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5 Major Trends of the EU E-commerce Industry and the Biggest Drivers in 2021

Overview:

  • The Covid-19 pandemic has contributed to the development and rapid success of the e-commerce industry globally and in the EU particularly in 2020.
  • The move to Strong Customer Authentication (SCA) has a huge impact on the online trading market in the EU. 
  • Brexit-related changes in VAT charges have affected e-commerce in both the EU and the UK. 
  • To foster growth and decent profits from e-commerce in 2021, entrepreneurs need to invest in specific capabilities on their online portals.  
  • The future of e-commerce lies in the automation of processes, direct communication with customers by the brand, and creating the effect of a visit to a brick-and-mortar store for online shoppers.  

The Covid-19 pandemic has had an enormous impact on all areas of modern society. The e-commerce industry is hardly the only sphere that could not only withstand the blow but also emerge victorious from the unequal battle with coronavirus. As a consequence of the Covid-19 outbreak, people around the world and the EU began to buy more on the Internet, which spurred the development and profitability of online sales. The pandemic has played to the e-commerce market's advantage. According to Statista.com, e-commerce retail sales worldwide were $4.28 trillion in 2020, and e-retail revenues are projected to grow to $5.4 trillion in 2022. 

But despite the impressive figures, not everything is as smooth and rosy as it seems, and yet there are significant obstacles for those entrepreneurs who are engaged in e-commerce in the EU. 

What EU E-commerce Entrepreneurs Should Keep a Close Eye On 

Strong Customer Authentication (SCA) 

One of the major issues affecting e-commerce this year is the move to strong customer authentication (SCA). Seamless authentication and authorization through digital identity are designed to ensure future conversion rates. Nevertheless, persistent differences in readiness and national enforcement of this technology have caused an increase in transaction failures across the EU. 

Online merchants will have to continue to adapt to the demand for seamless payments, especially with the ever-growing popularity of mobile and wearable payments. 

Brexit-related Changes in VAT Charges 

The end of the UK's membership in the European Union is being keenly felt by both offline companies and their online "mates" operating in these territories. Because of the new rules for charging and collecting VAT, online companies began to charge additional delivery fees to compensate for the time spent filling out administrative paperwork. The increase in delivery costs due to new administrative burdens, in addition to VAT and customs duties on shipments sent from the UK to the EU, prompted many British businesses to invest in distribution networks in the EU.  

Clevver can help with the incorporation in many EU countries, such as Ireland, the Netherlands, Cyprus, Estonia, Germany, Georgia, and Italy in order to smooth out the effects of Brexit on your business. 

Key E-commerce Trends to Consider in 2021 

Despite significant obstacles, on a weekly and monthly basis, more and more merchants are launching online projects and entering the e-commerce sector, working hard to grow their business on the Internet to join the ranks of successful merchants and conquer the field of e-commerce. Knowing key e-commerce trends in 2021 can help achieve this aim successfully.  

Let's take a closer look at e-commerce trends of 2021 and highlight 5 of them that EU entrepreneurs involved in e-commerce should be paying attention to today to succeed tomorrow. 

Transition to D2C  

In 2021, many business owners are expected to start using a D2C scheme actively. By D2C, direct sales of the brand to the end consumer are meant. This way the business can analyze and influence all channels of communication with the user. Without intermediaries, it has complete control over every stage of interaction with the client: from acquaintance to purchase.  

Many large companies have begun to refuse even to cooperate with online marketplaces. Despite the fact that such sites have detailed information about the audience of any brand partner, they are reluctant to share it with suppliers. In 2019, Nike refused to partner with Amazon. The company explained that it wanted to concentrate its efforts on sales through the official website.  

AR Technology  

The main fear of users who hesitate to make an online purchase is not to guess at the color, size, or shape of the product and to waste money and time waiting for delivery. Augmented reality capabilities easily solve this problem. AR-technologies help customers understand how goods will look in reality, not in pictures.  

AI Technology (Voice Assistants)  

Artificial intelligence (AI) acts as an online in-store associate by offering personalized guidance and recommendations to customers. More than that, AI uses shoppers’ past purchase history and browsing behavior to show them products they are more likely to purchase.  

Around 20% of smart speaker owners already use them for shopping-related activities, whether that's ordering products, creating a reminder, conducting research, or tracking deliveries. This figure is expected to jump to 52% within the next four years. If you're not currently optimizing your e-commerce platform and fulfillment processes for voice search, get moving or get left behind.  

Buying by Subscription

Let's talk about the e-subscription market. According to Mckinsey.com, it has been growing at a staggering rate, doubling annually. Specifically, the demand for subscription purchases at a certain interval is increasing. This frees a person from the long and tedious procedure of selecting, paying for, and checking out an item. In addition, stores usually offer increased bonuses or discounts for signing up. For a brand, such a user is a regular customer who regularly buys a monthly or weekly supply of the product of interest. Categories for which users more often subscribe are pet food, baby products, hygiene products, and dietary supplements. 

Mobile Commerce  

The predominance of mobile Internet surfing over desktop surfing was noticed 5 years ago, and since then mobile traffic is only gaining momentum. While initially, the lion's share of visits fell on social networks, games, messengers, and various applications, now, people have become more active in making purchases through smartphones. Statista.com shows that mobile e-commerce sales are expected to grow about 73% by the end of 2021. At the same time, about 30% of customers will not complete their orders if they notice that the online store is not optimized for mobile shopping.  

Bottom Line  

E-commerce businesses looking to dominate the market must prepare themselves to adopt the latest changes (SCA and Brexit-related changes in VAT charges) and trends as soon as possible. The future of e-commerce lies in the automation of processes, direct communication with customers by the brand, and creating the effect of a visit to a regular store for online shoppers.  

The winner in business is always the one who is able to analyze the current situation competently and adjust to it in time, which we wish everyone who wants to succeed in e-commerce in 2021.

DISCLOSURE NOTICE: Any legal or tax information in this communication (including any attachments) is for information purposes only and not intended to be used as tax or legal advice. The author is neither an Accountant nor a Lawyer and cannot be made liable. Please, contact your tax accountant or ClevverLegalServices LLP for individual consultation.