E-commerce in Italy

It took longer for Italians to get used to online shopping than it did for people in the Netherlands and Germany. This growing e-commerce market offers opportunities for Dutch online shops. In this article, Cottona’s Mieke Bos explains how she launched her Italian online shop.

With over 60 million inhabitants, Italy is an interesting market for Dutch businesses. After Spain, it is one of the fastest growing e-commerce markets in Europe. And thanks to European funds, government incentives and rapid digitisation, the Italian e-commerce market will still have plenty of room for new entrants for the next 3 to 5 years.

Market research

Every successful foray into a new market begins with market research. You can do research online or by actually visiting the country yourself.

Online research

To do market research, you need a basic understanding of the Italian language and culture. In your online market research, use Italian keywords that are important to your product and industry. Keyword research helps you focus on opportunities (in Dutch) in your sector. The Dutch Embassy in Rome and the Consulate General in Milan investigated the e-commerce opportunities for Dutch entrepreneurs on the Italian market. It identified promising opportunities for Dutch fashion, cosmetics, and flower and plant vendors.

Mieke Bos, owner of Cottona (in Dutch) is living proof that there are chances to be had in other sectors, too. In a workshop in Panningen, this company makes table linens from European fabrics. Cottona has six online shops; in the Netherlands, Italy, Belgium, Germany, France, and Spain. Bos did her own market research.

She always keeps track of the latest market developments before entering a new market. Her advice: “Enter a market when it is still relatively small. The competition will not be as fierce and the marketing costs will be relatively low. That is how you grow with the market.” It often takes 2 to 3 years to make a name for yourself in the market, after which your shop will start to grow. Bos decided to visit Italy with colleagues and conduct field research.

Field research

When exploring a new market, Bos wants to learn more about the culture and get a feel for the country and people. “You can’t find everything online. Compare the products sold in Italian shops to your product range and take a close look at pricing. Decide whether your prices are competitive as is or whether you should adjust your product range or prices.”

Products in your online shop

European rules apply to e-commerce in Italy. These rules protect consumers so they can shop safely online and are similar to the rules in the Netherlands, which makes it a lot easier to start an Italian online shop.

Product requirements

Investigate whether your product meets Italian product requirements (in Dutch). In most cases, EU product requirements apply. But Italy also has special rules and regulations for certain products. Food products, for instance, are subject to specific labelling and packaging requirements.

Customer needs

Make sure that your products meet your customers’ needs. Segment your target audience by identifying specific audiences in different Italian regions, for instance. Research has shown that most Italian online shoppers live in the relatively affluent north of Italy. And that this group is already accustomed to international e-commerce. Segmentation will allow you to use your marketing budget more effectively than if you tried to sell your products to all of Italy right away.

Bos illustrates: “Most of our customers are in the north. Delivery in the larger cities is easier than in the southern tip of Italy, for example. It is also worth considering whether you want to reach customers in Sicily and Sardinia. If you do not deliver to the islands, state this clearly on your website. You should always be open and transparent.”

Market approach

There are two ways to test the e-commerce waters in Italy. You can either sell your products from the Netherlands on a widely used online marketplace in Italy. Or you can start your own Italian online shop.

Online marketplace

Italian consumers like shopping on online platforms and you could also consider selling your products on a marketplace (in Dutch). If you take this approach, you do not have to launch your own Italian online shops. On marketplaces, buyers and sellers find each other and make deals, while the platform mediates and provides support. Commonly used online platforms in Italy are Amazon, eBay, and Facebook Marketplace. With a 38% market share, Amazon is the largest platform in Italy.

Italian online shops

You could also start your own Italian online shop, either by building one yourself or outsourcing it to a partner who is familiar in the Italian e-commerce market.

Do it yourself

If you decide to build your own website, make sure to give your site an Italian look and feel. And communicate with your customers in their own language. An Italian-speaking support assistant and Italian phone number will make life easier for both parties.

Bos insisted that her online shop feel entirely local, due in part to the cultural differences between Italy and the Netherlands. “We mainly supply custom table linens and ship orders from the Netherlands. Delivery times are not a problem, and people do not realise that our products come from the Netherlands until after they receive their order.”

Bos does not communicate with her customers herself but chose to outsource sales, marketing, and after-sales to a partner.

Outsourcing

A business partner who knows the market and speaks the language can be very helpful, as they can communicate directly with your customers and provide information about delivery times or warranty terms. Most businesses that take this approach ship their products from the Netherlands to their Italian customers with an invoice.

Bos works with a Dutch partner that has branches in the countries where Cottona sells its products online. “It is a perfect system. Our partner charges a flat monthly fee for its services, and we also pay a monthly fee for every phone call or email.” Bos’s partner also delved into product requirements and answered legal questions when she entered the Italian market.

Applying for a local domain name

domain name is the internet address of your shop and consists of two parts: the name and extension. The name you choose is usually the name of your company or shop, followed by an extension that suits your target audience and the country in which you do business.

Bos registered her online shops with local extensions. To have your domain names registered, you need an authorised Dutch registrar. “With an .it extension, it will be easier for your Italian customers to find you on Google. It also gives a distinctively Italian flavour to your online shop.”

Registro it deals with applications for .it domain extensions. Registro has a directory of hosting companies, including Dutch ones. Your online shop does not have to meet special requirements to qualify for an .it extension. Anyone is free to register domain names that have not yet been taken.

Payment methods

Italians like to pay via PayPal, credit card, and upon receipt of goods, but bank transfers are also on the rise. If you offer bank transfers as a payment option, consider opening an Italian bank account to facilitate the payment process.

Bos has noticed that lots of Italian people use bank transfers. “We do not ship our products until we have received payment, so paying by bank transfer does delay the shipping process. Apparently, Italian consumers do not mind waiting a little longer for their online orders. Bank transfers work to our advantage, because bank fees are lower than PayPal or credit card fees.”

VAT on distance sales in Italy

If your online shop sells products to Italian consumers, the 'destination country principle' applies, which means you have to charge Italian VAT to Italian consumers.

This rule also applies to entrepreneurs who are not subject to VAT and to legal entities that are not entrepreneurs. The Italian government, the Agenzia Entrate provides information on Italian VAT rates, or Iva - Imposta sul Valore Aggiunto.

There are two ways to file overseas VAT returns.

  1. The first way is to apply for an Italian VAT number and file local VAT returns in Italy.
  2. The second way is to sign your company up for the Union scheme under the One-Stop-Shop system of the Dutch Tax Administration, who will then pass on the VAT to Italy.

If you run a Dutch online shop and your annual sales to consumers inside the EU stay below the threshold amount of €10,000, you are allowed to keep charging Dutch VAT. To calculate whether you have exceeded the threshold amount, add the grand total of all sales to Italian consumers to your other intra-EU consumer sales figures, excluding sales in the Netherlands, because these are subject to domestic VAT. If you exceed the €10,000 mark in any given year, start using the local VAT rates of the country where your customers live.

Bos uses the OSS system of the Dutch tax authorities. “It saves me a lot of time. I only have to file a single tax return for all countries in which I sell products to consumers and the system is incredibly user-friendly. The first tax return was done in no time.”

E-commerce trust marks

With a recognised European trust mark for your Italian online shop, you show customers that they can safely buy products from you online. It should be noted that Italian consumers attach less value to trust marks than Dutch online shoppers.

Cottona's online shops do not have an e-commerce trust mark. “Our online shops are doing well and the fact that we do not have a trust mark has not come back to bite us yet, not even in the Netherlands.”

For more information about trust marks in Italy, visit the website of Consorzio Netcomm (in Italian), the umbrella association for online shops and Italian counterpart of Thuiswinkel.org. In addition to its own trust mark, Sigillo Netcomm (in Italian), the association also provides information about the Ecommerce Europe Trust mark (in Italian). The Trusted Shops trust mark is also widely used in Italy.

E-commerce figures in Italy

Italian organisation Osservatori Digital Innovation publishes surveys on the e-commerce market in Italy.