The state of e-commerce in Europe: Spencer Stuart hosts discussions among leading European executives from different industries

London—Companies across Europe are feeling the impact of the internet and digitization on their business models. There are plenty of opportunities to embrace web-enabled, multi-channel e-commerce; but there are also countless challenges, including how to address the question of scale, cross-border trading, and finding and developing the right talent.

Spencer Stuart recently held dinners in London, Frankfurt, Amsterdam and Paris, attended by 45 senior European e-commerce executives who had the opportunity to exchange views and experiences on this rapidly changing area and to compare developments in the US and Europe.

Having completed over 700 e-commerce and internet/digital searches over the last 10 years, we have observed a variety of direct-to-consumer models across retail, hospitality, financial services, online education, and marketing services, often involving social media and mobile technology. These models are typically highly complex and fast moving. The high degree of analytics, technology, product and business experience required to manage these direct-to-consumer models has created exceptional demand for talented e-commerce executives who are able to manage rapid growth scenarios.

Each dinner focused on different aspects of e-commerce that are particularly significant each country.

In the UK, much of the discussion revolved around the fact that the fastest growing sources of revenue and profits for many large traditional companies are their e-commerce businesses. As a result, the head of e-commerce now tends to report to the CEO.

These businesses can generate many hundreds of millions of Euros in revenues, so it is not surprising that general management skills are at a premium. The new breed of executive needs to be focused, curious and collaborative if they are to build new businesses while integrating with slower growing legacy revenue streams. The importance of mobile shopping is growing quickly in the UK and the success of internet grocery ordering and delivery (25 per cent of grocery sales) has had an enormous impact.

Understanding that a customer is a loyal participant in your business, regardless of the channel they buy through, is paramount in creating a seamless experience. Certain retailers have been insisting that store managers participate in Internet deliveries to drive home the point that the interaction with customers in their homes can be even more personal and important than in the store.

In order to fully develop their e-commerce models, companies need board support for substantial capital expenditure and take a unified and aggressive stance on the issue to prevent management from becoming complacent about its e-commerce capabilities.

In Germany, a group of senior leaders from all corners of the country discussed the evolution of e-commerce. German consumers cannot buy Internet goods through their debit cards and credit card penetration is only 10 per cent of what it is in the US. As a result, although German consumers are internet savvy, e-commerce businesses in the country are growing more slowly than in the US. One source of growth is cross-border e-commerce, which requires a deep understanding of the supply chain, tax and purchasing systems of each country. Mobile technology is used to access the Internet, but the majority of purchases are still through SMS text. This limited use of devices restricts the opportunity for businesses to develop and deliver applications that drive new revenue streams. Although social media is important, most executives view it as little more than hype at this point, but understand that experimenting with the medium is important.

In the Netherlands, low penetration of credit cards and high security mean that consumers have to take many steps to make an e-commerce purchase, for example loading their credit cards into a bank reader (separate from the computer) in order to complete the transaction. This is almost certainly restricting spontaneous purchasing and limiting growth in the sector.

As an illustration, even though the Netherlands has one of the densest populations in the world with extremely high Internet penetration, only one per cent of groceries are purchased through e-commerce. This contrasts with the UK Internet grocery business which is worth around two billion pounds.

E-commerce executives are concerned with how to create new brand experiences around the increasing number of touch points that mobile devices and social media allow. There is some uncertainty about which social network to back – Hive, currently the largest social media network in the Netherlands; or Facebook, which is starting to make serious inroads.

Because the digital medium is so data driven, companies that are willing to "start small and experiment" stand to gain a great deal. Some executives believe that the pace of change is so quick that focusing on opportunities presented by emerging technologies can waste valuable time.

There is also much debate about how to attract and retain programmers and data experts who are in short supply; these people need to feel excited about their jobs and career opportunities.

In France, executives do not believe that the pace of change in e-commerce will be as rapid as it has been in the US due to low credit card penetration. They also express concern about how quickly some businesses may become obsolete. One executive asserted that for an e-commerce business to succeed in France, it must set itself up as a separate unit with new methodologies in order to overcome inertia and bureaucracy. This mirrors how Internet businesses were initially created in the US, although most have now become more integrated within matrixed environments.

For more information on Spencer Stuart’s e-commerce capabilities, please contact Anthony Laudico (Stamford), Chris Nadherny (Chicago), Grant Duncan, Jonathan Harper (London), Klaus Halsig (Frankfurt), Vincent Poggi, Angeles Garcia-Poveda (Paris), Ollo den Tex, Jacomien Bolier (Amsterdam).

About Spencer Stuart

Spencer Stuart is one of the world’s leading executive search consulting firms. Privately held since 1956, Spencer Stuart applies its extensive knowledge of industries, functions and talent to advise select clients — ranging from major multinationals to emerging companies to nonprofit organizations — and address their leadership requirements. Through 51 offices in 27 countries and a broad range of practice groups, Spencer Stuart consultants focus on senior-level executive search, board director appointments, succession planning and in-depth senior executive management assessments. For more information on Spencer Stuart, please visit www.spencerstuart.com.