the high-street’ in the UK, ecommerce habits vary widely across Europe. The Centre for Retail Research estimates 15.1% of Germany’s retail sales were made online in 2018, whilst in Italy it was just 3.4% of purchases.

        Online shopping habits: While ecommerce as a proportion of total retail sales are low, habits are changing fast and these numbers are only increasing. Eurostat research in 2018 found that 84% of Danes had shopped online in the last year, and 77% of Germans. This falls to just 20% in Romania and 12% in Montenegro, where economies are smaller and internet penetration less widespread.

        Mobile shopping: While it’s easy to imagine mobile shopping is the primary method of online shopping today, this is actually far from the case. Amazon Pay and Drapers asked consumers about the devices they use to shop with and Italy came out ahead in mobile use with 39.7% using a mobile to shop. This compares with 24% in France, 22.4% in Germany and surprisingly 16.8 % in the UK. The use of mobile for shopping, however, is of course rising rapidly.

        Payment trends: Payment cultures also vary widely across Europe. According to Pay safe, the UK for example makes 63% of online purchases made via payment card, however, in the Netherlands, the picture is quite different where nearly 60% of online purchases are made via bank transfer, with only one-third by card. Worldpay research also charts the growing importance of alternative payments across Europe, such as e-wallets and real time bank transfers.

        Delivery trends: In addition to shopping habits, European consumers also vary widely in how they like to receive goods. Salesforce research finds, for example, that there’s a large difference in acceptance of click and collect between nations, Germany for example has an adoption rate of just 51% versus 66 in Belgium and 75% in the Nordics.

        Currency: While the Euro may dominate the European Union, within the EU there are a further nine currencies in use. So, while having a bank account within the Eurozone will give you an advantage, if you plan to operate within other territories, you need to ensure you have a cross-border payments solution which can allow you to act as a local within each currency market.

Of course every business is different and a variety of different trends and cultural idiosyncrasies will impact each in different ways. Gaining an understanding of the differences that are most important to a business is a vital first step in planning expansion, prioritizing focus areas and giving businesses the best possible chance of international success.