Financial markets are taking a close look at Italy due to its high levels of unemployment and sky-high public debt. Although numerous difficulties are imperative, the e-commerce sector in Italy is flourishing and has the potential to exceed the European frontrunners in the nearby future.
Italian consumers demonstrate a strong inclination toward purchasing from foreign online retailers. This is mainly caused by the scarcity of some items available in the area, as well as the lack of rivalry among domestic online retailers. This situation presents great opportunities for international sellers.
Main characteristics of the Italian marketplace and consumers
Italy is the second biggest e-commerce region in Southern Europe and had a commercial output of almost €17 billion (2015). Italy is ranked 42nd on Forbes’ list of the most ideal locations for business and 28th when it comes to how simple conducting business is.
Despite the economic hardships that have impacted nations in the south of Europe, e-commerce in Italy has been growing gradually in recent times, and it is projected that the upbeat pattern will remain. Internet usage in Italy falls far behind countries at the top of the list in Europe.
Remember that over 90% of individuals communicate in Italian (which is also used in various other nations, such as Switzerland and Malta).
Provide Italian customers with the option to purchase your products from a store or marketplace tailored to their needs.
Italian e-commerce market in numbers
- 59.80 million – Population
- 62% – Internet penetration
- 58% – Population’s online shopping
- 45% of – Population shopping online from abroad
Online buying behavior
Given the tough economic conditions and the typical desire to economize during a recession, Italians are showing interest in purchasing items online with competitive pricing. Generally, in markets with less growth, people tend to prefer using services over buying physical items on the internet. However, the trend is beginning to reverse.
Italian e-shoppers tend to have rather lofty demands when shopping and typically anticipate top-notch customer service.
Italian online shoppers are relatively patient. Typically, customers should expect their orders to take 3-5 days to arrive, but free shipping or a reduced shipping rate should be provided.
A ContentSquare study revealed that Italian web users may be hesitant in their decision-making. They may wish to look at the website a minimum of five times before ordering something. They likewise enjoy creating wishlists and normally utilize the “add to basket” option to store items in the list for them to review in the future. It is suggested that your website includes a feature that allows people to save items they desire.
The percentage of returns for merchandise acquired through e-commerce in Italy is 5% for general items, 15% for electronics, and a whopping 40% or higher for fashion pieces. It’s crucial to offer easy returns solutions.
Popular product categories
Electronics for the home, clothing, and shoes, and books are some of the most popular items bought by Italian internet shoppers.
And what do Italians like to purchase from abroad?
- Vehicle Parts and Accessories
- Clothes, Shoes, and Accessories
- Home and Garden
- Computers, Tablets, and Networking
Who Can Establish a Dropshipping Business in Italy?
In order to initiate and run a firm in Italy as a non-native, the principle of reciprocity must be complied with. What does this mean? In order to set up a business in Italy, it is required that an Italian citizen would be able to establish one in your native nation.
This rule does not apply to people from the European Union and European Economic Area. If you are a non-European Union resident, you should go to the website of the Italian Ministry of Foreign Affairs to determine if you are allowed to begin a business in Italy.
If you are a non-EU citizen and abide by the rule of reciprocal arrangements, a work permit is necessary in order for you to commence a business. You can submit an application to an Italian embassy or consulate in your nation of origin.
When starting an internet venture, especially one that uses the dropshipping method, you have to make choices that are critical and adhere to a set of rules and laws.
Legal Requirements That Relate to Starting a Dropshipping Business in Italy
The kind of legal structure that you pick for your company could determine whether it succeeds or fails. It can have long-lasting legal and tax consequences.
Decide what type of business entity to establish and register it
It is of great importance to take your time deliberating the best legal setup for your online venture since the applicable legal structure is invaluable in many facets of the business. It is suggested that expert counsel should be sought when deciding what to do.
In Italy, there exist a few distinct lawful frameworks. What is the best structure for your online start-up? Let us investigate the most common kinds of frameworks in which you can operate an e-commerce dropshipping venture in Italy. The same applies to every “most-common” online business model.
1. Sole proprietorship
This is one of the most common structures that is opted for by solo entrepreneurs. In Italy, it is comparatively straightforward and cost-effective to become a sole proprietor.
In order to become a sole proprietor, you must register with the Italian Business Register. You will be liable for any and all matters related to your business, including any monetary losses and debt incurred.
2. Partnership
Many types of partnerships exist in this country. The dissimilarity between them is in the amount of responsibility for each partner. The two most usual types of alliance are a general partnership and a limited partnership.
· General Partnership (Società in nome collettivo or S.n.c.)
All partners in this collaboration are financially responsible for the partnership’s responsibilities. The benefit of this setup is that you don’t need to put in a certain amount of money in a bank or to a lawyer to start functioning.
· Limited Partnership (Società in accomandita semplice or S.a.s.)
In contrast to a general partnership, a limited partnership necessitates that one partner is responsible solely for their portion of the capital while the other carries the whole responsibility of the partnership’s liabilities.
It is advisable to have the agreement officially witnessed and signed by a notary public, should a legal argument occur between you and your partner.
· Limited Liability Company (Società a responsabilità limitata or S.r.l.)
Most small and medium-sized businesses in the nation choose this legal framework. This is the most used business type in Italy.
This type of corporate structure is the Italian equivalent of an LLC or Limited Liability Company. When forming an LLC in Italy, you are establishing a distinct legal entity that is separate from yourself. It shields you from individual responsibility if your business accrues debt. The amount put in the company determines how much liability you are responsible for.
Despite its advantages, the major downside to this type of incorporation is that there must be at least one shareholder and a minimum of €10,000 worth of shares. A formation of an organization as a limited company involves a more convoluted filing procedure than what is required for a lone proprietor or a team. In order to establish a business in Italy, you need to complete the necessary registration process.
Essentially, you must choose a distinctive name for your business that is written in any language that uses the Latin alphabet. First, you have to determine if your business name is open.
You should establish a financial institution account for your business and deposit a minimum of €2,500 into said account. This equates to €2,500 of the required minimum share capital which is €10,000. The bank will provide you with a CD demonstrating that you possess the requested amount of funds in your business bank account.
The following steps should be taken: compose the Memorandum of Association (Atto Costitutivo) and the Articles of Association (Statuto), both of which should be notarized. You should also get an Italian tax ID and sign up for the Value Added Tax with the Italian Revenue Service.
Before signing up for the Italian Business Register, you must secure the certificate of incorporation (Visura).
Register with the tax authorities
No matter where your e-commerce company is located, if you are planning to distribute products on your website or through online retailers to customers located in Italy, you must adhere to the applicable Italian tax measures and regulations.
As a proprietor of a digital shop in Italy, you are responsible for paying taxes. This nation has a range of taxation, such as income tax, corporate tax, value-added tax (VAT), and so on.
The Italian Revenue Agency and the Ministry of Finance are the two government organizations that dictate the taxation laws in this country. To gain additional information pertaining to taxation in Italy and to sign up for the proper taxes, you should go to these websites. Getting personalized guidance from a tax accountant is a smart move.
Comply with the Italian and EU e-commerce legislation
Making a well-crafted e-commerce platform is not sufficient to begin a prosperous dropshipping operation in Italy. To conduct business electronically in this nation, it is necessary to adhere to the electronic commerce rules and regulations established by both Italy and the European Union.
Firstly, you must show a plain “Terms and Conditions” agreement on your website to protect yourself and your internet shop from any legal repercussions. In this contract, it is necessary to state the prices, delivery details, policies on refunds, the ability to cancel, and payment methods. Include information about what kind of products you are planning to offer. Be sure to indicate if the last cost of the product includes Value Added Tax. This can assist customers in gaining an immediate feeling of whether or not an item is a correct choice for them.
Secondly, you must develop a “Privacy Policy” agreement to safeguard your clients. In order to legally collect and manage personal data from guests and customers, you must include a Privacy Policy agreement. In your “Privacy Policy”, you should clearly state how your website accumulates and processes user data.
You should also include the necessary details on your electronic commerce website. This data encompasses an email address, postal address, telephone number, VAT registration, and so on.
Logistics, delivery, and shipping
DPD reports that home/office delivery is the most widely used form of delivery in Italy, with delivery to an alternate address coming in second. Postal services such as Poste Italiane Group, GLS Italy, DHL, UPS, TNT Express, and FedEx are the leading package companies. Poste Italiane and BRT (formerly known as Bartolini) are the principal players in the B2C delivery market.
In regards to the quality of Italian post office services, the overall consensus from consumers is not favorable as they have been known to take longer than expected and are not always reliable.
However, consumer delivery expectations and demands are rising. This causes the selection of delivery alternatives obtainable to virtual shoppers to increase, such as lockers and collection/return points.
Be aware that Italian consumers do not appreciate any unexpected fees. They prefer openness and wish to be informed of shipping prices at the beginning of the e-commerce process. They also appreciate multiple delivery options.
Aim to satisfy Italian online shoppers in terms of delivery by providing attractive shipping rates/free shipping and simple return procedures. Italian shoppers are delighted with the option of deciding where they would like their order to be sent as well as knowing the specific date and time of its arrival prior to finalizing their purchase.
Almost all Italians would be delighted to possess the capability of monitoring their purchases.
More than half of Italian shoppers are more likely to buy from an Internet store if they can get it from a physical location. Gathering a thing from a pick-up spot is appealing because it costs less.
Poste Italiane, the local postal organization, does not perform as well as its rivals and there is potential for some delays. We advise opting for parcel companies like Bartolini or DHL in order to minimize the chances of having a bad experience with shipping. Distinctions in transit times and overall shipping encounters vary between the North, South, and island regions.
If the shopping cart system is not able to generate delivery areas, for instance between mainland Italy and Sicily, consider adding one or two days to the guaranteed delivery time for those specified areas during the checkout process. This way sellers can set the right delivery expectations. They can also reduce the annoyance of expected wait times that are common in certain places in Italy.
Payment methods
Paypal is the payment of choice for Italians, coming ahead of pre-paid and credit cards and cash upon delivery. Italian purchasers enjoy having the choice to perform a direct banking transaction or postal transfer (bonifico bancario). If sellers don’t offer this method of payment, there is a high chance of many customers leaving their shopping carts without completing the purchase.
In comparison with other European nations, Italy appears to rely heavily on cash. Many Italians are worried about safety when paying online, which could be a difficulty for internet retailers.
Mobile e-commerce
In Italy, 30% of retail e-commerce sales originate from mobile platforms, which is lower than that of the top European countries in this category – the UK and the Netherlands, which both stand at 52% and 39%, respectively.
The majority of Italian online shoppers (87%) use a desktop computer to make purchases, while a much smaller percentage (7%) use a smartphone, and only 3% use tablets. It is anticipated that the use of the Internet will expand until it reaches a level of 70.9% in 2022.
Cross-border shopping
Italian e-commerce customers enjoy buying items from abroad due to the restricted selection of Italian merchandise. There is a big interest in items that cannot be easily gotten in the local market, like apparel from international brands or car parts for automobiles brought in from another country. Italians have a preference for shopping on websites from the UK, the US, and China.
The importance of international online trading is increasing steadily in Italy. Approximately 26% of French e-commerce shops have clients in Italy, while roughly 33% of Italian customers have purchased goods from a foreign electronic commerce website.
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