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The IMRG guide to trading into Switzerland

IMRG has published a cross-border trading guide for retailers thinking about entering the Swiss ecommerce market.

It includes

  • An overview of the Switzerland ecommerce market
  • Marketing strategies
  • Online and mobile statistics
  • Legal framework & regulation
  • Logistics

Download the Switzerland eCommerce Country Guide, or read on for an introduction to the market.

Overview

Although marginally smaller than London, with 8.1 million inhabitants, Switzerland enjoys an international reputation for stability, a safe-haven for investment, and the creation of high quality products and services.

In the heart of continental Europe, the country is a federal state of 26 cantons (regions) with 4 official languages. German and French is spoken widely, with Italian spoken in the south of the country.

Switzerland’s international perspective means that although English is not officially recognised, it is readily understood, and many government department regularly make translations available on their websites

Switzerland is also home to a large expat community and many international institutions, including the Olympic movement, the International Red Cross and the United Nations.

Economy and infrastructure

Its economy is driven by high levels of employment, a highly skilled work force, and correspondingly high wages. A strong social system and goo quality public services result in relatively high costs of living, although the population enjoys one of the highest savings levels globally.

This high cost of living incentivises shoppers to look to international markets for many of their purchases. Traditionally, their near-neighbours have benefited but, with over 80% of the population having access to the internet, online merchants form further afield are starting to benefit.

With connection speeds averaging 78 mbps, consumers expect a rich media experience, and increasingly this is consumed via a smartphone. 5.8 million smartphone users are driving a change in domestic online retailing.

Retail in Switzerland is the second largest employer and worth an estimated CHF 94bn in 2016. Growth is at best flat, but online and cross-border are taking a bigger proportion of the available spend.

72% of the population have made an online purchase in the last three months, driving revenue growth up by 9% in 2017 and creating a market worth CHF 8.5 bn. International brands compete favourably against domestic online players, and the government reflected this trend with changes to VAT regulations in 2018.

Research predicts that by 2020, 38% of home electronics and 27% of fashion spend will be made with international online merchants. Reflecting the market size and potential, many of these brands actually service the market from other territories. For example, Amazon uses its German infrastructure for the Swiss market.

Key sectors for international brands include fashion, which has a 29% share of category spend, home electronics with a 40% share, and travel at 84%. Mobile is having an increasing impact on digital commerce. 98% of the country has access to 4G, with 64% of smartphone users considering a mobile-optimised, transactional web experience key to their relationship with a brand. This is reflected by 84% of Swiss online retailers having a mobile-optimised website.

Advertising spend is still dominated by non-digital channels, with 42% of expenditure going on print. Television is still seen as an important driver of online traffic, especially the grocery sector. Online ad-spend only accounts for 11% of the total, although this share is growing.

Shoppers' expectations

Google dominates search, while Facebook and WhatsApp are the main social platforms. Video content is growing rapidly, and some estimates suggest that as much as 51% of Facebook posts are now in this format.

With the country’s history of cross-border purchases and growing concern for domestic businesses, the Swiss government recently introduced new VAT registration thresholds.

Businesses with global revenues of more than CHF 100,000 are now required to register with the Swiss authorities. However, changes to taxation laws are meant to encourage competition and focus domestic businesses.

As with any expansion into a new market, the international merchant is advised to offer a localised experience. Local language, local payment methods in local currency, clear pricing and competitive delivery options are required for optimising the opportunity. For example, direct payments and payment-on-delivery are still prerequisites whilst local returns are a ‘given’.

Fashion, by way of example, sees return-rates of over 40%, although this drops to 7% for cross-border purchases. This has doubled over the last 12 months though, indicating consumer expectations are changing to a more consistent offering between international and domestic brands.

On delivery, a 3-4 working day service is expected, while next working day delivery should also be offered. 80% of clothing retailers offer next day delivery options. Click and collect is gaining in popularity, representing about 10% of total deliveries.

Value perception is an important part of the retail proposition, but even this is price sensitive. Switzerland is an attractive market, but merchants would be mistaken in thinking that the high

standard of living equates to a lack of price sensitivity.

Swiss shoppers want choice, quality and convenience, but not at any price. Value and a clear proposition is key to this market.

 

To read more, download the Switzerland eCommerce Country Guide

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