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Sustainability, competition and development: the challenges for e-commerce

  • Rome
  • 9 November 2023

        Although for some years e-commerce had already been gaining ground in Italy, the true acceleration came with the pandemic. While by 2019 consumers had purchased online products and services for an overall value of 31 billion euros, the growth increase in 2020 alone, compared with pre-Covid rates, would have taken three years. Yet, this increase has not affected every sector in the same way; on the contrary, during the lockdown phase, the demand for services fell due to the widespread limitations on travel. Other traditionally more disadvantaged sectors, such as food, saw an uptick in business, with online commercial revenues in 2023 quantified at 54 billion. The purchase of services has received renewed impetus, especially with regard to leisure activities, while other product categories show contrasting performances. While, on the one hand, the digital media sector has been gaining steadily, the food sector has begun to drop off, mainly as a result of inflation. Considering, however, that the rate of e-commerce penetration in Italy – the ratio of online to overall buying – is 13%. Comparing that with the UK’s 30%, for example, it is easy to see that there is still much room for growth.   

        If e-commerce in 2023 represents a 54-billion-euro sector, its being a multifaceted and highly complex value chain boosts its indirect value to as much as 80 billion. In the same way, thanks to the multiplier effect, every euro invested in online commerce generates 1.48 on the value chain, and every employed person generates 1.4 in associated activities. Moreover, various studies underscore the benefits that e-commerce can bring both to fighting inflation as well as to promoting competition. In general, it could be said that much of the earlier prejudice against online buying – as the enemy of traditional commerce – has subsided. The majority of retailers now recognize the importance of multi-channel sales, and more and more SMEs are seeing digitalization as the way to open up new opportunities, including foreign exports. Although only 13% of Italian SMEs sell online – compared to an 18% European average – some studies indicate that over 70% of these companies have undertaken digitalization programs.

        Naturally, the many benefits come along with a wide range of problems and snags to be unraveled; these include:

        • Taxation: an issue that has long pitted major Big Data multinationals against national governments. Nevertheless, the two appear to be edging toward collaborating, thanks not least to new instruments such as the Global Minimum Tax.
        • The need for widespread distribution, no longer only to retail outlets but to individual consumers, has profoundly changed logistics and transport, and created a traffic issue for cities and the environment in general; even major warehouses and distribution centers have an environmental impact that needs to be mitigated.
        • The correlation of the disappearance of physical points of purchase, in both historic city-centers and more peripheral areas, with the spread of e-commerce, while not definitively proven, must be monitored – and prevented where opportune – for its possible social, economic and security effects.
        • Data management, and its countless implications in terms also of cybersecurity. A contribution in this regard could come from the adoption of the personal digital ID, already diffuse in countries such as Sweden, that can attenuate the diffidence and difficulty of the elder segment of the population.
        • Linked to the previous point is the theme of demographics: in an ageing society, the convenience of buying online represents an advantage that, nevertheless, presupposes some basic computer skills as well as access to a digital and distribution network, not least in more marginal and less-densely populated areas.
        • Finally, the proliferation of counterfeits, which impacts the credibility of intermediary platforms as much as the consumer/buyer’s right to protection. The protection of patents and use of technologies such as AI can help counter this phenomenon.

        A central role in exploiting the broad margins for growth described above can be played by national and local institutions and policy-makers, in collaboration with the private sector. Investments are needed in physical and digital infrastructures dedicated to better connecting citizens and area, and in digital literacy programs; these latter should also be made available to companies in support of their digitalization, along with tax incentives and bureaucracy streamlining. This will make it possible to promote a sustainable and flexible e-commerce model capable of satisfying the evolving needs of consumers and to meet the challenges of a continually shifting scenario. 

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