Online shopping in Europe is experiencing a resurgence this year, driven by a rebound in consumer confidence, according to a report released by Ecommerce Europe on Wednesday. However, the rise of budget-friendly platforms, such as PDD Holdings’ Temu, is intensifying the competitive landscape.
Global inflation has significantly impacted shoppers’ purchasing power, contributing to the rapid growth of online marketplaces specializing in low-cost products. Research from Bank of America indicates that low-income households in the United States, earning $50,000 or less annually, have notably increased their online spending, highlighting a trend toward heightened price competition as the critical holiday season approaches.
Ecommerce turnover in Europe is projected to reach €958 billion ($1.05 trillion) this year, an 8% increase from €887 billion in 2023. When adjusted for inflation, this marks a 5% growth, according to the Ecommerce Europe report, which encompasses 38 countries, including the UK. This represents the first increase in ecommerce turnover since 2021 after adjusting for rising prices, which have previously driven consumers toward more affordable options.
“We’re not back at the levels of consumer confidence before the inflation crisis, but we are not far off,” stated Anton Delbarre, chief economist at EuroCommerce, which co-published the report. “We are reaching a new normal that is slightly more pessimistic than the old normal.”
Despite the positive growth outlook, ecommerce leaders in Denmark, Finland, and Germany expressed concerns over the competitive threat posed by Chinese platforms like Temu. These sites offer products, such as hiking boots for €10 ($10.97) and smartwatches for €15, which are drawing German consumers towards cheaper Chinese goods.
“German consumers have turned to cheap Chinese goods,” noted Martin Gross-Albenhausen, deputy managing director of the German ecommerce association BEVH. Similarly, Niels Ralund, head of e-commerce at the Danish Chamber of Commerce, criticized Temu for creating unfair competition by selling in the European Union without complying with the same regulations that local webshops must adhere to.
In response to these concerns, a spokesperson for Temu emphasized the company’s commitment to complying with local laws and regulations while supporting local businesses. They invited merchants from the UK, Germany, France, Italy, and Spain to join its platform.
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