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Internationalisation in Online Retailing

March 15, 2016 • Business Mobility & E-Commerce, Global Business, Marketing & Consumers, Strategic Spotlight, STRATEGY & MANAGEMENT, TECHNOLOGY

By Moritz Hahn and Niccolò Pisani

Online retailing is clearly on the rise. In this article the authors offer a snapshot of the current status of online retailing and provide insights on how differences between countries play a fundamental role in shaping firms’ internationalisation in the online space.

 

Pure-play online retailers have, at least in principle, an unlimited trading space that spans beyond the borders of the country where they are headquartered. Webpages and mobile applications can be accessed from anywhere in the world, orders processed online, and products efficiently shipped across national boundaries. To internationalise the operations of pure-play online retailers may appear relatively easier when compared with traditional companies, as there is no need to rely on investments in brick-and-mortar retail spaces in foreign countries to attract local customers. Yet, to expand abroad in the online space is as difficult as in more traditional marketplaces. In this article we aim to offer a snapshot of the current status of online retailing and provide some insights on how differences between countries play a fundamental role in shaping firms’ internationalisation in the online space. In particular, we focus on the apparel and footwear online market and the case of Zalando, the largest pure-play online fashion retailer based in Europe.

Online retailing is clearly on the rise. This pattern is recognisable across all world regions. Despite a recent impressive growth observed in Asia, the North American and European markets still report the largest online retail sales figures.1 In 2013 online retailing reached $262 billion in the US – a growth of 13% over 2012’s $231 billion.2 In Europe it peaked at €142 billion – a rise of 16% over €122 billion reported in 2012.3 Albeit this remarkable annual growth rate (steadily maintained over the 2009-2013 period), the web penetration is still relatively limited in the retail market. The above-mentioned 2013 figures correspond in fact to respectively 7% of the total retail value in the US and 5% in Europe. Other regions report an even lower level of online penetration in the retail industry (4% in Asia-Pacific and 2% in Latin America), suggesting that we are still in the early days in terms of adoption of this new channel.



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