0203 696 0980

Online and mobile usage

A key factor for the development of ecommerce in any market is the access to digital infrastructure and the propensity for this to be used by online consumers.

According to FSO data, in 2014, 97% of people live in a household with at least one mobile phone and 94% of people in a household with a computer.

In terms of internet connectivity, Switzerland ranks strongly when compared to its European neighbours, with 86% internet penetration. The Dutch for example, are nearly the highest at 96%. By way of comparison, the UK has penetration levels of around 90%, and Germany, the next most developed ecommerce market in the EU after the UK, is at 89%.

According to speedtest.net, the present average download speed in Switzerland is 43.99 Mbps via mobile internet and 78.89 Mbps for fixed line connections. This measure allows international merchants a degree of confidence that users in these countries will be able to make good use of rich media services such as video content.

Table 3: Average internet connection speeds in Switzerland. Source: speedtest.net January 2018

Coupled with the high levels of IT technology availability, levels of broadband penetration and high connection speeds, the Swiss market is one ideally suited to digital commerce and development. A highly skilled workforce also means that the use of technology is increasing and again suits the development of a digital economy, ideal for cross border merchants to explore.

Overall Retail Sales

In common with many western economies, overall retail in Switzerland has shown modest growth levels since the global financial crisis of 2008/9.

Data from the FSO picks up the trend from 2011 as economies start to recover and show sign of growth again. Domestic growth in apparel has been negative for the 5 years reported below. Interestingly, retail is the second largest private sector employer, with 351,000 employees engaged. One school of thought is that the travel category is taking a larger share of shoppers’ disposable income, with city breaks increasing in popularity. Consumer travel expenditure abroad increased by a modest 3% between 2013 and 2015, but in a market the size of Switzerland, this represents a change in behaviour that has a knock-on effect in other industry verticals.

Figure 3: Percentage change in overall retail sales. Source: Statistical data on Switzerland 2017. FSO, March 2017.

Irrespective of growth trends, total retail in 2016 was worth €94 bn in 2016. To provide some perspective around the growth of online in Switzerland, a recent study by Carpathia showed that the five largest online retailers had sales revenues greater than the five largest shopping centres. In 2016 the shopping centres were responsible for sales of CHF 2.1 bn. In 2017, the top online stores sold a total of CHF 2.3 bn. The largest online retailer, Digitec Galaxus, had sales of CHF 704 m whilst the largest shopping centre, Glattzentrum had sales revenues of CHF 601 million.

 

Graph 1: Comparison between offline and online retail sales growth, 2010 - 2016. Source: GfK, VSV and Die Schweizerische Post, 2017

eCommerce Sales

Online retail has grown strongly in Switzerland and whilst the overall size of the market is modest compared to some of its European neighbours, investment in technology and communications has ensured that it continues to develop.

For example, Eurostat data from 2014 shows that 61% of the adult population had made an online purchase in the previous 3 months; ahead of Germany and second only to the UK in the European context. In 2017, the same data sets showed that while the overall rankings hadn’t changed, the number of people who had made an online purchase increased by 10%, to 72%.

Table 7: Percentage of Swiss shoppers who have shopped online at least once in the last 3 months compared to other key EU markets. Source: Eurostat, January 2017

To put this in to context, online retail in 2017 was worth CHF 8.5 bn, an increase of 9% on the previous year. Of this however, CHF 1.6 bn is spent with international retailers. This international trade is growing at circa 20% year-on-year — a clear signal for merchants that Swiss online consumers are happy to purchase from abroad.

Overall, the average annual online spend per person is CHF 1,172, second only to the UK (CHF 1280) in August 2017 according to data from regiodata.eu. This level of expenditure reinforces the importance of customer acquisition and retention. Competing for a larger share of this spend is central to success in the Swiss market.

A few key retailers dominate the domestic market but interestingly, several of them, such as Amazon, fulfil orders from outside of the country.

Figure 4: Top 10 online retailers in Switzerland (CHF m). Source: Various inc. Statista, EHI and Carpathia (2016 figures).

For these brands this is a reflection on the overall size of the potential market. It was also widely reported in December 2017 that Amazon.de had signed a deal which would enable them to offer the Amazon Prime (24 hour) delivery service in to Switzerland without having a physical distribution facility — that is fulfilled from Germany.

Categories where products are commodity items suit online retail particularly well. These categories are where products are the same across different retail outlets and differentiation often comes down to price. Home electronics in Switzerland is no exception and Credit Suisse analysis predicts that by 2022, 37% of sales in the category will be made online. VSV/GFK report that sales in 2017 were worth €1.6 bn which, at around 28% channel market share, indicates the potential for growth in online sales.

Apparel (clothing and footwear) is to some degree protected from this commoditisation of product and the ensuing price competition. Of course, where retailers are selling the same brands and products then price becomes a key factor. This category is currently worth €1.45 bn and the Credit Suisse report suggests that by 2022, 27% of this will be transacted online.

Source: www.de.statista.com

When looking at purchasing patterns and comparing these to other markets, it is clear that the peak times for sales differ slightly. The lunchtime period, evening meal time, and late evenings are usually the most important. However, in Switzerland these periods are a little earlier. Perhaps shoppers are making the most of business internet access prior going on a lunch-break, or before leaving work in the evening. This would indicate that research has been carried out at another time and these periods are about the transaction. The importance of this is for online merchants to understand that the customer journey at this point should be as frictionless as possible, with cross/up selling limited.

Figure 7: Popular times of day for online shopping, showing percentage of total orders per hour. Source: digitec.ch

In proportion to total retail, ecommerce is performing strongly in Switzerland and this trend is expected to continue for the foreseeable future.

Data compiled by Statista allows us to overlay transaction volumes by day of the week, giving us a clear idea of not just what time of day, but also which day of the week customers might be more likely to make a purchase.

Figure 8: Percentage of total weekly sales by day of the week. Source: Statista.com 2017

Impact of mobile devices

Technological developments have meant that shoppers’ access to online content and services is changing. Swisscom reports that 98% of the country has access to 4G, while 100 cities have access to 4G networks.

The increased penetration of Smartphones and Tablets, coupled with good mobile network coverage, has meant that brands need to become increasingly available to their customers. This development is an interesting trend for international merchants as it allows them to compete in the offline environment, by having a mobile-optimised digital presence.

Switzerland has a well-developed mobile marketplace and high levels of smartphone adoption. 32% of smartphone owners use smartphones more to access the internet than via a computer/tablet. EY reported in 2017 that 64% of consumers with smartphones consider the provision of a mobile optimised web experience to be either fairly or very important.

Figure 9: Online shopping by device and time of day. Source: digitec.ch

However, looking at ecommerce data points such as those provided by Digitec.ch, desktop still has an important role in completing the transaction. It is particularly apparent that the peak times of day for ecommerce tie-in with customers work patterns, suggesting that the Swiss are just as likely to do some internet shopping at work as their international peers! Interestingly, peak tablet usage is during the early hours of the morning, whilst smartphone usage peaks at bedtime.

Mobile device share of online activity is increasing and contributing to 38% of adults spending 11 hours per day on the internet. The Digitec data would suggest though that browsing is done predominantly on desktop, and we know from other markets that mobile device usage is very task driven; less browsing, more ‘doing’.

Analysis of available data by Statista highlights the mix of mobile enabled content and the mechanisms for providing this to the market. Mobile enabled websites, including those with a transactional function, are by far the most popular method for enabling mobile commerce. The number of digital retailers providing apps is considerably lower at 47%. There is then an even split between iPhone apps and Android-based equivalents. The relevance of this will really depend on the retail proposition. Apple products tend to be favoured by those with higher disposable incomes and therefore suit mid-high market propositions. It is certainly interesting to see that iPad apps are not popular among retailers. This is probably a reflection on the increasing size of smartphones and shoppers’ reluctance to invest in devices that have marginal differences in functionality.

Figure 10: Online shops with mobile website or app in Switzerland. Source: Statista.com analysis, 2017

Merchants need to understand their potential customer in Switzerland and provide the appropriate technology solutions that suit them. A good starting point would be a mobile enabled website. Apps could wait until the local market conditions are understood better.

One example of this is the device usage by customers of LeShop. Data reported by them indicate a strong prevalence of Apple products amongst its customers.

Figure 11: Device usage of Le Shop customers over the years 2013 to 2016. Source: FH Munster University of Applied Sciences

This graph also reinforces the generally declining trend in the use of iPads, while iPhone usage is remaining constant. For this brand, a focus on Apple products is key to their mobile success.

 

 

 

Demographics

Political and socio-economic environment

Online shopping behaviours

Marketing and branding

Finance and payment

Legal framework and regulation

Logistics and delivery

References

Data Summit 2019 scroll banner