Intro Spain
Like most Southern European markets, Spain requires a commitment to localisation and understanding the local culture. But for a merchant able to localise and willing to put the effort into understanding specific consumer needs in Spain, the country offers a potentially lucrative market.
The IMF predicts a growth rate of 4.8% for the Spanish economy [1]. The country’s own central bank thinks the eventual growth rate could come in at just 4% [2]. But even the second figure is a respectable rate of economic expansion and a cause for, cautious optimism. In 2023, the growth rate will slip to a projected 3.3% [1].
Spain’s unemployment rate was rising in the second quarter of 2022, hitting 13.65% as this report went to press, up from 13.33% in the previous quarter [3]. Throughout 2021 and into mid 2022 retail sales either flatlined or, toward the end of the period, dipped slightly [4].
Spain’s e-commerce market
The average Spanish online shopper spends US$1,384 a year with cross-border and Spanish e-commerce merchants [5]. Worth US$66 billion in 2021, the Spanish e-commerce sector is growing at a rate of 11% a year [5]. E-commerce spending accounts for just under 5% of GDP [5]. The most popular categories are air travel (36%), health and beauty (18%) and electrical goods (15%) [5].
Spanish e-commerce consumers buy 16% of their online purchases from sites outside of Spain and almost 61% of them have shopped cross-border at least once [5]. The value of their purchases is almost US$10 billion [5]. The top three cross-border markets of origin are China (50%), the UK (11%) and Germany (8%) [5]. Spaniards complete 46% of their online purchases using a mobile device [5].
Payment methods in Spain
Local payments in Spain are mainly alternative payments. Cards, which account for 41% of all online payments, are dominated by Visa (73%) and Mastercard (26%) [5]. There are no local card schemes with any significant market share.
Spanish alternative payments are dominated by e-wallets. After card payment, these are next most-common way of paying for online shopping, with a 30% market share of online payments. Cash has an 4% market share and bank transfer 14% [5]. Spanish e-commerce shoppers pay for the remaining 11% of online purchases using a range of smaller alternative and local payment methods.
Enabling and limiting factors
91% of Spanish citizens have an Internet connection [5]. 90% of Spaniards live in areas with a network that supports next-generation broadband speeds [6]. 84% of all Spanish citizens have a smartphone [5]. 94% of the adult population has a bank account and 54% has a credit card [5].
Spain ranks 17, out of 160 countries, in the World Bank Global Logistics Performance Index [7]. Spain’s last-mile sector is highly fragmented, with more than 12,000 separate distributors [8]. According to Deloitte, 86% of all e-commerce fulfilment is for home delivery and half of these are for next-day delivery [8]. With parcel volumes rising fast, the market for last-mile logistics is aggressive and highly competitive [8].
According to one recent report, Spain has one of the worst levels of English-language competency in Europe [9]. Nor are there any signs that this is improving. Greece, Portugal and Italy all had similarly low levels of competency when the survey was last conducted but all have subsequently improved, while Spain has not [9]. Localisation should be a priority for any merchant expanding in Spain.
Footnotes:
- https://www.imf.org/en/Countries/ESP
- https://uk.investing.com/news/economic-indicators/bank-of-spain-could-lower-2022-growth-outlook-governor-says-2651279
- https://www.ceicdata.com/en/indicator/spain/unemployment-rate
- https://tradingeconomics.com/spain/retail-sales-annual
- Original PPRO research
- https://digital-strategy.ec.europa.eu/en/policies/desi-spain
- https://lpi.worldbank.org/international/global
- Last Mile Logistics Challenges and solutions in Spain, Deloitte, February 2020 (PDF)
- https://english.elpais.com/elpais/2019/11/08/inenglish/1573204575_231066.html
