E-commerce defies economic crisis

E-commerce is already worth SFr6 billion in Switzerland Keystone

Experts say e-commerce in Switzerland is continuing to record a two-figure rise in turnover - bucking the general economic downturn.

The E-Commerce Report 2010 found that turnover had increased by an average of 14 per cent among more than 20 leading online retailers in the country last year.

“The large majority were not at all affected by the economic crisis or at most only had lower growth,” concluded the study, which was conducted by the University of Applied Sciences Northwestern Switzerland and officially published on Thursday.

In contrast, private consumer spending only rose by around one per cent last year, it noted.

Average e-commerce growth over the past five years has been around 25 per cent, ensuring that – ten years after its arrival in the country – online trading is now worth SFr6 billion ($5.2 billion) a year.

Online shopping now has a four to five per cent market share in the commercial sector – still only around half of the average for other European countries.

“Switzerland has a rather small market compared with other European countries and above all, it’s fragmented between the different language regions,” said study co-author Ralf Wölfle.

“It’s no wonder that global e-commerce giants prefer to concentrate first on the larger markets, such as the French and German ones.”

Security concerns

Growth has, however, in the past few years been hampered by security concerns, such as abuse of personal data collected online.

At the beginning of May, the State Secretariat for Economic Affairs (Seco) announced the advent of electronic signatures, hailing it as a “groundbreaking day for the security of e-commerce”.

SuisseID is a password-protected card which acts as a secure digital signature for correspondence, forms and purchases. But it could be a few years before it is in widespread use.

Nevertheless, the report still predicts two-digit future growth for e-commerce, with market leaders expecting a boost of annual turnover of between ten and 20 per cent in the next five years.

And after eating away at catalogue sales, web purchasing is also taking market share from traditional retailers. This presents some companies which have web and shop purchasing with a dilemma.

“There is a certain self-cannibalisation which can’t really be avoided. On the other hand, even firms which were more reluctant to do e-commerce are now developing their online offer even more,” said Wölfle.

Tickets and supermarkets

In some sectors, such as ticket sales, e-commerce now accounts for more than 50 per cent of the market.

And Switzerland is the second most developed market for online supermarket purchases after Britain.

Christian Wanner, CEO and co-founder of LeShop, a subsidiary of large retailer Migros, said that the company was growing faster than average. It had sales of SFr38 million in the first quarter of 2010 and currently delivers 200 tons of food a day.

“E-commerce is basically about the transformation of the market, which is now a deep-rooted trend, so we’re migrating business from traditional retail points to the online scene,” Wanner, whose firm was surveyed by the report, told swissinfo.ch.

“In some categories it has been more acute than others, for example, music where it’s going extremely fast or books where we also saw how in ten-12 years Amazon rose from nothing to become the leading book retailer worldwide.”

LeShop launched an iPhone application this January, from which it now already does four per cent of its sales. This confirms a trend shown in the report towards more mobile phone use for e-commerce.

Future optimism

The CEO is optimistic about future growth. “This will be supported by the wide spread of broadband access to all households at least in western Europe and in the United States, along with new technology that makes it even easier,” he said.

“In a couple of years touchscreen surfaces with internet access will be widespread in all households.”

But Wölfle does not believe e-commerce’s strength means the end of traditional retail, as some had predicted during the initial internet euphoria in the early 2000s.

“The pleasure of going into a shop, of looking around and touching the merchandise can never be offered online, nor can you get advice” he said.

“E-commerce is an excellent complement. If you buy food and other necessities on the web, you can avoid carrying heavy bags and can have more time for purchases which are more pleasurable to buy in shops or on the market, such as cheese, fresh vegetables, clothes and so on.”

Armando Mombelli and Isobel Leybold-Johnson, swissinfo.ch

Internet

Almost 80% of Swiss have access to the internet.

Regular surfers (by age group):

92% of 14-19 year olds

90% of 20-29 year olds

88% of 30-39 year olds

78% of 40-49 year olds

72% of 50-59 year olds

51% of 60-69 year olds

(Source: Federal Statistics Office)

E-commerce

Annual growth in e-commerce (compared with private consumer spending)

2006: 34% (2.9%)

2007: 29% (3.7%)

2008: 26% (3.9%)

2009: 14% (0.9%)