The European ecommerce market – key trends and developments

European ecommerce 

Ecommerce on the European continent grew 10% from 2019 to 2020, to EUR 757 billion, and is expected to grow 12% in 2021 to EUR 844 billion. Western Europe remains the leader in turnover, encompassing 64% of total turnover, followed by Southern Europe with 16%. The regions with the highest turnover growth rates from 2019 to 2020 were Eastern Europe (36%), Central Europe (28%), and Southern Europe (24%). The countries in Eastern Europe that registered the highest growth rates are Moldova (49%), Russia (41%), North Macedonia (37%), and Hungary (35%).¹ The share of retail made up by ecommerce remains high in Western and Northern Europe, with leaders such as Denmark (17%), the UK (15.5%), Finland (8.6%), and Ireland (8.3%). ^{2 3}

Figure 1: B2C ecommerce turnover growth rates, 2020⁴

Digital skills and literacy are also on the rise in Europe, as internet users grew from 87% to 89% in 2020. In Western and Northern Europe, over 95% of the population uses the internet, while even in Eastern Europe, where internet use is the lowest in the continent, 77% were online. Perhaps most importantly for ecommerce, the share of European e-shoppers grew at an unprecedented rate in 2020, rising from 66% to 71%. This growth was strongest in Central (12%) and Southern (11%) Europe, and it is expected to increase at a rate of over 7% for the regions. 

Cross-border trends 

According to Cross-Border Commerce Europe’s 2020 figures, amongst 15 prominent European ecommerce markets*, 22% of total B2C turnover for 2020 was cross-border.^{5 6} This research, paired with figures from the 2021 European E-commerce Report, reveals that cross-border turnover accounted for 50%+ of total ecommerce turnover for Finland, Austria, Ireland, Norway, Switzerland, and Sweden. 

Despite these figures, consumer survey responses show cross-border online shopping nosedived from 2019 to 2020 in most European countries. The top 10 countries purchasing from ‘abroad’ (other EU & non-EU countries) saw an average -20% drop from 2019 to 2020, and the top 10 countries purchasing from the ‘rest of the world’ (non-EU) saw an average -24% drop from 2019 to 2020.⁷ However, there was an average 14% increase in online shopping from sellers with an unknown country of origin amongst the leaders, which include the UK (+216%), Malta (+103%), and Cyprus (+7%).⁸ This increase in the UK figures could be due to their leaving the EU in January 2020. 

According to research conducted by the IPC in 2020, Europeans predominantly purchased across borders from China, which leads in 19 out of 26 countries.⁹ When asked to specify the country ‘from which you bought this most recent online cross-border purchase’, seven countries responded with 50%+, particularly in Eastern European countries, Latvia (61%), Lithuania (65%), Poland (60%), Hungary (60%), Croatia (50%), and Russia (80%).¹⁰ Using AliExpress as a representative case for online cross-border sales from China, desktop web traffic data reveals that from January 2019 to December 2020, ten out of the top twenty countries visiting the online marketplace were European, and Russia was in the first place.¹¹ 

Though many consumers shop on online marketplaces, several also visit popular online cross-border retailers. Some examples of these retailers are IKEA, H&M, Pandora, Smyths Toys, and Lego.¹² When it comes to marketplaces, the leaders remain the large global players such as Amazon, eBay, and AliExpress, as well as European players like Zalando and Asos. 

Sustainable marketplaces have also proved important in the ecommerce landscape and have been ranked with weighted KPIs such as sustainability objectives, sustainable business model, sustainable shopping experience, sustainability certification and labels, and sustainable last-mile delivery and transport carriers.¹³ Some of these leaders include eBay, Redbubble, Etsy, Threadless, Bol, Leboncoin, and Rakuten.¹⁴ 

Cross-border developments 

Sustainability has become increasingly important for European consumers, retailers, and policymakers in the past few years, and online retail is receiving more scrutiny than ever before. Concerns surrounding the environmental impacts of purchasing cross-border have heightened for Europeans, as have supply chain issues involving human rights, labour conditions, and the collection of raw materials. 

One cross-border consumer survey found that 82% agree with the sentiment ‘I would like the packaging materials of my parcels to be recyclable’, and 80% said they would ‘Like the packaging materials of my parcels to be reusable’.¹⁵ Although consumer surveys may not match consumer behaviours, the same survey found 68% are indeed willing to receive their package a few days later to reduce environmental impact.¹⁶ 

Consumer behaviours around sustainability have also shifted since the COVID-19 pandemic. In fact, the share of consumers in 2020 that primarily shopped at local businesses (online or in-store) to reduce their environmental impact was highest in France (44%), Germany (35%), Italy (28%), the UK (25%), and Spain (22%).¹⁷ Moreover, according to Duncan Graham of Ireland’s national ecommerce association Retail Excellence, the share of business done with Irish e-retailers increased 10% in 2020.¹⁸ Whether this is due to sustainability concerns or the pandemic slowing foreign purchasing due to supply chain issues is up for debate – one thing is certain, local shopping saw a boost in 2020. 

Shopping locally has likely also seen a boost from the new VAT ecommerce regulations, which went into effect on 01 July 2021. Cross-border sellers are now required to charge the VAT rate of the buyer’s country of residence, which applies to all sellers above the micro-business threshold, and they are also required to register their business for VAT in either the customer’s country or the one-stop-shop.¹⁹ 

Of course, the new VAT law applies only to European countries operating in the EU Single Market, which means there are several Eastern European countries still accessible to foreign retailers looking to sell into Europe. Perhaps the largest hurdle for foreign e-retailers hoping to sell into Eastern Europe is the heavy reliance on cash-on-delivery as a payment method. Unlike consumers in Europe’s other regions, a large portion of Eastern Europeans remain unbanked (adults who do not use or have access to traditional financial services like credit cards).²⁰ The highest rates of unbanked in Europe are found in Romania (42%), Ukraine (37%), Bulgaria (28%), and Hungary (25%) – compare these rates with Norway, Sweden, Finland, the Netherlands, and Denmark with 0% unbanked, and Belgium, Germany, and Switzerland with only 1% unbanked.²¹ 

As Eastern Europe proves, consumer payment preferences and behaviours are important aspects of localisation strategies for e-retailers selling cross-border into Europe. Looking to Western and Northern European markets, cross-border payment preferences are quite similar, differing only slightly. Credit cards appear to be the most popular payment method amongst consumers in Ireland, Italy, and Belgium, while bank transfer is preferred in Germany and the Netherlands. E-wallet payments are also very popular in Italy and Denmark.²² 

Table 1: Payment methods in select European countries²³ 

This article was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 

About Sara Lone 

Sara Lone is a Lead Research Analyst for the CMI focusing on ecommerce, digitalisation, sustainability, and diversity. Within the Digital Commerce Research Group, Sara works with international stakeholders to measure and analyse ecommerce in both developed and developing digital markets, generating insights for SMEs, trade and development organisations, and policymakers. 

About the Centre for Market Insights 

The Centre for Market Insights is the innovative research centre of the School of Marketing at the Amsterdam University of Applied Sciences. Our experts carry out challenging research projects for top companies and trade associations in the field of digital commerce and marketing analytics.