Editor’s note: This is the third post in our ‘Payments in Focus’ Series. You can see the previous posts on payments here.
Lately, we are seeing more and more domestic EU merchants who are interested in expanding the global reach of their businesses. Many UK, U.S. and Germany-based online merchants have already successfully expanded beyond their domestic markets by generating a positive balance of e-commerce trade for their countries, i.e. the country’s e-commerce exports have exceeded its imports.
Plethora of Domestic Choices
The Netherlands, on the other hand, shows an e-commerce trade deficit of $385M where the volume of goods bought by Dutch citizens abroad exceeds the volume of what foreign online consumers purchase on local Dutch sites. I believe the reason for such a deficit lies in lack of readiness of Dutch online merchants to become truly global.
The history of the Dutch e-commerce industry reaches back to the birth of the internet itself. Already in 1995, there was Wehkamp.nl, one of the first e-commerce sites. In 1999, Bol.com came online. One of the first e-commerce giants, Bol.com sells products from all categories imaginable: books, DVDs, toys, sport and leisure, garden, consumer electronics and many more. And a pure player like Coolblue, which owns dozens of online stores, has found its way to the high street. There is also online food retailer Albert.nl, online department store Fonq.nl, take-away service Thuisbezorgd.nl, BAS Group (which owns electronics stores MyCom and Dixons), and multi-channel department store, Hema.
Challenge of Cross-Border E-Commerce
A good place to start to understand the Netherlands’ cross-border e-commerce habits is by looking at its relationship with Belgium in this regard. Even though these countries have a lot in common, in the e-commerce industry it’s mostly Dutch players who influence the Belgian industry and not the other way around. Most NL-based online businesses use their .nl site for reaching out to Belgian online shoppers willing to enjoy cross-border e-commerce from a neighboring country.
However, despite its success, the Dutch cross-border e-commerce experiment starts and ends almost exclusively with Belgium. Thuisbezorgd.nl and Hema are among a few online stores that offer their services to the rest of the EU (mainly UK, France, Germany, Austria, Denmark and Switzerland), while the majority of Dutch online stores still remain purely NL/BE serviced.
Another possible reason for Dutch online retailers not expanding globally, is the payment method specific to the Netherlands. Surprisingly, unlike other EU online consumers, credit cards are not the favorite online payment method of Dutch consumers. Fifty-four percent of online payments are actually being done via iDeal — an online payment method developed by the Dutch banking community, and favored by the Dutch people for its security. It’s also the preferred payment method offered by online retailers, as the money goes straight from the consumer to the online shop.
With a population of 13.3 million between the ages of 15–79, the Netherlands are not amongst the largest markets in Europe, but definitely represent an interesting and dynamic e-commerce market with room for further growth —particularly in cross-border e-commerce — by reaching into the German and Nordics market. Unfortunately, Dutch companies are ignoring this huge opportunity and are failing to recognize the power of international expansion via e-commerce.