BBVA API Market
Ecommerce has continued to grow steadily in Spain, except during the pandemic, which has already been overcome in terms of online shopping.
Ecommerce has been making inroads among the Spanish for over two decades. In 2000, it was a marginal and niche activity. Now it is almost universal. Almost all Spaniards with internet access shop online regularly. How will the sector grow? How do integrated financing, security mechanisms and payment gateways help?
Ecommerce is just an abbreviation of electronic commerce, meaning sales activity through digital channels. It is also, though less commonly, referred to as cybercommerce, as computer networks are used for purchases. A more up-to-date way of defining it is all commercial activity involving a screen and the internet.
The term ecommerce is also sometimes used to refer to the specific tools through which a virtual store is deployed on a website, a social network, mobile application (m-commerce), etc. Some sources even include things like cellphone payments and the sale of digital assets as ecommerce, although there is some debate about the limits for this.
In 2008, a study by Nielsen found that nine out of ten Spanish Internet users had bought something online, although many obviously had help or only did so occasionally. And almost half of Internet users at that time (mainly on computers, as the first smartphone appeared in 2007) had bought something in the last month.
Online shopping has been growing rapidly and relatively steadily ever since. Or until the pandemic, at least, which marked a new stage in the adoption of ecommerce in Spain. There was sharp and sustained growth in online shopping in 2020. This declined in 2022 but to levels above the peaks for 2019. Let’s look at this in detail:
2019 was an excellent year for ecommerce in Spain, as indeed were the previous five years, with sustained and uniform growth quarter by quarter, according to figures from the National Commission on Markets and Competition (CNMC).
As the chart shows, the growth of the sector had been over 20% for several years. This growth could be described as ‘organic’, without it being enforced or there being any breaks with demand. The sector grew without becoming saturated as people became less afraid of digital shopping.
While there were some growing pains, these were resolved with scalable systems, the opening of localized distribution points, finding options for last-mile delivery such as cargo bikes, etc.
Two simultaneous and apparently opposed phenomena occurred in 2020, with ecommerce gaining market share due to the pandemic at the same time as households increased their savings rate, reducing total purchases of all kinds.
The overall result was a drop in the growth of online sales, but always with positive growth, although this was just 0.2% year-on-year in the second quarter of 2020. There was no decline, but people were caution due to the pandemic. This drop was overcome in 2021.
2021 was an atypical year for ecommerce in Spain compared to the rest of the world, growing by 5% in Spain while falling by 2 points elsewhere, according to figures from the Salesforce’s Shopping Index. Spain was the only country in Europe where this type of shopping grew rather than shrinking. Why?
This is partly explained by Spain’s lag in relation to digital shopping. Before the pandemic, Spain was lagging the rest of Europe in terms of digital consumption and online shopping. As a result, the boost from the pandemic made it stand out with faster growth compared to countries where this had been developing more gradually for many years.
There were two growth figures for the year-on-year performance of ecommerce in 2021, as can be seen from CNMC data for the period. The difference between the CNMC and Salesforce figures is due to their methodologies, with the CNMC’s being more reliable. The chart shows the alignment of the fourth quarters of 2019, 2020 and 2021.
Spain still has more room for growth than other countries in the region according to some metrics, such as euros per purchase, frequency of purchases and conversion rates. However, with the pandemic increasingly overcome and traditional stores once again open to the public, the growth trend has been squeezed in 2022.
Ecommerce turnover was down by 3% in Spain compared to a fall of 6% in the rest of the world, according to Salesforce (the CNMC has not presented its report yet). This fall is explained by the curves for 2020 and 2021 resulting from the pandemic. Ecommerce became one of the few available options when customers weren’t leaving their homes, particularly because it also had an especially low risk of infection. This made online purchases take off or, in the case of Spain, maintain their growth rate.
However, as with working from home, the end of the pandemic reduced some of the 2021 growth in 2022. Teleworking, which stood at just 4.3% in 2019, increased to 30% during the pandemic. When it subsequently experienced a ‘recession’, it fell to 15%, still triple the level in 2019, according to Eurostat. The pattern for ecommerce was similar, though less marked.
The reopening of conventional commerce returned some of the gains made by ecommerce to more traditional channels. But some of the growth remained as residual growth. Over the next few years, ecommerce is expected to continue growing, though not at double-digit year-on-year rates.
The top three major companies are:
It is striking that 70% of online purchases were rated as “very satisfactory”, with the most frequent problem being delivery delays. These delays are usually due to great pressure in important periods, such as Christmas.
The 5 main ecommerce sectors in Spain by market share are:
In the coming years, ecommerce in Spain is expected to grow at similar though slightly slower rates than before the pandemic. There might be a slight decline in digital sales during the rest of 2022 and in early 2023 to adapt to this growing curve, as part of the growth due to the pandemic was, in a sense, forced on consumers.
What we can be sure of is that technology will shape ecommerce, although not necessarily in ways that customers can perceive. For example, the security mechanisms that work with merchants’ APIs are invisible but are essential for generating confidence in shoppers.
The advantages of digital stores, especially in terms of security, reliability, availability and on-demand orders, as well as the integration of banking technologies into digital stores (such as integrated financing, security mechanisms and payment gateways) help boost the loyalty of users to businesses that only operate offline.
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