A genuine lifeline. This is the only way to imagine the impact that digital technology, and more generally the e-commerce sector, has had on the exports of Italian companies. The 2020 digital export figures for consumer goods stood at €13.5 billion, up 14% from 2019. While this growth matches the pre-pandemic trend, it now accounts for 9% of consumer goods exports (7% in 2019) and 3% of total exports (2.5% twelve months earlier).
“These are salient figures testifying to the significant impact of digital technology on Italian businesses despite the pandemic and its initial obstacles. “Now, it will be interesting to see if these trends continue in the long term”, explains Maria Giuffrida, Director of the Digital Export Observatory at Polytechnic University of Milan’s School of Management, who presented her research “Export digitale, Covid ed emergenza: strategie per la ripartenza” (Digital exports, COVID and the emergency: strategies for recovery).
The pandemic period and subsequent economic crisis radically changed consumption worldwide. “It is no coincidence that the fashion sector, for instance, which is still very important in Italy, posted a drop of 9% in this period despite remaining by far the largest, with over 7 billion in value and a 53% share of exports of consumer goods. The reason is clearly pandemic-related: people were stuck at home most of the time and thus preferred not to buy shoes and clothes unless strictly necessary. A radically divergent picture can be painted of the food sector, which benefited enormously from the pandemic period”, emphasises Lucia Tajoli, Professor of Management Engineering at the Polytechnic University of Milan and Scientific Director of the Observatory.
The report reveals a 46% growth in the food sector, reaching a value of €1.9 billion, i.e. 14% of digital exports. Absolutely massive numbers. “The furniture sector, which has always been one of Italy’s best performers, grew by 10% during this pandemic period, in line, however, with what we have already seen in 2019″, concludes Tajoli.
This was certainly a relief for all B2C companies that interface directly with consumers, but less so for B2B companies that sell to other companies
Maria Giuffrida, Director of the Digital Export Observatory at Polytechnic University of Milan’s School of Management
Digital has therefore heralded a turning point for businesses, who would have otherwise struggled under the traditional sales channels that have long been severely restricted by the health emergency. “This was certainly a relief for all B2C companies that interface directly with consumers, but less so for B2B companies that sell to other companies. In fact, the latter recorded a small decrease of 5% compared to 2019, due to the slowdown in many sectors, with the exception of FMCG and pharmaceuticals, which performed positively”, emphasises Giuffrida.
Yet, were companies really ready for digital? “Actually, no. They weren’t. SMEs in particular needed time to figure out how to rise to this challenge, as companies often lacked staff capable of implementing a digitisation process that had never taken place before”, points out Giuffrida.
Nearly one in ten companies lacked an e-commerce or export manager, and this has effectively conditioned the transition to digitalisation, which for many companies has been a complicated challenge and meant an inevitable shift towards internationalisation.
An Observatory survey conducted on a sample of 124 Italian companies of various sizes and sectors indicates that the uncertainty wrought by the pandemic in international markets has led to an increase in risks, especially of a financial, logistical and commercial nature. Financial risks were a particular concern for 28% of the companies, followed by logistics difficulties for 19%, moderate risks in both areas for 23% and serious risks in both logistics and financial areas for 30%. “Companies have also opened up e-commerce channels, deployed digital solutions such as collaborative platforms and tools, introduced smart forms of work and greater flexibility on assigned tasks to mitigate these risks. A very compelling strategy for the future, although it will certainly need to be adapted”, says Tajoli.
Companies have also opened up e-commerce channels, deployed digital solutions such as collaborative platforms and tools, introduced smart forms of work and greater flexibility on assigned tasks to mitigate these risks
Lucia Tajoli, professor of Management Engineering at the Polytechnic University of Milan and Scientific Director of the Export Observatory.
The worst, however, would appear to be behind us. Global trade slumped by 10% in 2020 (WTO estimates), which affected Italy too, where exports fell by 9.7% and imports by 15.3%. The first signs of recovery between late 2020 and early 2021 have already led to a growth in world trade of over 7%, with a return to pre-crisis levels in Europe and the US expected by 2022.
“Forecasts from every institution call for a strong rebound in international trade between this year and 2022. A figure predicted by all scenarios that will obviously affect different areas and countries differently. Asia and China have felt the effects of the pandemic less and are already reacting. The United States is already recovering more than Europe, which overall will grow less than the others”, explains Tajoli. And what happens with digital then? “It will naturally remain, though a resurgence of traditional channels will be inevitable”, points out Giuffrida.
Before the pandemic, 56% of companies used digital channels to sell products abroad, but nearly 75% exported products online worth less than 20% of their turnover. Things are about to change. “This is an inevitable transition. There are two ways forward for B2C companies: creating synergies between companies to pool knowledge and wealth for competing in the global marketplace by fully harnessing service providers; and enriching their online presence while maintaining physical contact”. And what about B2B companies? According to Giuffrida, even here “digital has so far been useful especially in the trade fair sector, the real meeting point between supply and demand. A return to presence will be inevitable, but online will come in handy especially when it comes to managing the channel commercially”. There is no turning back.