Every year, numerous quantities of research try to estimate the size of the Belgian e-commerce market. Most of the time these high-level estimations are derived from the consumer perspective to tell the story on how Belgian e-commerce performs. We believe, however, that there are always two sides to a story, and that we should also pay attention to the merchants’ perspective.
Therefore, The House of Marketing together with SafeShops.be explores this black hole of merchant-based facts through the E-commerce Barometer. As opposed to other research, the E-commerce Barometer brings forth accurate information on Belgian e-commerce based on real transaction data, in collaboration with payment service providers in Belgium. A payment service provider or PSP is a third party that facilitates and helps merchants in the acceptance of payments.
Before the release of the E-commerce Barometer 2018, we would like to untangle the web of information available today. Therefore, we bring together key figures and different insights from a broad range of research.
Belgian e-commerce and consumer spending are growing steadily
In 2017, we experienced the first real increase in e-commerce penetration in four years. Based on CBS and Gfk analytics, on a population of around 11.5 million people, an estimated 7.6 million Belgian consumers shopped online at least once, which represented 86.5 million purchases (an increase of 2% compared to 2016), and 10.05 billion euro (+ 11%). Based on these estimates, Belgians spent on average 1.322 euros online. At that time, Belgium was the ninth biggest grower of e-commerce in Europe (E-commerce Foundation, 2018). From a merchant perspective, the E-commerce Barometer revealed a total transaction volume of 60 million transactions (+ 39%) for all Belgian webshops, representing a value of 5.84 billion euros (+ 17%) in 2017.
Belgium still has a huge untapped e-commerce potential
The Belgian e-commerce market has for many years found itself in what PostNord describes as the acceleration stage: a strong increase in new e-commerce consumers drives growth, but the total sales value and average ticket size are low. We now see a move towards the so-called digital market shift stage, where the inflow of new e-commerce consumers slows down, and the market expands via an increase in purchases. Despite the fact that the infrastructure and other conditions are in place, it seems that e-commerce has not yet fully broken through.
Data gathered for the E-commerce Barometer shows us that the number of Belgian online merchants reached 20,000 in 2017, an increase of 26% compared to 2016. The striking thing about this is that just 4% of these online players are responsible for 89% of all revenue generated. It is mainly the smaller merchant segment that seems to be showing a growth in number of webshops. One possible explanation for this could be the fact that more and more stores, including the smaller ones, opt for an omni-channel strategy and therefore decide to engage in online sales. Although 92% of independent merchants in Flanders have an online presence, only half of them (46%) are actually selling online.
To put our Belgian performance into perspective, let us have a glance at our neighbors up north. According to the CBS, 11.5 million people, out of a total population of 17.3 million, bought something via the internet in 2018. They spent 22.5 billion euros online in 2017 (+ 13%), representing 201.7 million online purchases (+ 17%). This results in an average online spend of 1.957 euros in 2018. While we are still waiting for exact numbers for 2018, they are forecast to hit 25 billion euros in online purchases (GfK).
Cross-border e-commerce has grown explosively: huge platforms rule the scene
Recent figures show that Belgium imports 2.9 billion more than it exports, and that Belgians are increasingly shopping abroad (Eurostat, 2018; Ecommerce Foundation, 2018). Over the past five years, Belgian customers’ spending in foreign webshops has increased tenfold. In 2013, about half a billion euros was spent in foreign webshops. In 2017, according to Comeos, about 5.5 billion euros is spent online across the border. In total, 5.4 million Belgians are estimated to buy products abroad, and more than 1 out of 4 even shop abroad at least once every quarter.
Although 53% of consumers claim to shop cross-border due to lower prices, it is important to remember that consumers take a lot more factors into account. A motivation often seen in Belgium is the opportunity to have access to new, unique products and a broader range. In nearly all European countries, China and the UK are the countries mostly indicated by consumers for buying products from. In Belgium however, the Netherlands leads the pack, followed by China, Germany, the UK and the USA (PostNord). Why? Well, we prefer Dutch webshops, and often shop at the well-known behemoth platforms, such as Amazon (USA/FR/UK/D), Zalando (D), eBay (USA), Bol.com (NL), Wish or Ali Express (China).
As a result of consumers’ ability to shop globally in combination with their demand for low prices and unique products, cross-border e-commerce has grown exponentially in recent years. Therefore, Belgian e-commerce platforms suffer from deadly competition from foreign platforms exploiting these customer demands. As a matter of fact, in 2017, the whole top five of the biggest online stores in Belgium consisted of foreign players (Twinkle100).
A driving force behind this rapid internationalization of e-commerce are young consumers, who are mainly made up of tech-savvy digital natives who are quick to reap the benefits of digital, technical and commercial advantages. In some European countries such as Poland and the Netherlands, the percentage of young consumers who often buy from webshops abroad has more than doubled in just three years (PostNord).
The main shopping drivers are convenience and price
According to the Global Online Consumer Report (KPMG, 2017) and confirmed by Comeos, the main drivers for Belgians shopping online are (1) convenience and (2) price. Belgian consumers mainly value saving time, the ability to shop 24/7, the fact of having everything in one place and being able to compare prices at the click of a button. The ‘ideal webshop’ should encompass clarity of pricing and cost, and reliability and speed of delivery, according to Safeshops research. Barriers for buying online are (1) the lack of physical proximity of the product and (2) the cost of shipping. People still want to see, touch and try items before buying, and are mainly concerned about the fact that the final product does not meet requirements and expectations. In addition to this, delivery time often gets perceived as being too long and shipping costs too high.
When looking at devices, the Online Shopper Report (2017) by SafeShops indicated that 83% of consumers shopped on their laptop/PC, 16% on a tablet and 11% used their phone for online purchases. In 2018 however, we saw a drop in the percentage of laptop/PC users to 68%, and smartphones overtook tablet use with 29%.
When it comes to payment methods, PostNord research showed that Belgians prefer debit or credit card (59%) followed by Paypal (20%). Comeos research estimated these numbers to be lower (respectively 46% and 10%) and also claimed that Bancontact makes a big difference. Following their study, almost 1 of out 10 purchases is done through the app.
Belgium: the Mecca for e-commerce?
Is Belgium the Mecca for e-commerce? All facts considered, we observe that Belgium is an e-commerce sweet spot that is full of potential, but it is still an atypical and difficult market to play in. We summed up five challenges and opportunities for you.
- In the past year, Belgium was a strong grower and is considered one of the most attractive markets for e-commerce activities, growth potential and infrastructure (Global Retail E-commerce Index).
- The country is densely populated and tightly-packed with top-notch logistics and distribution.
- We are at a central location in a major market - a region that enables you to access markets across Europe.
- The region is surrounded by Europe’s and even the world’s most important e-markets, right in the middle of a whopping 72% of the EU’s internet sales activity (Flanders Investment and Trade).
- Local government is willing to transition as quickly as possible to the digital era.
- Big players dominate: 4% of Belgian online merchants account for 89% of all transactions (E-commerce Barometer).
- Although the difference with other countries is diminishing, high taxes as well as high labor costs still apply in Belgium.
- Belgium has been slow to board the e-business train, with night work, as a textbook example, not having been legal until recently. The market is fragmented between no fewer than four different languages (Dutch, French, German and English for expats). This makes operating in Belgium relatively hard for an online merchant, even for Belgian stores.
- Belgians have high demands regarding delivery: they want it fast and cheap (preferably free).
Belgian e-commerce is once again heading for a record year. Soon we will publish our new E-commerce Barometer report in collaboration with SafeShops.be, unveiling the current state of the Belgian online retail landscape, based on real transaction data. We continue to build on previous editions and compare against previous years. Knowing the real facts of the current state of e-commerce in Belgium helps companies, entrepreneurs and marketers make better forecasts by aligning ambitions with market reality. Launching an e-commerce business may not be easy but with the help of experts, the probability of success can be significantly improved.
References: Comeos, Gfk, PostNord, Unizo, Wijs, KPMG, SafeShops, Reuters, CBS, Flanders Investment & Trade, Global Retail E-commerce Index, Twinkle100, Eurostat and Ecommerce Foundation.