The rapid development of e-commerce in recent years and the following restrictions imposed by the Covid-19 pandemic contribute to revolutionising the retail market. In this context, and with global Internet penetration set to double in the coming years, e-commerce is increasingly becoming an indispensable tool for businesses, both in increasing their sales volume and as a means of reaching new markets.
E-commerce advances at double-digit annual growth rates
E-commerce in Italy is developing fast, the number of web shoppers is constantly increasing, and the sector has been recording double-digit annual growth rates since 2014. It is partly due to a market that has become increasingly sophisticated. The main factors fuelling the growth of e-commerce in Italy are improved internet access infrastructure and the broader availability of broadband connections, and one of the world’s highest mobile and smartphone penetration rates. Moreover, e-commerce in Italy is also facilitated by its growing recognition as a valuable tool to serve and support customers more economically and efficiently and by improved security in transactions.
E-commerce: the Eurispes data
The Covid-19 has therefore led to a dramatic increase in the use of digital channels for the purchase of goods and services. This aspect is well highlighted by a recent survey conducted by Eurispes, which aimed at analysing the way the pandemic has changed citizens’ habits and lifestyles: it emerges how the pandemic has led, for the first time, 21.9% of Italians to order their groceries online and 13.1% to buy their medicines on the Internet. Furthermore, 30.7% of the population started to use communication support platforms such as Zoom or Skype, and 13.1% decided to subscribe to a streaming platform. Despite the growth over the past year, the levels of e-commerce penetration are still below the European average, with around one-third of the respondents saying they never buy online. It is particularly true for the over 64 age group, where the percentage rises to 59%.
E-commerce’s value in Italy
According to an analysis conducted by ICE on Statista data in Italy, the total value of online purchases in 2019 worthed €441 billion, with an increase of 14% compared to 2018 and equivalent to around 20% of the national GDP. More specifically, B2C (Business to Client) trade reached 31.6 billion in 2019, 15% higher than the previous year. Besides, of this amount, 18.1 billion are related to the sale of physical products while 13.5 billion are related to services sale. With regard to services income, 10.9 billion came from the tourism and transport sector and 1.5 billion from online insurance purchases. On the other hand, physical goods, computer and electronic products are in first place with 5.3 billion, followed by clothing with 3.3 billion, furniture with 1.7 billion and the food sector with 1.6 billion.
Regarding B2C digital exports, they reached €11.8 billion in 2019, up 15% from the previous year. The share of digital B2C export is about 2.5% of traditional export. Besides, the fashion sector represents 66% of B2C exports – 7.8 billion euros corresponding to 14.5% of the sector’s total exports- while agri-food represents 11% -1.3 billion euros equivalent to 3% of total exports- and furniture represents 8% -1 billion euros for 10% of the sector’s exports. However, for all the other sectors, B2C trade has a very residual weight.
According to ICE, B2B (Business to Business) trade in Italy reached €410 billion in 2019 with an annual growth rate of 14%. More than 50% of the value generated by B2B trade is concentrated in six sectors. The automotive industry with €98.4 billion accounts for about a quarter of the total value of B2B sales in Italy. The other main sectors linked to sales on B2B platforms are consumer goods with €77.9 billion, pharmaceuticals (€20.5 billion), textiles and clothing (€12.3 billion), and household appliances and electronics (€8.2 billion). In contrast, B2B digital exports in 2019 reached €134 billion. It represents 28% of total exports (online and offline) and more than a third of B2B trade in Italy. The sector that weighs most heavily on Italian B2B exports is again the automotive sector, which reaches a value of €30 billion, or 73% of total sector exports. It is followed by textiles with a value of 20 billion euros (38% of sector exports) and mechanics with 15 billion (18% of sector exports).
Despite the picture outlined above, the development of electronic commerce in our country is slowed down by two elements that we could define as systemic. The first concerns the lack of infrastructure, while the second is linked to the lack of specific technical skills. As regards the first aspect, Italy is still far behind in the diffusion of fixed broadband, given that only 19% of SMEs have a connection speed of 100 Mbit/s or more (US Department of Commerce), and many do not have the funds to update their digital infrastructure. The second aspect concerns, as mentioned above, the lack of specific skills for the use of digital technologies. These technologies, which are necessary for the development of new products or support decision-making processes – such as the use of collaborative platforms to facilitate exchanges with customers and suppliers – are becoming increasingly central to enhancing the productivity, efficiency, and competitiveness of businesses. In this context, one of the main barriers to the adoption of solutions related to new digital technologies lies, as mentioned, in the lack of skills and economic resources on the part of companies, especially small and medium-sized ones. In a survey conducted by ICE, it emerges that about 40% of the companies interviewed do not believe that the benefits of adopting new technologies justify the initial investment or that these solutions can improve the product development process. In relation to the lack of specific skills, it is also worth noting that data published by the European Commission places Italy in the last place among European countries in terms of the digital skills of its citizens.
More significant investment in infrastructure and digital skills is therefore essential not only to increase the competitiveness of Italian companies but also to encourage a recovery in exports, whose prospects for revival – especially in 2021 – will depend on the growth of trade with South-East Asia, China and India. In this context and given the growth of new wealthy classes in these countries, e-commerce, mainly for B2C exchanges, could be an excellent means of relaunching Italian companies; especially in the clothing and agri-food sectors for which growth rates of around 10% are forecast, thanks to ever-increasing demand from Chinese consumers.