While most of the world isn’t travelling across borders just yet, many of us are shopping across them. Data shows that almost 1 in 4 ecommerce purchases in Europe is international. As the world begins to emerge from social distancing, ecommerce growth shows no sign of slowing down. In fact, it is predicted that the global ecommerce market will reach USD 6.07 trillion in 2024, growing at a compound annual growth rate (CAGR) of 11.34%.
With growth rates skyrocketing, new global markets emerging, and established markets reaching new milestones, the big questions are: What markets do companies need to be planning to enter or expand? And how can the acceptance of local payment methods enable brands to succeed in global markets?
Let’s take a look at Europe’s ecommerce growth drivers.
The United Kingdom
No other country in or around Europe has embraced online shopping more fully than the UK. Despite the recent withdrawal from the European Union, the UK’s ecommerce market, currently the third-largest in the world, is predicted to be worth GBP 26.4 billion by 2024, a 37% increase compared to 2020.
In the UK, Buy Now, Pay Later schemes were the fastest-growing online payment method last year, according to a Worldpay report. Whilst it was originally considered a niche payment method, it is now a mainstream checkout option with widespread adoption; BNPL schemes are predicted to account for 10% of UK online spending by 2024. For example, the UK’s favourite department store, John Lewis, recently announced that it was launching its first-ever BNPL offer online to help satisfy a surge in demand for interest-free credit.
Another trend we’re seeing emerge is that bank transfer payments are becoming increasingly popular. In the UK – typically a card-centric payments market – bank transfers have doubled in popularity over the previous three years. To anyone who knows the UK payments market and is familiar with Open Banking, this isn’t surprising. Bank transfer payment methods offer transparency and security; allowing the consumer to see their balance in real-time before they press the ‘pay’ button.
Germany
With a population of 82 million, Germany is the fifth-largest ecommerce market in the world and the second-largest in Europe, behind the UK. According to PostNord’s latest report, 92% of Germans in the survey state that they have shopped online. For context, the European average was just 60% in 2019. Since the beginning of the pandemic, Germany has experienced an uptick in online sales with as many as 29% of consumers stating that they shop online more often as a result of the pandemic.
It is once again the bank transfer payment that is driving ecommerce transactions in Germany. Payment methods such as Giropay and Klarna Pay Now (Sofortüberweisung) have become firmly established for online shopping in the region, providing innovative and secure payment and verification solutions based on online banking. According to statistics, Giropay covers over 85% of the German market, with over 1,500 banks providing access to approximately 17 million customers.
Italy
The last, but by no means least, of Europe’s growth drivers is Italy. The growing demand for local payment solutions combined with rapid ecommerce growth led to digitalisation in the region. And now, Italian consumers are increasingly embracing digital services. In fact, in Italy, nearly one-third of all Italian ecommerce purchases are made with an e-wallet, frequently funded via a bank account.
Italy already has a thriving cross-border shopping culture, with China (35%), the UK (19%), and Germany (19%) all categorised as the most popular overseas markets for Italians seeking increased variety and choice. The future of Italian payments is being shaped by payment methods like Satispay, a popular European mobile payment method. Satispay’s recent growth underscores the opportunity. In 2020, the company doubled the number of online merchants in its network and recorded a 61% increase in the number of online transactions.
The borderless future of ecommerce
In addition to these markets, fast-growing ecommerce regions across the globe include countries in Asia Pacific, Latin America, the Middle East, and Africa.
In APAC, increased mobile internet usage and smartphone penetration have been key ecommerce drivers. Governments and businesses have also been heavily involved in helping SMEs to digitalise and adopt ecommerce to overcome the impact of COVID-19. And this has been heavily reliant on the integration of new local payment methods.
For merchants with their eyes firmly set on growth in the year ahead, implementing the right local payment methods at checkout – supported by the necessary infrastructure – will be key to unlocking the opportunities cross-border trade has to offer.
About James Booth
James Booth has over ten years of experience in the financial sector, eight of those in fintech. In his current role as VP, Head of Partnerships for EMEA, he leads the new business and partner development teams in managing PPRO’s new and existing strategic partnerships. In addition to helping PPRO partners grow their business, he acts as PPRO’s internal advocate for aligning the company’s product roadmap with the needs of its customers. James has been actively involved in various projects during his tenure at PPRO, including establishing PPRO’s presence in North America and managing the development of the PPRO Partner Portal.
About PPRO
PPRO is the top global provider of local payments infrastructure, powering growth for payment service providers and enterprises with payment platforms. Companies at the forefront of payments technology leverage PPRO's unified platform, expert services, and local payment methods to boost sales in over 100 e-commerce markets worldwide. In 2020 alone, PPRO processed over $11 billion for its customers, including companies such as Mollie, PayPal, Worldpay, and many others.
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