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Introduction
You have grown your ecommerce business as much as you can on your home turf. The next step you want to take is to sell to European Markets. But, the varied nature of the consumers and countries put forth the question - How to sell and expand in Europe? You might want a simple answer to this question, but it does not exist.
The European markets are made from various smaller national markets. These markets have unique customer behavior patterns as well as commercial regulations. Therefore, the marketing and sales effort for your expansion has to be catered to the needs of these geographies. In this blog, we will understand the various intricacies of the European market so you can plan an effective expansion.
4 Main Challenges for E-commerce Expansion in Europe
Before starting your steps to expand into Europe, here are some of the common challenges you will face.
1) Delivery Speed
Faster deliveries have become the norm around the globe. However, deliveries are a different story in Europe. Most deliveries are being made on an international level across the countries. Therefore, it limits the reliable carrier options. Furthermore, cross-border issues like limited transport options and strict EU regulations tend to slow down the delivery process even further.
2) Technological Challenges
Europe might be a safe haven for the physical traveler, but cyberspace is quite unsafe. Therefore, as an ecommerce business, you will have to ensure a safe shopping experience for your customers. Many countries will also have their own set of security compliances that you may have to comply with. You will also have to find the right balance between security and usability, as too many security protocols can hamper the shopping experience.
3) Payment Gateway
Europe is a continent with over 44 countries. Each country will have its own preference for payment methods. For example, Carts Credit cards have over 40 percent market share in Italy, while iDeal is the preferred method in the Netherlands. Finding a gateway that can enable customers across the continent can be quite difficult. Along with this, processing payments from these many sources can result in heavy transactional charges as well.
4) Tax Compliance
The tax code across Europe is quite similar due to the presence of unions like the EU or FFA. However, not every country is associated with these organizations, and members within them also choose to have their own taxation regulations. Therefore, this results in increasing the accounting workload. The efficiency of the work process will dictate your ability to grow and expand in the region.
3 Things to Understand Before Expanding into Europe
You will have to comply with some new regulations as you expand into new geographies. When it comes to Europe, you won’t have to put in that much effort as most countries come under either the EU or FFA. This enables you to be compliant for multiple countries with minimum effort. The three main things you have to ensure are:
1) EORI-ID
EORI stands for Economic Operators Registration and Identification Number. This number is used to identify economic entities across the entire EU. It will be your identification number for customs, security, and statistical purposes. It will act as your official license number to sell in the European market.
This number will be issued to you by a customs department. Once your application has been scrutinized, you will receive a unique number with a member code. This code will then be used to import, store, and sell every product within the European Union.
2) GDPR
General Data Protection Regulation (GDPR) is a set of regulations and protocols that is recommended to ensure data security in online mediums. The regulations were implemented in 2018 to ensure data security for European Customers.
Therefore, every legitimate organization has to follow these cyber security guidelines to be able to carry out transactions in the region. Most of these regulations surround your data collection efforts to ensure maximum safety and privacy for the consumers.
3) Labeling
If you want to effectively ship within the EU, your shipping labels have to be on point. Many orders are held at borders due to incorrect/incomplete information on the label. Most companies miss the mark on the packaging and labeling.
On the label, it is mandatory to have a CE mark for all products that operate on electricity or batteries. Along with that, the label should have all the details for the manufacturer, enough to trace the product back to them. It is also imperative to add precaution or care instructions with the apt symbols.
3 Reasons You Should Consider Expanding to Europe
If you are still reading, you might start to wonder if it is actually profitable to shift to Europe. Especially in a field as competitive as Ecommerce, one wrong expansion move can collapse a well-standing company. Therefore, before we learn how to set up in the European markets, here are the top three reasons you should consider expanding into Europe.
1) Market Size
The European Union alone has over 27 member states, which also happen to be some of the richest countries in the world. Along with this, the region has excellent penetration of E-commerce. In the major economies across Europe, the internet penetration rate is over 90 percent. Therefore, as an ecommerce brand, you have quite a huge potential customer base.
Despite the colossal size of the consumer base, the market has very few major players in the ecommerce space. As a result, newer ecommerce platforms have more scope for growth and success in the market.
2) Free Movement of Goods
As opposed to other geographies where you have to target a country, the rules of the EU enable you to sell to an entire continent. The free movement of goods allowed within the continent makes it easier for you to set up a central distribution center and ship to multiple countries at once.
Along with this, the commercial and operational requirements are almost similar, making it easy. Organizations like the EU and FFA foster commercial growth and ease of business, enabling e-commerce businesses to leverage their virtual model.
3) Ease of Commerce
It is fairly easy to start selling in the European markets. All the countries on the continent tend to use the same currency, facilitating easier cross-border transactions. Additionally, the presence of the European Union also brings many countries and geographies under the same customs regulations.
The European sector also has a strong presence in global marketplaces like Amazon, Etsy, etc., enabling easier launch of new products. This presence also allows you to understand customer preferences and make necessary essential changes.
5 Factors for Success in European E-commerce Markets
Here are five key factors that are imperative for your success in the European markets.
1) Legal Expertise
The European markets can be tricky to navigate. Here, countries change faster than the roads change color. To navigate this vast and diverse geopolitical market, legal expertise is crucial.
You will need to learn the right way to import and sell your product in the market. Furthermore, the right legal teams will guide you in various procedures and process-building activities that allow you to create an efficient base.
2) Seamless Cross Border Shipping
The main advantage of expanding to Europe is your market is not restricted according to National boundaries. Even if you set up a distribution network in Europe, you will almost constantly be shipping to other countries in the region. Hence, you will need to establish a seamless cross-border shipping process.
You will have to team up with courier partners that have a strong domestic presence in several countries along with superior connectivity across the continent. Additionally, your systems should have pre-existing workflows in place that produce and align the documents for your international shipments.
3) Marketing Strategies
Whenever a company expands into new territories, marketing strategies are at the spearhead. Typically, regions tend to have a similar pattern of customer behavior. Therefore, formulating an effective marketing strategy becomes quite easy.
Even though legal uniformity exists, the region is diverse in terms of socio-economic background. Therefore, to enable effective marketing outreach, you will have to take the differences due to it in account. It is ideal that you divide your marketing efforts according to the geographical areas for maximum market penetration.
4) Demographic Analysis
Your marketing strategies, seamless shipping experience, and top-notch website won’t be useful unless your product has viability in the market. The European market tends to be volatile. Therefore, it might be a good idea to test your product viability before you launch a full-scale expansion.
This can be done by doing either a soft launch or conducting extensive surveys of the market and the customers. These surveys will enable you to gather feedback from potential customers. Along with this, it will allow you to understand the spread and nature of your potential customers. You can use this information to tweak your product and experience for the perfect launch.
5) Understanding the Taxation Systems
If you are expanding into Europe, you won’t be sticking to one country. You will be shipping to at least 4-5 countries at first. This creates a mess for your accounting and taxation department. Therefore, before you launch into these markets, it becomes imperative to understand the taxation systems in place.
You will have to look at the taxation for online businesses as well as your product category. This will not only allow you to have a flawless accounting statement but also price your product right. You might want to consult an accounting firm based in the region to get an understanding of taxation systems and the best practices associated.
How to Make Your Products Ready for the European Market?
Now that we have an understanding of the intricacies of the European market, let’s take a quick look at the launch process you need to follow. You may have already successfully run an e-commerce venture in other markets. Still, it is necessary for you to cater your products and the shopping experience to the European customer base.
The first thing, you will have to rethink the packaging. If you plan to export, you will have to ensure that your product is protected in transit. Along with this, the product content has to be rewritten in different European languages.
Additionally, you will have to list the product on platforms according to the country. For example, you will have to create a listing on marketplace platforms like Prestashop, OpenCart, Cdiscount, etc., so that you have a viable presence in the European market.
Order fulfillment and delivery supply chain has to be established. You can either do this by partnering up with a 3PL. Alternatively, you can set up a single distribution center and partner up with a carrier that can handle deliveries across the continent.
Conclusion
When a company reaches its target potential in the current markets, it is easier for them to expand into new geographies. However, without proper planning, making this expansion is not ideal. In diverse markets like Europe, getting the lay of the land beforehand is important. Hopefully, the above blog has enabled you to get a good idea of the European market so you can expand effectively.
FAQs
1) Which is the best country in the EU to start in the e-commerce sector?
European markets have a few good options to start selling online. Countries like the UK, Germany, and France are a few good options. The high internet penetration rates, as well as the presence of online financial infrastructure, make it the best option for ecommerce brands.
2) What are the top product categories in online retail for the European market?
Beauty and Personal Care is the highest-selling product category in the European Market. Other popular product categories include products from Fashion, Food, and Furniture.