Switzerland can be considered a unique market. It’s certainly small, but with a strong purchasing power. The e-commerce sector is particularly booming because the Swiss population is fond of online shopping, while the local supply in this area is still limited. To open an e-commerce company, it’s essential to define your strategy and know the regulations for this country outside the European Union.
The Swiss business environment
Switzerland is a confederation composed of 26 cantons. It has 8.4 million inhabitants, 74% of whom are living in urban areas. The GDP per capita is around € 67,000, one of the highest in the world. However, the cost of living is also higher. For example, prices are 40% to 50% higher than in France.
The official languages used in Switzerland are German (68% of the population), French (18% of the population), Italian (10% of the population), and Romansh (1% of the population). The Swiss are very keen on using mobile devices, including for doing their shopping. Recent studies show that around 70% of Swiss use a smartphone.
The Swiss e-consumer
With around 51% of adults making at least 1 Internet purchase per week, Switzerland ranks third in Europe for online shopping. In addition, 80% of those over 60 connect online every day and one third make online purchases at least once a month. Thus, the average shopping cart reaches nearly € 2,000 monthly for about 8 items.
The most popular sectors are recreation (event tickets and travel bookings), technological equipment and fashion. Swiss consumers make 33% of their online purchases on foreign platforms. The reasons why these online sectors are doing so well are simple. Most people are attracted by the price, the rarity of the items and the wide choice they have online.
The Swiss e-commerce market has a great potential. Online sales are booming. Foreign platforms are often preferred, due to the lack of variety in the local offer. The average consumer, especially seniors, has a high purchasing power. Swiss consumers have high demands, are looking for quality products and services and enjoy having diverse options. The delivery system is fast and flexible, due to the highly developed infrastructure.
However, it’s important to define a business strategy, to establish a distribution method, and calculate its costs according to the tax system in order to become a top company in this interesting market.
The characteristics of the Swiss e-commerce market
Being outside the EU, the regulations in Switzerland are different. Since 1 January 2018, any foreign company that provides services and has a turnover of more than € 85,000 is subject to VAT in Switzerland (7.7%) and must have a tax representative.
As of 2019, any e-commerce company in Switzerland with a turnover exceeding € 85,000 will also be a subject to the 7.7% VAT. The price will be more transparent for the local customers, and the businesses will have to include this VAT in their selling prices.
Swiss customs fees vary depending on the products. Most products manufactured in Europe are virtually no longer subject to customs.
Important cultural feature: 1 out of 3 Swiss don't have a credit card. 88% of online purchases are made through an invoice, with an average payment time of 30 days.
Important factors to consider for opening an e-commerce company in Switzerland
To gain a foothold in the Swiss e-market, it is essential to offer an online sales site adapted to local operations and referencing. First, you need to create a dedicated site with a ".ch" domain name. The site must be multilingual (French, German, and English) to reach the entire market, and offer payment options by invoice.
Having a registered address in Switzerland is important to reassure consumers. Once you open your e-commerce company in Switzerland, you should consider offering an after sale service on the website, to manage the customer relationship.
If you decide to open an e-commerce company in Switzerland, you should take the following requirements into consideration:
- Have a registered office in Switzerland;
- Have certified accountants to comply with the provisions of the Swiss VAT;
- Set up logistics and transportation operations to manage the flows, returns, and storage of products;
- Search for local distributors, especially for the food industry.
For more information regarding the necessary steps and requirements to open an e-commerce company and to request an offer for our services, please contact our Swiss company formation experts.