The International

E-commerce Forum 2013

14 March 2013

Hotel Fira Palace, Barcelona

held in association with e-show

Barcelona

Conference Report

PRESENTATION by Walter

Devenuto, EMOTA President

Borderless Digital Commerce

DEBATE: What’s the

Difference? How Countries

Compare

PRESENTATION by Xavier

Mayo, Barcelona City

Council: “Does E-Commerce

love BCN?“

DEBATE: The Practicalities

of Cross-border Trading

ANALYSIS: Near-Future

Technology and Trends

BEST PRACTICE: What Does

‘Good’ Look Like?

SPECIAL FOCUS: Brazil

KEY NOTE by Pablo Arias

Echeverría MEP: “ Is E-

commerce the way out of the

crisis?”

EMOTA, the European Multi-channel and Online Trade Association, in cooperation with the eShow Barcelona, today hosted the International E-Commerce Forum in Barcelona, which attracted more than 100 delegates representing e-commerce pure players, multi-channel retailers and distance sellers from several European countries, to discuss and share the secrets of successful cross-border trading and debate the core issues that will define and shape Europe’s digital commerce agenda. During this high-level conference, e-commerce leaders exchanged practical ideas on what infor-mation, help, resources and solutions businesses need to enable them to trade across borders more easily and efficiently, and realize the full potential of the Digital Single Market in Europe.

PROGRAMME: 9.30 - 10.00

PRESENTATION by Walter Devenuto, President of EMOTA: Borderless Digital Commerce

- E-commerce statistics and insights of key European markets

- Trends and best practices - EU lobbying issues

10.00 - 11.00

DEBATE: What’s the Difference? How Countries Compare

- Thierry Petit, showroomprive.com (FR) - Thomas Carroux, bonprix (DE; TR) - Francesca Benati, lastminute.com (IT) - James Roper, IMRG (UK)

Moderator: Walter Devenuto, EMOTA

11.00 - 11.20

PRESENTATION by Xavier Mayo, Economic Advisor, City Promotion, Area of Economy, Enterprise and Employment, Barcelona City Council: Does E-Commerce love BCN?

11.20 - 11.45 Coffee break , sponsored by Barcelona City Hall

11.45 - 13.00

DEBATE: The Practicalities of Cross-border Trading

- Alexander von Schirmeister, Ebay (DE) - Luca Cannoniero, M&S (UK) - Bruno Decker, Saldi Privati (IT)

Moderator: James Roper, EMOTA and IMRG

13.00 - 14.00

Lunch time in the exhibition

14.00 - 15.15

ANALYSIS: Near-Future Technology and Trends

- Eduardo Menal, Grupo Planeta (ES) - Stephen Mader, Kantar Retail (UK) - Katarzyna Lasota Heller, EDiMA (PL) - Christoph Wenk-Fischer, BVH (DE)

Moderator: Alexandre Nilo Fonseca, EMOTA and ACEPI

15.15 - 15.30

Short Break

15.30 - 16.45

BEST PRACTICE: What Does ‘Good’ Look Like?

- Roger Graells, Mango (ES) - Marc Nieto, Letsbonus (ES) - Andreas Schräder, eDreams (ES)

Moderator: Jean-Rémi Gratadour, EMOTA and ACSEL

16.45 - 17.15

Coffee break and visit to the exhibition

17.15 - 18.15

SPECIAL FOCUS: Brazil.

- Ludovino Lopes, President of the Brazilian Chamber of E-Commerce

- Flavio Dias, Walmart Brazil - Leonardo Gasparin, Nova Pontocom

Moderator: Mariano Gomide Faria ,VTEX

18.15 - 18.30

Is E-commerce the way out of the crisis? The point of view of Pablo Arias Echeverría MEP, Chairman of the European Parliament’s Working Group on the Digital Single Market

EMOTA commits to drive borderless digital commerce in Europe:

1. Guide and govern international e-commerce for the benefit of consumers, business and so-

ciety at large; 2. Inform the international e-commerce industry through a standard e-commerce measure-

ment and reporting capability; 3. Proactively listen and respond to the needs of all the digital economy stakeholders, including

merchants, consumers, service providers, and Governments.

“We are very pleased by the impressive growth of online retail in all European markets, even in such a challenging economic environment. We are keen to work will all stakeholders at EU level to harmonize consumer regulations, streamline interna-tional logistics and payments, and improve consumer confi-dence in shopping across borders, in order to realize the huge economic potential of a true borderless digital economy in Europe.”

Walter Devenuto. EMOTA President

Opening Presentation The EMOTA President, Walter Devenuto, opened the conference and presented the developments of e-commerce, focussing on its job creation potential, Europe’s position compared to the rest of the world and the EU regulatory topics having a major impact on online trade. EMOTA estimated the e-commerce turnover in Europe having reached € 300 billion in 2012, what meant an impressive growth rate of 20% compared to 2011. The online retail market would continue to expand rapidly in Europe, with forecast growth rate of around 15-20% in 2013. Europe would remain the largest e-commerce market in the world and grow faster than North America in 2013. Citing a study by Civic Consulting, Mr Devenuto stressed also that the benefits of a borderless digital market, in terms of lower prices and wider choice for consumers, were estimated to be over € 200 billion per year, corresponding to 1.7% of the GDP of the European Union.

The following first session, moderated by Walter Devenuto, focussed on the differences that could be observed by traders on the various e-commerce markets in Europe. Francesca Benati (lastminute.com) highlighted the double-digit growth rates of the Italian and

Spanish e-travel sector in 2012, despite of difficult times for the travel sector in general, due to the economic recession. The travel industry benefitted also from cross-border business. Spain was a challenging market due to its fragmentation. On both markets, strong market concentration made it difficult to compete. From the challenges for e-traders Ms Benati further mentioned the way in which price comparison engines were changing the traffic to online travel agencies’ sites; and how credit card fees balanced the discounts offered to consumers. Lastminute.com started refocusing on last minute offers. The specificities of the French online market were presented by Thierry Petit (showroomprive.com).There were 100.000 e-commerce websites in

France, but 40 of them accounted for the majority of sales. He felt that France still had to catch up with other markets: only 7% of retailers sold online in France, compared to 13% in the UK. As to cross-border business Mr Petit referred to the speed of delivery as an example for the differences among the European countries: whereas in Spain delivery took between two and three days, the Nordic countries offered one or same day delivery, and in France, the delivery speed laid somewhere in the middle. The problem of Europe was its fragmentation which made it difficult to launch business abroad. For any effective marketing strategy, it was important to understand the local culture and expectations. Although Europe was leading in terms of e-commerce, there were lots of barriers to cross-border sales. The VAT requirements and differing payment methods were complicated to handle for companies. Europe should simplify the rules & regulations, but the necessary political decisions took too long for e-commerce where developments happened so fast.

Thomas Carroux (bonprix) presented the changes and developments on the German distance selling market where the former two main competitors for all market players, Quelle and Neckermann, where no longer operating. Otto has been competing with Amazon and Zalando which both were enjoying impressive growth on the market. German consumers expected high product quality and liked hunting for bargains, what led to sharp competition. In the textile sector, the high return rates were a particular issue to be taken into consideration. As to payments, offering payment by invoice to German consumers was a must for every e-trader.

Another challenge was the fact that younger consumers became less and less loyal, meaning that companies had to work quite harder to retain customers than they had to in the past. Mr Carroux further informed about Bonprix’s entrance into the Turkish market; a market without distance selling tradition which differed largely from the German one. Turkish consumers were very eager to try the new distance sales channels, but there was big competition from stationary retail and the expectations in terms of service quality and speed were quite high. As to cross-border business Mr Carroux stressed the biggest obstacle remaining the logistics. Europe was not ready for a logistical flow at reasonable cost.

Describing the e-commerce leader in Europe, the UK market, Mr James Roper (IMRG) pointed to the impressive turnover of £78 billion that estimates revealed for 2012: Travelling/ticketing accounted for 20% of this turnover. The UK market was very strong and sophisticated. As to cross-border business, Mr Roper stressed that the UK leading merchants went into quite early -25% of parcels were moving across borders, in general 16% outbound- and gave the example of Clarks shoes which was a rather ordinary shoes brand

normally, but managed to become the top brand in some countries, thus reflecting the difference in markets. EU politicians should better organise and harmonise legal requirements for businesses. From a global perspective he felt that for too long, the European merchants ignored the US and Asian competition, for which they were paying the price now. Representing the Barcelona City Council who kindly contributed with a sponsorship to the Forum, Xavier Mayo addressed the audience with a presentation of the importance of e-commerce for Barcelona. The online sales channel employed about 5000 people and bore continued job creation potential. Barcelona was the main reference point for e-commerce in Spain. Mr Mayo further presented the latest actions taken by the Barcelona public authorities aimed at attracting even more businesses to Barcelona in order to spark economic growth.

The practicalities of cross-border trading were discussed in a special session moderated by the EMOTA Vice-President and CEO of IMRG, James Roper. The general observation was that all policy makers were nowadays focusing on e-commerce. E-commerce was considered to be a big engine for growth.

Supporting Thomas Carroux’ observation, Alexander von Schirmeister (eBay) pointed to logistics as being the key area where most improvements were still needed for the development of cross-border trade. This added to major challenges such as different legal obligations, different languages, VAT rates and payment methods. eBay invested quite some resources in proposing to merchants good solutions to these obstacles. 20% of eBay’s global business happened across

borders; and the emergence of mobile commerce pressed cross-border trade further ahead. The main trade flows ran from China into the US or the EU, and between countries without language barrier, for instance between the US and the UK or Australia. In the USA, eBay has been testing 1h/immediate delivery service, a niche segment that could no longer be ignored. Mr Schirmeister deplored that despite of the great business opportunities that led in the cross-border delivery segment, nobody seemed to be ready to seize it. It could further be observed that 27% to 30% of UK merchants were exporters, and over 90% of UK sellers had engaged in a cross-border transaction, passively or actively. Consumers were becoming more and more active in searching for the offers that matched their needs and actively sought cross-border offers. Estimates suggested that by 2015, 91% of online buyers would come from emerging markets and account for 55% of the growth. Chinese e-commerce would soon exceed the US one; a big challenge for Europe.

A less optimistic picture of the Italian e-commerce market was drawn by Bruno Decker (Saldi Privati). Italy was a fragmented market with many small players. Logistics were the key issue also for e-commerce in Italy, a country with a complicated geography, the highest fuel prices in Europe and consumers who attached great importance to free shipping. These aspects, together with a strict legal environment, demanding consumers who wanted great brands for good prices, low credit card usage and a general preference for high street shopping made it

difficult for e-commerce to grow. In the absence of big mail order companies from catalogue times, e-commerce was growing in Italy from a very low level. Amazon entered the market and owed its success to the fact that Italians loved foreign products. Also, Mr Decker observed that Italian universities were not paying enough attention to e-commerce. This translated into a lack of interest from students and young professionals to recognize e-commerce as a good career opportunity.

Luca Cannoniero (Marks & Spencer) informed that M&S, a company with an annual online turnover of more than £600 million, launched sites in several countries, including China, Ireland, France, Germany, Belgium, Austria and Spain. In each country there were different customer expectations that needed to be taken into account. Being online was easy, but being successful online was still different. M&S was generally a known brand at global level but brand awareness didn’t translate automatically into sales. There was quite some time and investment needed so as to be able to offer consumers local experience. A further key aspect in a business selling across several channels, such as M&S, was to find a way to

manage the prices and cost differences between online and offline. Taking the floor from the audience, Alessandro Valdettaro from Asendia explained at the end of this session the complexity of cross border delivery. Parcels were managed by several different postal operators through the process. The first operator had to rely on the last mile operator and sometimes there wasn’t any possibility for the first operator to have control on the entire delivery process. The third Forum session, moderated by Alexandre Nilo Fonseca, EMOTA

Board member and President of ACEPI, looked into near-future technology and trends. Whereas Katarzyna Lasota Heller (European Digital Media Association, EDIMA) believed that on the online market, the big players would become even bigger making it more difficult and expensive for SMEs to survive, Christoph Wenk-Fischer (BVH) thought that new competitors would challenge the existing companies and drive the market forward. He recognized that SMEs had hard times when monopolies existed, but they could face the challenge by finding their own ways to success instead of trying to imitate. We were in the middle of a

revolution of the industry itself, trading in general was changing. Ms Lasota added that the online market was very complex, with many channels available, and companies could not afford to single one channel out as the best. Policy makers should ensure that investments are available to help SMEs to grow. It was very easy to be online for any company, but just being online was not enough. Regarding cross-border business, she confirmed the views of the previous speakers: for being successful, a local approach was needed. Ms Lasota finally raised the issue of copyright and deplored that the respective European rules were so outdated.

Stephen Mader (Kantar Retail) provided for a positive description of the evolution in the market. Companies such as Amazon challenged the existing market players and tried to benefit from pushing competition up. However, news about large, established retailers suffering significant losses, or even being forced to close their business, were not necessarily a sign that the market was not doing well. It was rather showing that retailers could not ignore e-commerce and that they had to develop a strategy that ensured their competitiveness. The challenging position of a big traditional seller of books and encyclopaedias was vividly presented by

Eduardo Menal (Grupo Planeta). Taken by surprise by the online boom, the company had a shock when five years ago sales fell from thousand encyclopedias per day to 20. The enterprise had to adapt

quickly to the more and more complex online market and needed to invest into finding new opportunities. Nevertheless, Mr Menal felt there remained always room for physical stores. In line with Ms Lasota, he further thought that the policy around intellectual property rights was problematic. It drove consumers to download content illegally, what in Spain alone made the industry loose about €11 billion per year.

Under the moderation of Jean-Rémi Gratadour, EMOTA Strategy Committee member and Managing Director of ACSEL, the final European session explored best practice and what “good” looked like. The considerable experience of a company operating internationally, including Spain, Portugal, Italy, Argentina and Chile, was described by Marc Nieto (Letsbonus). The successful company, third e-commerce site in Spain in terms of visits, learnt that to be a relevant player on a market,

it was important to capture before a potential competitor did so. There was a strong relationship between South America and Barcelona. Travel business constituted the “nice to have” part of Letsbonus. Due to its constant increase, also in South America, payment fraud was a particular issue to which the company paid attention. Trying to avoid fraud included careful study of the payment habits and methods in every country and correspondent adaptation of the website.

The impressive number of 38 countries is served by eDreams, represented at the Forum by Andreas Schräder. His advice regarding internationalisation was not to engage in export when one had nothing excellent to offer abroad and was not strong enough on the home market. Secondly, Mr Schräder advised not to address new markets one by one, but to bundle, for instance, the countries of interest per language groups. And thirdly, it was important, he added, to conduct a market research before entering a new country and to check whether there was a chance of being profitable. Roger Graell (Mango) described more in detail the advantages and disadvantages of a centralised and a decentralised business model. In

countries with warehouses delivery could be managed faster and cheaper. On the other hand, decentralised warehouses had less stock capacity available than a central warehouse. An offline presence via stores offered certain advantages, such as the parcel pick-up possibility, or shipment from stores. Though, this required good stock management,

Mr Graell added. Another challenge in Europe was the need to offer cash on delivery, what entailed local shipment and bore the risk of parcel rejection for the benefit of avoiding payment. Mango managed its international business out of Barcelona and ran stores in 110 countries.

Mr Graell saw retailing move towards channel integration and click & collect models. The last Forum session was devoted to the Brazilian e-commerce market. The President of the Brazilian Chamber of Commerce (Camara.e-net), Ludovino Lopes, provided for an overview of the Brazilian market. The young country was the 6th economy in the world. The B2C turnover of 2012 was estimated at BRL 22 billion which corresponded to about $11 billion. The most sold items were white goods, beauty & health products, fashion/accessories and books/magazines.

The biggest challenges of the country:

logistics and geography: there were huge distances and access sometimes difficult and costly;

the tax structure: there were 55 different types of taxes and each of the 27 States applied them differently;

the need of qualified labour: there were not enough experts available on the market, but recent immigration from Europe brought some improvement of the situation;

market operational issues: there was a strong need to adapt to the realities of the

country and to respond to consumers’ habits;

the regulatory framework: data protection or contractual issues started to be discussed in the e-commerce context by regulators.

After Mr Lopes’ presentation, Leonardo Gasparin, Flavio Dias and Mariano Gomide presented Nova Pontocom, Walmart Brasil and VTEX.

Nova Pontocom was a branch of GRUPO PÃO DE AÇÚCAR, the largest retail group in Brazil. Nova Pontocom was a 100% e-commerce oriented company and responsible for online sales of 3 of the largest Brazilian retail brands: Casas Bahia, estra.com.br and pontofrio.com. Within three years, the company grew by impressive 550% and became the second largest e-commerce operation in Brazil. Walmart Brasil ran 500+ stores in Brasil and was the third largest retailer in the country.Walmart.com.br was launched four years ago and reached a 100.000 SKUs turnover in 24 categories. The company

enjoyed 40 million visits per month. VTEX was an e-commerce platform founded in 2000, with offices in São Paulo, Rio de Janeiro and Buenos Aires. It occupied 203 employees. More than 10 millon orders per year passed throught the VTEX technology platform. The Brazilian guests further informed about fraud being a big issue in Brazil, leading to 3% to 5% of orders being blocked daily because of suspicion of fraud.

At the end of the International E-Commerce Forum, MEP Pablo Arias Echeverría joined the audience for a keynote speech on the importance of e-commerce from the point of view of a European legislator.

He recalled the digital revolution that was happening today and expressed his worries about the fact that European companies lost the leading position they enjoyed ten years ago. Now the e-commerce markets were led by big brands from outside Europe which did not pay the same taxes. It seemed that Europeans did not find their place in the digital world where things were moving very fast. Europe should therefore pay utmost attention to catch up. When Mr Arias became an MEP, he realised that people spoke about e-commerce as something that would happen in the future. Policy makers did not look at the economic crisis via the perspective of the future, but of the past. He therefore felt there was a strong need to drive the focus in the

right direction and created the EU Parliament’s Working Group on the Digital Single Market. At the regular meetings of this Group, MEPs and EU Commission representatives could discuss all matters of importance to e-commerce and the digital environment with the relevant stakeholders, such as EMOTA. Another important matter that the European Parliament needed to address was the existing legal fragmentation that resulted from heterogeneous transposition of European rules by the EU member States. Small and medium sized companies could hardly afford the experts needed to deal with this legal fragmentation; only large companies could. Competition was therefore distorted. In this context, Mr Arias gave the example of a Spanish company that had to spend €12 million to be able to sell in 12 Member States. Finally, Mr Arias pointed to the importance of trust. A large percentage of companies in the EU were still not online because they didn’t trust the online environment. If institutions decided to help small and medium sized companies with money to connect to the internet, by creating for instance one employment per small or medium sized company, the incredible amount of 18 million jobs could be created in Europe. The way out of the crisis had a digital format, he concluded, and time was ripe to grasp the opportunities.