The emergence of online shopping is considered a major challenge for bricks and mortar shops globally.
The trend developed hand-in-hand with the rise of the internet, with the first e-commerce transactions taking place in 1994 (Amazon launched in 1995). Today, the reflex of searching for an item online is firmly engrained in consumer habits with six in every ten EU residents buying online, according to 2018 Eurostat figures. In Luxembourg, the proportion is even higher with seven out of ten having bought online during the previous 12 months. “Everyone with a credit card in Luxembourg is buying online, that’s the reality,” says Jerry Klein, manager of online shopping platform Letzshop.
Deliveries to Luxembourg
If the exact number of purchases made online within Luxembourg is not known, analysts have a rough idea. 2017 postal figures show that some 6.67 million parcels weighing 3.1 kilos or over were sent from abroad to Luxembourg addresses, up 10.9% on the previous year. “I expect it to be much higher than this,” says Klein. “Imagine everything below 3.1 kilos: books, CDs, DVDs, mobile phones. Every time you order a pair of shoes, they don’t weigh 3.1 kilos.”
Not all of these parcels will necessarily be online purchases, but the conclusion is clear--online shopping will continue to grow. And, if bricks and mortar retailers want a piece of this customer base, they need to get online. Yet only 7% of the retailers in Luxembourg are there.
A Luxembourg survey found that seven out of ten people bought goods online during the previous 12 months. Photo: Shutterstock
Launched in September 2018, Letzshop supports domestic retailers through the process of starting and continuing an online store. For €500 per year, they get professional photos, training, initial access to shipping through Michel Greco and a platform that handles the sales side of things and reminds them when they need to ship items. Almost a year after its launch, some 220 out of the estimated 3,500 shops in the grand duchy had joined Letzshop. Not all have made sales but, as Klein says, it took Amazon 25 years to get to where it is now. “These 25 years of the marketplace explain why people need to be patient. It’s not because Letzshop is here for nine months that people will abandon their habits of going online abroad,” he says.
To convince local residents to buy locally, online, Klein has three compelling arguments: firstly, “local commerce is an important recruiter for Luxembourg”. Secondly, there is a vast choice of products already in Luxembourg, it simply needs to be gathered in a place where consumers can find it. Lastly, he asks people to consider what if something goes wrong with the item they ordered. Returning something like a bicycle to a physical shop is far easier than posting it back to China.
What is clear is that for the platform to work, retailers need to offer consumers choice, but this takes time. Some Letzshop members, such as bookstore chain Ernster, have automated the process and its database is imported into Letzshop every 2-3 hours. Books sell well on the platform. Indeed, the first product sold was a book. This is largely thought to be because of the choice offered. For smaller shops, updating product listings is more labour intensive, although they can upload en masse via spreadsheets. Traditional retailers must make time for this and other things, Klein says. “It’s not enough to be online somewhere and that’s it. It needs a little more engagement than that.”
Developing an online marketing strategy should also be top of the list of priorities along with allocating a budget for it. “We encourage sellers to go and find a web agency to support them in their new marketing strategies,” says Klein. The platform also provides tips and advice on other areas that can be improved, such as ensuring websites are “mobile-friendly” under Google’s standards and how to claim one’s “Google My Business”.
There remain several challenges. For one, not all shops are permitted by law to sell online. For instance, Luxembourg’s legislation prevents pharmacies from selling even non-prescription products like cosmetics online. And there is always the thorny question of shipping fees. “[International] figures show that roughly half of the buying intentions are aborted when the client notices he has to pay for delivery,” says Klein. In Luxembourg, it will be difficult for smaller shops to absorb those costs without it eating up their margins. “We have to find a compromise. That’s one part of the learning curve to this new e-commerce tool which, to 99% of sellers, is completely new.”
This article was originally published in the September 2019 edition of Delano Magazine.