E-commerce: the business of the century

Recently, e-commerce giant Amazon organized its usual event with discounts and special offers for its most VIP users, Amazon Prime Day. In fact, it's a little more than a day, 36 hours to be exact. A day and a half of maximum activity that generates a more than significant billing peak for the platform, with revenues estimated at 3.6 billion euros for this edition. And this, despite the call for strikes in several European logistics centers (among them the one located in San Fernando de Henares, in Madrid). Nothing seems to be able to stop this call to online consumerism, which for its duration becomes one of the main search terms on Google from any country in the world.

What most differentiates Bezos and Jack Ma (Alibaba) from other common names in the rankings of the world's richest people is that not many years ago they were basically unknown to most people

According to data from the National Commission for Markets and Competition (CNMC), online commerce turnover in Spain in the last quarter of 2017 reached a record figure of 7,785 million euros, which represented an increase of 26.2% compared to the same period of the previous year. In 2017 as a whole, this type of commerce generated sales exceeding 30,000 million euros, 25.7% more. These figures show that this is an already consolidated activity, and that it goes far beyond the purchase of tickets and tourist reservations, although this area continues to dominate the absolute figures. Specifically, according to CNMC data, apart from that pioneering segment, where online purchases are most concentrated is in clothing, sports or cultural shows, games and betting, passenger land transport, or subscription to television channels.

CNMC data also clearly shows the spectacular progression that this commerce has had in recent years. In the first quarter of 2012, it generated a turnover of around 2,500 million euros, that is, less than a third of that recorded during the last quarter of 2017.

The weight of this commerce is so high that the INE (The National Institute of Statistics) has decided to include it in the Household Budget Survey, which every year tries to profile how Spanish households consume. According to this same body, in 2017 one in four households (25.7%) bought something online, compared to 21.6% the previous year. On average, each household bought products or services worth 1,723 euros. According to another study by Moody's agency, e-commerce in Spain will exceed 15,000 million euros in 2022, with growth rates of 12% to 15% annually until then. This volume will place Spain above other larger European economies such as France or Germany.

Amazon invoiced 4,241 million euros in the Spanish market in 2017, distributed in as many as 53,014,442 orders. These are dizzying figures that placed it well above the second classified, the Chinese AliExpress (from the Alibaba group), which totaled sales of 1,234 million euros in 16,904,994 orders.

Following this impressive market presence, the US giant has just announced that it will allocate a new investment to build another logistics platform in Catalonia, the seventh. It will be located in Barberá del Vallés and will have more than 50,000 square meters. The company has opted for Catalonia as one of its main hubs of distribution in southern Europe, attracted by the strategic location of this territory, well connected to the French border via the AP-7.

All major retail brands have intensified their commitment to the online channel in recent years. Giants like Inditex, the world's largest distributor in the textile sector, already obtains 12% of its turnover through this channel, and more traditional companies like El Corte Inglés has just launched a same-day delivery service to try to counteract the strong competition exerted by Amazon's sales platform. In fact, the delay in the digital strategy of the department store chain has been one of the arguments that has circulated around the internal crisis that has ended up removing its until now president, Dimas Gimeno, from the top.

But although no one doubts anymore that being able to generate online sales is vital for the survival of brands (even SMEs), the truth is that e-commerce still has pending challenges. One of the most obvious is that transactions are still dominated by price ranges in the medium or low scale. Although 74% of Spanish internet users between 16 and 65 years old have made an online purchase in the last year, this percentage would drop considerably if only higher value acquisitions were counted. However, there are already, for example, car brands that dare to sell new vehicles online. Seat is a good example. The manufacturer announced in April its entry into Norway, where it has launched its first direct sales online store.

Another challenge is the ability to be efficient in delivery, that is, the logistical part of the entire process. Amazon's multi-million dollar investments highlight the constant need for more and larger infrastructures to be able to offer the customer a good shopping experience, which increasingly means deliveries in a few hours. But not everyone is capable of making this investment effort, and that is why there are already voices warning of a greater danger of concentration in a few groups in the e-commerce sector. Another challenge is technological. Statistics show that most internet users do not carry out their operations through computers, but increasingly do so through their mobile phones or other devices such as tablets. That is why brands must have well-developed applications, because today selling online no longer necessarily means selling through the web.