Italy: an e-commerce & payments primer
The Italian e-commerce market is worth US$45 billion a year and is forecast to grow by an annual average of 10% a year between 2022 and 2026, reaching a value of US$75 billion [1]. Like people almost everywhere else, Italians who had never shopped online before started doing so during the pandemic.
And that trend persists. In 2021, the latest year for which we have figures, 36 million Italians shopped online [2]. In certain categories, clothing and beauty, between 25% and 44% of consumers now use a mix of on- and offline stores [2]. Over 20% of total fashion sales in Italy are now made online, compared to just under 3% of grocery sales [2].
The top e-commerce segments in the country are electronics and media, of which 29% of shoppers say they have bought online, fashion (26%), toys and hobby items (16%) and personal care items (15%) [1]. Over half of Italian online shoppers have bought items from merchants based outside of Italy [1]. Their purchases are worth US$7 billion, approximately 16% of the total e-commerce market value [1].
Italians only pay for a third of all online purchases using a credit card [1]. They pay for the remaining two thirds of e-commerce transactions with a mixture of e-wallets (34%), bank transfers (11%), various other alternative payments (19%) and cash (4%) [1].
That’s a relatively high proportion for cash, twice the rate of cash payment in neighbouring France. According to a recent study, consumers are more likely to insist on cash-on-delivery when buying from lesser-known merchants and merchants based outside of Italy [3]. This underlines the importance of building trust, and offering trusted payment methods, for merchants seeking to build a consumer base in Italy. Even the credit card market in Italy is unforgiving to any e-commerce merchant that assumes it can fall back on the payment options it offers consumers in the UK or the US. Almost 40% of the credit cards circulating in Italy were issued by local schemes, rather than the big international names [1]. Fail to support these local cards at the checkout, and you’ll miss out on a significant chunk of the Italian e-commerce market.
Italian e-commerce: enabling and limiting factors
Around 5% of Italians are unbanked and just under half do not have a credit card [1]. As the payment data has already shown, to succeed in Italy, merchants must support a range of locally preferred, “alternative”, payment methods. Only supporting the payment methods standard in the UK, US or other Anglophone markets will make it harder to reach Italian consumers and win their trust.
More than 90% of Italians have an Internet connection and almost 80% have an Internet-connected smartphone [1]. According to EU figures, 38% of Italians with a connection enjoy download speeds of at least 100Mbps — and 7% of 1Gbps [4].
On the other hand, just 13% of Italian small and medium enterprises sell online, even in 2022 (when the last figures were collected) [4]. In many niche areas, new entrants will generally find local competitors are less likely to be online than might be the case in other markets. Italy ranks 19th, out of 160, on the World Banks Global Logistics Performance Index [5]. Unsurprisingly, given the rapid expansion of e-commerce in the country over the last few years, the last-mile logistics sector, specifically set-up to tailor to e-commerce providers, is growing. A recent study found last-mile capacity increasing by almost 9% a year [6].
Footnotes
- Original PPRO research
- https://ecommerce-europe.eu/news-item/netcomm-publishes-figures-on-italian-e-commerce
- https://www.researchgate.net/publication/330135463_Factors_determining_Italian_online_shoppers%27_preference_of_cash_on_delivery_Empirical_analysis
- https://digital-strategy.ec.europa.eu/en/policies/desi-italy
- https://lpi.worldbank.org/international/global
- https://www.brinknews.com/the-last-mile-is-determining-e-commerces-winners
