B2C e-commerce in Italy: forecasts for 2019

Alessandro Perego
Scientific Director at Osservatori Digital Innovation

B2C e-commerce keeps growing: the value of online purchases in Italy was 27,528 million euros in 2018, with a 16% increase on the previous year. And 2019 is likely to continue in this direction, with an estimated value of 31,560 million euros.

But what do these numbers tell us? First of all, with these estimates, Italy is going to show an important +15% compared to 2018. A considerable increase, considering that the World projection stops at +9%. In short, Italy seems to have reached the right maturity in terms of e-commerce. And this is certainly good news, given the impact of this on overall consumption (online + offline). In recent years, B2C e-commerce has increasingly been taking over the total consumption growth. Just think that in 2016 it had an impact of 29%, while in 2019 it had an impact of 62%.

The push of products


If B2C e-commerce is travelling full steam ahead, much of the credit is certainly due to the growth in product purchases.

Detailing a bit more, and breaking down those over 31.5 billion euros estimated for 2019, it turns out that more than half of the total, 60%, comes from the purchase of products (Clothing, Furniture and home-living, Cosmetics, C2C, Publishing, Merchandising, Food & Grocery, Computer Science and Electronics). With 18.2 billion euros and a 21% increase on an annual basis, this segment surpassed by far services sector, which is growing by 7%.

Let’s take a closer look at the product segment: Information technology and electronics remain in first place, with a value of more than 5 billion and a growth rate of 18%, compared to the previous year. Purchases in Clothing keep rising, albeit at lower rates than in the past, thanks to the mass market and sporting goods.

Among the sectors that exceed one billion euros, two score the highest growth rate: Furniture and home living and Food&Grocery, which also includes Food Delivery. With regard to the delivery of food at home, growth almost touches 60%, and to date it seems to be the most popular bet of e-commerce worldwide.

As for the purchase of services, in Italy the first sector is Tourism and Transports, which grows at a steady rate (+8%), followed by Insurances (+4%).

 

Mobile evolution


Many areas of the Digital world are following the mobile-first model: B2C e-commerce makes no exception. If we examine the devices mostly used to buy, in fact, we find that purchases from smartphones amount to 12.4 billion euros out of a total of 31.5 billion. The penetration is higher for products, where the mobile segment accounts for almost 50%.

Today, smartphones account for 39% of total online purchases and in the last 5 years this percentage has grown with an average rate of +58%. For this reason, we expect the smartphone to become - between 2020 and 2021 – the main channel for generating e-commerce demand. Smartphones are also driving another cornerstone of the new e-commerce: omnicanality.

 

Omnicanality


Online shopping is becoming increasingly omnichannel. This can be observed watching companies’ statistics on online sales. In 2019, they will be worth 28,667 billion euros.

63% of sales are generated by companies that we can call “Dot Com”, and only 37% by traditional companies. Looking at the overview of products and services, we notice that DotComs are the protagonists of more than three quarters of the overall product turnover. Today, behind this percentage (77%) there are platforms that have a very different configuration compared to the past. They don't just operate online: 44% of these are marketplaces or aggregators, i.e. third-party e-commerce enablers for traditional companies that can therefore easily enter a multi-channel logic.

Overall, we are witnessing a mixture that is bringing the two sales channels closer: physical and digital. On the one hand, the adoption of omni-channel models in traditional retail stores is growing, with increases in initiatives such as click&collect, availability checks and in-store returns. On the other hand, DotComs have been signing agreements with physical retailers to develop a widespread network for the delivery and collection of returns. Shops are being opened (see Cortilia), as well as showrooms (Arredatutto.com), temporary stores (Amazon, Zalando) and pick&pay (ePrice).

The result is that e-commerce is beginning to fit into a multi-channel strategy even for traditional actors.

 

E-commerce as a driver of innovation


The importance of e-commerce is also determined by the fact that it is a source of absolute innovation. It is well known that a number of innovations in the retail sector come as a consequence of e-commerce.

Think of virtual/augmented reality, a kind of technology created alongside online commerce to meet increasingly demanding requirements, such as having the chance to see a virtual preview of the positioning of a piece of furniture in our living room. Such innovations are involving more and more both physical and digital retailers.

Also, the expectations related to the "invisible" payment, derived from e-commerce: it is revolutionizing physical stores, with the elimination of the classic checkout. Or even the convenience of on-demand deliveries and return policies, which entails major changes in logistics.

The numbers, the evolutions and the technologies so far make the projections on B2C e-commerce in Italy extremely positive. Compared to past years, when it was a mere niche phenomenon, unable to touch the retail sector, we have come to such a penetration that e-commerce is now innervating multi-channel strategies as a driver of innovation for the entire sales sector. It seems like the right way to go.