Italy has emerged recently as one of the major target markets for some online retail brands looking to expand into new countries. As a member of the European Union, launching digital initiatives in Italy is simpler than expansion into other countries, especially if operational capabilities already exist within Europe. So what should online retailers know about eCommerce in Italy? Here are five things…
1) Italy currently ranks fifth in online retail sales in Europe – Trailing the U.K., Germany, France, and Spain, Italy had approximately €6 billion in retail online sales last year. However, the growth rate of Italy (as well as Spain) is expected to surpass other leading European countries in the coming years, approaching €10 billion by 2018 at a growth rate of 9% or higher every year. Online retail sales currently make up 1.4% of all retail sales in Italy but are expected to reach 2% by 2018.
2) There are approximately 15 million “digital buyers” in Italy – This means only approximately 25% of the population in Italy (60 million people) made at least one online purchase in the past year. This percentage is lower than many leading European countries but it is expected to increase to around 34% by the end of 2018. With more Italians going online and choosing to experience online retail for the first time, there are some unique opportunities present for online retail brands to reach Italian consumers at the ground level of their digital shopping experiences.
3) Niche online retailers may have the most success in Italy – It’s no secret that the economy in Italy has not been the strongest in recent years and that the unemployment rate continues to increase (approaching 13%). Online retailers with lower-end products may struggle initially, but there is still a sizable demand for cosmetic and fashion brands, especially those who sell high-end products. The unique demand for high-end products online can be attributed to the growing income disparity in Italy and that niche retailers generally appeal to younger Italian consumers who are more likely to shop online.
4) Digital ad spending continues to increase in Italy – Brands currently selling or looking to sell in the European market are taking into consideration the digital shift in the mindset of Italian consumers. According to eMarketer, digital ad spending is projected to increase by 9% or more for the next three years (almost double the rate of Spain) and will reach approximately €2 billion in the next five years.
5) Online and point of sale integration can be valuable in the Italian market – Unlike some countries in Europe, the Italian culture is still cash reliant and some consumers are not comfortable buying online. Because of this, the ability to leverage online retail inventory in stores at point of sale devices can be valuable for multichannel retailers. Being able to “save the sale” in stores with access to additional inventory (an order in store, ship to home solution) can drive additional revenue and allow Italian consumers to experience receiving products at home for the first time.
In conclusion, eCommerce in Italy is on the rise but faces some unique challenges. With the hesitancy of some Italian consumers to shop online as well as economic instability, it may not be the right fit for some online retailers. With this said, some fashion and luxury brands (especially those with high-end products) may thrive and the investment may be worthwhile, especially if the infrastructure to succeed in Europe is already in place.