After reading this article of how a New York based online lingerie company decided to open a subsidiary in Berlin; as part of their expansion strategy, I have decided to take a closer look into investment in the area of fashion e-commerce in Berlin.
In this article the co-founder Guillaume Kretz mentions, “…the shift in market trends had created an opening in Europe…E-commerce in the US is now fragmenting. The big players arrived a while ago and captured most of the market share, but now you can see smaller players that have arrived two or three years ago having a more content arranged strategy, with a more refined target – higher hand clients – rather than a Zalando or Amazon.”
The research firm ThinkTank additionally shows the development of E-Commerce footprint by country in 2012.
According to a statistic in 2011 Germany’s online sales rose by 7% upgaining the total of €32.4 billion worth of online sales… A stable Internet infrastructure convinced more than 50% of Internet users to buy online. However, it’s important to note this doesn’t mean that one can invest straight away. On the contrary, it might turn out to be extremely difficult to squeeze into this packed environment, not to mention becoming its leader in any area of e-commerce sales. Though, it’s definitely worth trying!
Additionally it’s interesting to witness that even crisis-hit countries such as Spain are considered an “attractive market”. The B2C Ecommerce sale predicitions are expected to increase.
Another company following the same strategy as the lingerie company is American based Fab.com. According to this article from FashInvest.com, this succesful online shopping platform is planning an exapasion into the European market, which is said to be the largest e-commerce market in the world.
Boom or Bust
So the question is: Are market conditions more favourable for E-commerce companies in Europe. These determinants could be factors:
- E-commerce companies generally have less competitors than in the US
- E-commerce growth in US stagnates whereas;
- E-commerce is still a growing sector in Europe due to improving internet infastructure
- Increase of Investment in European E-Commerce projects by VCs
The last point is especially important if we look at Berlin. Many Venture Capitalists have opened new offices to support this e-commerce growth and engineered large fusions with the US main brand. Many see Europe as a market opportunity in the technology and e-commerce sector. In this article Philippe Collombel, a partner at Partech, said he was looking forward to tapping into Berlin’s potential: “We want to grasp more opportunities in one of Europe’s most vibrant and fastest growing technology hubs and in Germany as a whole. Partech is the first international top-tier venture capital firm to open an office in Berlin and we look forward to becoming even more deeply rooted in the city’s flourishing startup community.”