Will we resemble the British or the German online market?


(From the 4th European online trade conference in Berlin, November 2012)

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Picture source: www.isbournevalleyschool.com

All analyses and studies rank Great Britain first as regards commerce and e-commerce development in Europe. There are great differences in the structure of online providers in Great Britain and Germany. On the Isles, traditional stores with a multi-channel user experience are at the forefront with an impressive 70% of the market. In Germany, most of the market is occupied by new Internet retailers and retailers with catalogue sales. The turnover of traditional retailers accounts for only a quarter of total online sales in Germany.

In Britain, it is estimated that by 2020 a third of its present high street retailers will go out of business, while a third will undergo a perceptible transformation and in many cases also relocate and develop new store formats.

German traditional retailers and their suppliers are under great pressure from the competition. Amazon, eBay and other online retailers are threatening them not so much by taking over trade than through aggressive pricing policies that they can carry out owing to their economy of scale and optimized logistics.

Online competition is forcing traditional retailers into considerably higher cost-effectiveness, the development and promotion of the store’s own brand, products and services, the establishment of multi-channel marketing that can be a big advantage of traditional stores and, in recent times, also into internationalization through the web.

What about Slovenia?

Slovenia is very much defined by its smallness in all regards: territory, market, capital, human resources. We will probably never achieve the percentages of online sales seen abroad. While the level of competition will be lower than abroad, it will nevertheless be considerably higher than today. The structure of services will probably be closer to the German than British model. Much is said about the Internet, but a lot remains to be done, especially in real trade and the sale of products of specific brands.

Since Slovenia is also facing reduced demand, new retail chains and the aggressiveness of global and local online retailers, the transformation of business models into more competitive models is a necessity. Price cutting cannot be the only strategy. If only prices were important, we would be left with nothing but Internet retailers.

Every provider can find their own winning formula. More cooperation and trust is required. It is better to invest a percent today and prevent losing 10 percentage points in the future.

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