As one of the top growth markets, Switzerland offers great potential for your cross-border business. Read an interview with Peter Egger, Head of Sales Commerce at the Swiss e-commerce service provider MS Direct, to find out what you should be aware of.
What opportunities do you see for cross-border traders who expand their business into Switzerland?
Swiss e-commerce offers significant advantages. By European standards, we have relatively high purchasing power, which is related to the relatively high income and lower income tax.
In addition, VAT is low at 7.7 percent. This means that retailers have higher margins here from the outset compared to other European markets. The Swiss also have a high affinity for e-commerce. They are brand-oriented, and German brands in particular are very well-known – and popular.
Germans and Austrians also have the advantage that there are no language barriers in the German-speaking part of Switzerland. Since French and Italian are also spoken in Switzerland, the market is also interesting for Italian and French online retailers. Generally speaking, Switzerland is extremely attractive for cross-border trading.
“Same-day and next-day delivery – this does not have to be mandatory in Switzerland. But note preferences, such as payment by invoice, and give customers the option of paying in Swiss francs.” Peter Egger, Head of Sales Commerce, MS Direct
What do traders need to know about the Swiss market and Swiss customers?
There are a few essential things that you need to know as a trader. The customs clearance issue is of primary importance. Every product that is delivered to Switzerland must be declared.
Another important point is the currency. It is advisable to have customers pay in the local currency. That’s not a must, but – and this would be the Swiss customer: He or she would, of course, prefer to pay in Swiss francs. By the way, purchasing on account is also one of the preferences. PayPal and instant bank transfers are not used very often.
Another local peculiarity: Swiss people are used to prices in steps of five, for example, SFr. 12,95, - instead of SFr. 12,99. This may sound like an unimportant small issue at first. But I think that these are exactly the important details that help to attract customers to the shop, convince them to buy, and create lasting loyalty.
Because they feel more comfortable that way, and that contributes significantly to the purchase decision. That’s why I recommend that retailers who have the opportunity to benefit from the purchasing power in Switzerland respond to local customer needs in order to take full advantage of the market.
If possible, retailers should also present the online shop in the three national languages. The issue of shipping is also of great importance.
What is characteristic of the Swiss carrier landscape?
Swiss Post is the most widespread and most accepted carrier among private customers. DPD, DHL, and UPS also deliver in Switzerland, but mostly in the B2B sector.
In addition, since last year there is now a new carrier in Switzerland: the last-mile service provider Quickpac. The company was launched to create an alternative to the Swiss Post. Quickpac focuses on the sustainable delivery of parcels exclusively with electric cars and tries to tailor the delivery as closely as possible to customer needs, such as the desire for time-slot delivery, evening delivery, etc. Alternative delivery options will positively stimulate the market.
Is there anything else that traders should consider when shipping to Switzerland, for example with regard to delivery time and shipping costs?
The trend towards ever faster and more differentiated delivery has also arrived in Switzerland. However, most customers do not insist on their parcel arriving the next day or even the same day. Especially when a product comes from abroad, customs clearance is involved, and this is well known. I plead for a healthy relationship between purchase and delivery time. For me, that is about two to three days.
Next-day delivery is really something special for Swiss people. Zalando offers this service. But it also costs a corresponding shipping fee. Many shops offer free delivery, especially in the fashion sector. We recommend e-shops to follow their competitors in this area.
The import regulations represent a challenge for traders compared to EU countries. What exactly do they necessitate? And how can traders master them?
The challenges are clearly legal in nature. In principle, every article must be declared, because the goods are leaving the EU. However, we do not have a value-based customs duty; instead, you pay on the basis of weights and customs tariff numbers.
This means that the shop has to take very good care of its product data – weight, customs tariff number, country of origin, etc. In addition, the data is then needed in digital form for collective customs clearance.
The country of origin of the goods is also relevant, i.e. the country where they were produced. For products that were produced outside the EU, customs duties are due. If the goods were produced in the EU and a certificate of origin from the manufacturer can be presented to Swiss customs, no customs duties are levied. Traders are also subject to VAT and pay this as input tax at the time of import.
“Retailers should deliver exactly as the Swiss expect. This is a very important point.” Peter Egger, Head of Sales Commerce, MS Direct
How can shops gain a market advantage?
Firstly, through the prices of their products. As a German retailer, you have completely different purchasing conditions and therefore the possibility to offer the goods at a slightly lower price.
The range of products also makes a big difference – here, retailers should find out what is in demand in Switzerland. The market is heavily price and assortment-driven, it’s all about supply and availability.
If shops can fill a niche, they are way ahead. They also have an advantage when they do local marketing. And retailers should look into the buying and delivery habits of Swiss customers in detail. That is a very important point.
Switzerland in figures
Despite its almost 8.5 million inhabitants, Switzerland has the world’s twentieth largest economy and, with 75,773 euros, the second-largest gross domestic product per capita. The purchasing power of the Swiss amounts to over 1,000 euros per capita.
In 2019, private individuals in Switzerland ordered goods for 10.3 billion SFr. by online mail order, of which they spent 2 billion SFr. on purchases abroad. Compared to the previous year, Swiss online trade grew by 8.4 percent. The best-selling ranges are home electronics and fashion/shoes.
Switzerland breaks through the 10 billion mark in online trading in 2019
Since 2010, the Swiss have doubled their spending on online purchases by CHF 5.2 billion
(Source: Versand des Schweizerischen Versandhandels, 2019)
What do the Swiss order?
Home electronics, closely followed by fashion/shoes, are the online orderers for Swiss.(Source: Versand des Schweizerischen Versandhandels, 2019)