Although online sales in the Netherlands are rising year-on-year and passed the EUR 10 billion mark in 2013, the Netherlands still lags behind the rest of Europe. There is something of a ‘rat race’ to win the attention of the online consumer.
Online sales in the Netherlands could catch up in Europe
Retail changing rapidly due to dynamic pricing.
Earnings model of comparison sites changing rapidly.
Online playing field shaken by robo-pricing.
Online sales in the Netherlands have grown explosively over the last 15 years, rising from EUR 41 million in 1998 to EUR 9.8 billion in 2012. This year, online sales will break through the EUR 10 billion barrier for the first time. However, ABN AMRO notes that this strong starting position is not translating into a leading position in online shopping. In Germany (5.1%), France (5.5%) and the United Kingdom (9.5%) – the three countries which together account for 70% of the European e-commerce market – online shopping sales as a percentage of total retail sales are much higher than in the Netherlands (4.2%). The Netherlands has a good physical retail network, which reduces the incentive to shop online.
Buying on comparison sites
Online shopping does not always begin at the web shop itself. 66% of consumers who compare online products use a comparison site. ABN AMRO suspects that around 30% of online purchases are made by clicking from a comparison site to a web shop. However, comparison sites no longer only earn money from these clicks; they are increasingly changing their earnings model by acting as web shops themselves and receiving payment for each product sold. To make them easier to find, they are also focusing increasingly on unique content, such as product descriptions and customer reviews. This puts them higher in the Google search rankings and generates more traffic for them, enabling them to generate more turnover.
Robo-pricing making an entrance into online retail
ABN AMRO believes that the rise of dynamic and robo-pricing will influence the position of comparison sites. For example dynamic CPC (Cost Per Click) fees are making an entrance, which means that advertisers on comparison sites are able to set their own CPC fees. Sales prices will also fluctuate automatically, depending on the time, location and customer profile. Amazon leads the field here and, using algorithms, is sometimes able to update sales prices automatically as often as twice every 10 minutes. Robo-pricing is already being used successfully in the online advertising market and is now gradually penetrating the retail market.
"Comparison sites will profit from the growth in the online market over the coming years, but new technological developments such as dynamic and robo-pricing will influence the position of these websites. The activities of marketplaces, comparison sites, search engines and web shops are also becoming ever more closely interwoven – just think of Google Shopping and comparison sites with their own shopping cart", says Tim Bruins, Sector Analyst Retail at ABN AMRO. "Online players are thus increasingly operating on the same playing field, and new technological developments will give them more and more options. Technology firms are becoming retailers and retailers are increasingly becoming technology businesses. This means that the retailer of the future will have to be able to do their sums."