I. Regional overview
The Benelux region consists of three EU member countries: Belgium, Luxembourg and the Netherlands. The region covers 1.7% of the EU's land area, is home to 5.6% of Europe's population, and generates 7.9% of Europe's GDP. GDP per capita in 2022 is close to €76,000, well above the European average of €27,912.
The Benelux also has higher internet penetration than Europe as a whole, and the region's digital maturity has created more online consumers.
According to the RetailX e-commerce revenue index, the amount of online spending in the region is slightly lower than the European average.
The more populous Netherlands is the largest online marketplace in the region, with goods and services sold online in the country worth a total of €30.6 billion. This represents a significant leap from the €25.8 billion spent online in 2021. Since the onset of the pandemic (between 2019 and 2020), the Dutch online market has grown significantly, from €17.8 billion to €23.3 billion. This upward trajectory also shows that Dutch consumer demand for e-commerce has increased after the pandemic.
Belgium's e-commerce revenue rose from €6.6 billion in 2019 to €8.1 billion in 2020 and continued to grow in subsequent years. Belgian consumers spent a total of €8.5 billion online in 2021 and are expected to reach €10.4 billion by 2022. Luxembourg is the smallest national market in the region and the smallest of the three countries, but has a much higher GDP per capita. The total annual revenue of e-commerce in Luxembourg is 1.29 billion euros.
The e-commerce market in the Benelux region is dominated by retailers in the Netherlands. Among the top 100 retailers in the region, the countries where the retailers are headquartered are: the Netherlands (41%), the United States (16%), Germany (11%), and Belgium (10%). While Dutch retailers accounted for the largest share of the rankings, US retailers attracted the most traffic from the Benelux region. 43% of consumer traffic in the region goes to US-based retailers. Retailers in the Netherlands have also established a large presence outside the Benelux. Among the top 100 brands and retailers, 50 brands and retailers' e-commerce websites attract consumers from different countries, including the United States, Germany, France, the United Kingdom, and Poland. Meanwhile, the Netherlands and Belgium are the main consumers of these sites, with 31% of traffic coming from Dutch consumers.
II. Country Profiles
1. Belgium
Belgium's GDP per capita is generally lower than in the Benelux region, but the situation improved last year.
In recent years, as the country's internet penetration rate has increased, so has the online consumer population. In 2018, only 60% of internet users in Belgium made online purchases. By 2021, this increased to 66% and continues to rise. In 2022, 67% of internet users made online purchases. This figure, while lower than the average for the Benelux region, is on par with the average for Europe as a whole.
At the same time, online spending in Belgium is growing. Driven by the pandemic, the overall annual revenue of the e-commerce industry continues to grow, with a total growth rate of 21% in 2022. The furniture category is one of the hottest electrical products in the country, and the market size of this category is expected to grow by 28.5% by 2022. The grocery category saw significant e-commerce revenue growth (51%) in 2020 and has continued to grow at an annual rate of 17.7% thereafter. Categories such as beauty, health, personal and home care also flourished online, with revenue growth of 27% in 2022.
Although the number of people and the amount spent online in Belgium have increased, it is still at a relatively low level. Only 11% of multichannel consumers say they prefer online channels.
36% of Belgian consumers prefer to shop on their phones. 64% said they prefer to shop on the desktop.
The business environment in Belgium is expected to change in the final months of 2022, with the country's economic growth contracting by 0.2% in the third quarter. As winter approaches, rising energy prices, worsening inflation, geopolitical conflicts and other factors are putting heavy pressure on consumers. Subsequently, the consumer confidence index released by the National Bank of Belgium plunged 16% in September.
Belgium has an above-average cross-border shopping penetration rate. Consumers are also very happy to browse multi-category integrated e-commerce platforms. Amazon has launched its Belgian localization platform in 2022. Belgian retailers are also gradually expanding their operations abroad, with a large part of the traffic coming from consumers in Brazil and Germany.
2. Luxembourg
Most of Luxembourg's population is highly educated. The World Happiness Report study found that consumers in Luxembourg rated their happiness above the average for the Benelux, the European Economic Area and the global population.
Luxembourg is a member of the European Union, a financial powerhouse and a tax haven, and is also home to the headquarters of many banks in Europe, including the European holding company of major technology companies, including Amazon.
According to the World Bank, Luxembourg's GDP per capita is one of the highest in the world, after Monaco and Liechtenstein.
76% of Luxembourgers shop online, which is higher than the European and global average. Since 2020, the proportion of people shopping online in the country has steadily increased. 19% prefer to shop online rather than in a physical store, and 39% choose mobile over desktop.
Consumer electronics is the category most consumers in Luxembourg, followed by fashion, toys, DIY and hobbies.
Although electronics is a relatively mature online category, which is still growing, it is still at a low level of e-commerce category growth. The grocery category grew 50% online in 2020 and is expected to continue to grow by 7% in 2022. The fastest-growing categories are beverages, beauty, health, personal and home care, and fashion.
Nevertheless, inflation is also affecting consumer confidence in the country, with GDP growth also slowing from 6.9% in 2021 to 2.9% in 2022 and is expected to reach 2.1% in 2023.
3. Netherlands
The Netherlands, the largest country in the Benelux in terms of geographical area and population, has not only recovered from the pandemic-induced economic downturn, but also achieved substantial growth and high employment.
Under the National Economic Recovery Plan, the Netherlands will invest more than €2 billion in projects such as sea, rail and air transport. The Port of Rotterdam in the Netherlands is Europe's largest port, and this initiative will have an impact on related industries such as logistics and retailers. The Dutch government also plans to foster innovative development by developing AI solutions.
After the pandemic, consumers in the Netherlands gradually regained their spending power. However, inflationary factors, including high energy costs, also pose risks to consumer confidence and household budgets. Consumer spending is expected to decline slightly in the second half of 2022 and early 2023.
Despite the possible recession, consumers in the Netherlands are expected to continue shopping online. E-commerce has grown in popularity in recent years, with 78% of internet users shopping online in 2022, up slightly from the previous three years.
This has been followed by a steady increase in mobile commerce, with 37% of consumers saying they prefer to shop on mobile rather than desktop.
3. Analysis of popular categories
Consumers in the Benelux region are happy with online shopping, and despite the relative maturity of the e-commerce sector in these three countries, there is still room for growth, especially for retailers that can meet consumer convenience needs.
Convenience is the main reason for consumers in Belgium and the Netherlands to shop online, followed by price (44%), delivery methods (32%), and wide variety to choose from (31%).
Luxembourg has the highest amount of online consumer spending. While the country has the highest GDP per capita in the Benelux region, Luxembourg has the smallest population of the three. Therefore, the country is not the largest e-commerce market in terms of total size. The average online spend per Dutch consumer is expected to be €2,270 by 2022.
In terms of categories, consumers in the three Benelux countries spend the most on fashion products online. Per capita online spending in Luxembourg is about 1,344 euros, the Netherlands is about 963 euros online, and Belgium is about 540 euros online. Fashion retailers that occupy a major market position in the Benelux regional market and are among the TOP 100 are C&A, Bonprix, Zalando, de Bijenkorf, Zara, H&M, NA-KD, Asos and SHEIN.
Luxembourg's grocery category ranks second in average online spending by consumers, spending around €895 per person. But compared to the highs of 2020 (903 euros) and 2021 (914 euros), this figure is slightly lower, but still above the pre-pandemic level (677 euros). Interestingly, as a small country, Luxembourg is home to a large number of grocery retailers, including its homegrown retailers Cactus and Delhaize, Cora and Colruyt in Belgium, French grocer Auchan, and Lidl and Aldi in Germany. In June, Belgian food chain Colruyt announced it would begin home deliveries. Previously, consumers' online orders could only be charged from physical stores.
Online shopping spending in the Netherlands and Belgium continues to rise, but remains low compared to Luxembourg.
4. Cross-border e-commerce
Compared to their peers in Belgium and Luxembourg, consumers in the Netherlands are more likely to view globalization in a positive light. 59% of Luxembourg consumers are positive about globalization, compared with 63% in Belgium and 76% in the Netherlands.
While the Netherlands is the largest e-commerce market in the Benelux and home to the region's e-commerce leaders, consumers in the country are still very keen to shop across borders. Of the online traffic of the top 100 retailers visited by consumers in Luxembourg, 74% of the traffic went to US-based retailers.
52% of Luxembourg consumers have shopped online at retailers in other EU countries, and 20% have also shopped online at retailers outside the EU.
Cross-border shopping by Luxembourg and Belgian consumers is higher than the European average. 81% of Luxembourg consumers' online purchases are made at retailers in other countries, and 40% of cross-border shopping categories are mainly clothing, shoes and accessories. 31% of Belgian online shoppers have made cross-border purchases. In the Netherlands, the figure is only 7%.
Among the cross-border platforms in China, AliExpress and SHEIN are very popular with Benelux shoppers. Both retailers offer site-specific language versions on their European websites for things like French and Dutch. SHEIN IS WORKING TO BUILD ITS PRESENCE IN THE REGION, OPENING A POP-UP PHYSICAL STORE IN BRUSSELS IN SEPTEMBER 2022.
5. Sustainable development
As EU member states, the Netherlands, Belgium and Luxembourg have set corresponding sustainability goals. In 2021, the EU established regulations based on relevant provisions such as the United Nations Convention on Climate Change, the Kyoto Protocol and the Paris Agreement. By 2030, greenhouse gas emissions in the EU region are expected to be reduced by at least 55% below 1990 levels.
The Benelux countries are supporting each other in achieving these goals, seizing opportunities to develop a green economy, while also recognizing that their connected infrastructure and transport will transition to a greener and more sustainable model in the future.
Climate and environmental protection cannot be achieved by governments alone, but also by businesses and consumers. About half of Dutch consumers want retailers to be eco-sustainable. More people (72%) want a fair and good workplace for retailers and a high standard of benefits from their companies.
However, only 39% of consumers are willing to share more costs for products that are produced or transported in a way that does not harm the environment, lower than the European level as a whole (59.6%).
RetailX research found that 32% of 1,200 European brands and retailers in 2021 shared some sustainability information with consumers.
Bol has been named the most sustainable e-commerce brand in the Netherlands. The company invests heavily in reducing CO2 emissions. In April 2022, Bol became the first e-commerce company in the Netherlands and Belgium to carry a Climate Neutral Certification label. Bol helps consumers better protect the environment by offering sustainable alternatives in 60% of its product categories and using them as a label. The site's navigation also makes it easy for consumers to search for sustainable products, including second-hand items and related products made from at least 50% recycled materials.
VI. Payment Methods
IDEAL is the most popular online payment method in the Netherlands and funds can be deducted from the customer's bank account as soon as it is authorized. Funds usually appear in the retailer's account after 1-3 days. Other online payment methods are slowly eroding iDEAL's dominance. Currently, e-wallets are the preferred payment method for 10% of Dutch consumers.
In Belgium, the use of e-wallets and e-invoices is also increasing. Card payments remain the preferred online payment method for 39% of Belgian consumers, down from 49% in 2017. And in Luxembourg, Payconiq-owned Digicash is becoming a popular digital payment solution.
7. Last mile delivery
Benelux consumers want to choose services such as the delivery method, delivery location, time frame, and even the type of vehicle in which the package is delivered. All three countries have their own postal companies, but the market is still highly competitive, including locker networks, bicycle delivery, cross-border delivery and fast delivery.
Courier company Deliveroo will shut down its operations in the Netherlands because it has invested heavily and is not expected to gain leading market share. Dutch retailer Bol has invested in Cycloon, and together they plan to make the delivery service more sustainable, creating strong growth opportunities for their respective future market positions in a highly competitive market. A majority stake in Bol and its sales partners will ensure that more packages can be delivered by bike. As part of the terms of the deal, Bol will acquire the remaining shares of Cycloon over 4 years, while Cycloon will continue to operate as an independent brand.
Bol has also partnered with grocery chain Albert Heijn and zero-emission courier company Budbee to install parcel lockers that allow consumers to pick up products purchased online in offline stores in the Netherlands and Belgium.
Due to the need for sustainable and zero-emission transport, Luxembourg Post is also transitioning to a 100% electric fleet.
The Netherlands' PostNL aims to achieve zero emissions for all last-mile deliveries of parcels and letters in the Benelux region by 2030. In the Netherlands, postal companies already have a 96% penetration rate by bicycle or walk. In 2021, PostNL delivered more than 80 million packages with zero emissions. Half of the company's transportation fleet is electrically powered or uses renewable fuels such as HVO100 and bio-liquefied natural gas. The penetration of renewable fuels increased from 8% in 2020 to 35% in 2021. The company said PostNL was one of the first companies in the Netherlands to start mass use of HVO100, a clean fuel that is now extremely popular in many parts of the country.
Cover image source/ Figureworm creative
Mapping source/RetailX
Data sources / IMF, WB, Statista, Similarweb, etc
Compilation/Hugo Cross Border Liu Zhiwei