GD of Luxembourg, fertile ground for Brussels e-commerce
During the COVID-19 health crisis, e-commerce has become a major solution for maintaining export activities…and for expanding them. Due to its physical, historical and economic proximity, the Grand Duchy of Luxembourg is the perfect market to get a start!
Olivier Costa, the Economic and Commercial Attaché for the Grand Duchy of Luxembourg, provides information about the business opportunities in the region, the similarities with the Belgian market and the many possibilities for e-commerce.
Interview with Olivier Costa
What are the similarities between the Luxembourg and Belgian markets?
Olivier Costa: Due to their size, both the Grand Duchy of Luxembourg and Belgium are open economies. And like Brussels, the city of Luxembourg is a capital which hosts European institutions.
The ties between Belgium and the Grand Duchy of Luxembourg are long-standing. They were again evident during the state visit by King Philippe and Queen Mathilde in October 2019 (in french).
Given that the two economies are mature and operate in a similar environment, the needs for goods and services in demand in Belgium and Luxembourg are similar.
Construction, real estate and related activities have an undeniable appeal. The presence of many Belgian property developers is an indication of the market’s strength. The projects involve large areas and even entire neighbourhoods (notably Kirchberg, Cloche d’Or, Gare and Esch-Belval). Sustainability and circularity, which are priorities for the Brussels-Capital Region, are an integral part of the projects and provide clear opportunities for our companies.
What opportunities does this market offer?
Olivier Costa: First, the market is close-by, which allows us to build and maintain contacts easily: the Grand Duchy of Luxembourg is only 200 km from Brussels. In fact, roughly 25,000 Belgians live in Luxembourg and actively participate in its economy, some in key positions. Having Belgian interlocutors can provide numerous advantages.
Given that the Grand Duchy of Luxembourg is a major financial centre, the market can also be of interest to Fintech, AssurTech and digital businesses. The services industry, including the engineering, legal and consulting sectors, features prominently.
Its diversity, purchasing power, size and language are its main advantages.
Four great reasons to enter the Luxembourg market
1. Highly diverse: the population of the Grand Duchy of Luxembourg is international and multilingual, with half of its residents originating from other countries. The country hosts more than 210,000 cross-border workers.
2. High purchasing power: the purchasing power of the Grand Duchy of Luxembourg is markedly higher than that of Belgium. It is very attractive for certain sectors, such as luxury goods and fine foods.
3. Small size: Luxembourg provides an interesting “test” market because partners and commercial targets are easily identifiable. With respect to exporting goods, geographic proximity and reasonable export volumes coupled with higher purchasing power make it a choice destination for a first international foray.
4. The use of French (one of the national languages): this is an advantage in terms of contacts as well as relations with the authorities, providing information to customers and product labelling.
And the advantages for e-commerce?
Olivier Costa: The digital activities of Brussels companies could naturally extend beyond the border, in particular into the Grand Duchy of Luxembourg. With VAT of 17% for B2C, the margins in Luxembourg can be higher than those in countries with a higher VAT rate.
Brussels e-merchants can, with a reasonable investment, more easily expand their catchment area into Luxembourg thanks to the shared language.
The Luxembourg government has, in fact, implemented a series of initiatives to increase the share of e-commerce in its market. One of the more recent initiatives is the Letz Shop platform, which gives retailers located in Luxembourg the option to benefit from a virtual shop without worrying about the technical aspects. This is an excellent, motivating step forward for e-commerce.
The digital and physical worlds complete each other. One example is the delivery of goods purchased on an e-commerce platform.
What e-commerce sites are used in Luxembourg?
Olivier Costa: Generally speaking, the “marketplaces” known around the world are used extensively. With respect to food, I would say Luxcaddy, for example, which is a well-known webshop in Luxembourg.
The participating brands complete their brick-and-mortar sales with online sales modules. These webshop modules are their own and are accessible via their websites. This is the case of electronic-shop.lu (electronic equipment), Abitare.lu (furniture and decoration), webshop.provencale.lu (food), Weloveto.travel.lu (travel) and many other companies in Luxembourg.
The Grand Duchy of Luxembourg deserves the attention of Brussels companies as they expand their business internationally. I’m available to provide them with assistance to get started.