WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/C/W/345 
5 March 2012  
 
(12-1231) 
Council for Trade in Services  Original:   English 
  
 
COMMUNICATION FROM SWITZERLAND 
 
The Services Sector, Small and Medium-sized Enterprises and  
their activities related to Electronic Commerce:   
the Case of Switzerland 
   The following communication, dated 1
st March 2012, from the delegation of Switzerland, is 
being circulated to the Members of the Council for Trade in Services.  
_______________ 
 
 
I. INTRODUCTION 
1. In September 2011 the delegation of Switzerla nd submitted a communication on the role of 
Small- and Medium-sized Enterprises (SMEs) in Switzerland's services sector, entitled "The services 
sector, Small and Medium-sized Enterprises and employment:  the case of Switzerland" 
(S/C/W/340).1  That submission was presented in the c ontext of the sectoral and modal Background 
Notes previously discussed in the Council for Tr ade in Services (CTS).  In the course of the 
September meeting of the Council,  many delegations underlined the importance of SMEs for their 
economies and for the services sector in particular.  In addition, many delegations indicated that 
statistical information on SMEs were almost not existent. 
2. Given the predominance of SMEs in many coun tries and their considerable contribution to 
these economies, various delegations expressed th eir interest for additional information and 
discussions.  Members mentioned several topics for consideration, such as the basic difficulties for 
SMEs to participate in international markets, the absence of crucial information about market-
operating conditions in foreign markets and the va rious capacity constraints SMEs are confronted 
with when operating in different markets simulta neously.  As a consequence, Switzerland announced 
its intention to explore the feasibility of anothe r submission with a focus on the relation between 
electronic commerce and SMEs in Switzerland's services sector. 
3. The submission from Switzerland of Septembe r 2011 identified three major sectors:  
Distribution Services, Health Related and Social Services as well as Professional Services.  The sector Distribution Services generated the largest number of  jobs and appeared to be the most significant 
services sector in the SMEs in Switzerland. 
4. Despite the fact that presently many producer s maintain their own distribution channels, 
professional distributors, such as wholesale distributor s, had and have a major role in developing and 
performing electronic commerce activities.
2  As a consequence of the insufficient availability of 
                                                      
1 This current paper should preferably  be read together with S/C/W/340. 
2 For instance, according to a survey on e-commer ce activities in Switzerland , conducted between 2001 
and 2003, wholesale trade activities ranged between the five most important e-selling industries. Additionally, S/C/W/345 
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  information about electronic commerce activities in Sw itzerland, it is not possible to present data or 
information making a distinction between "pro fessional distributers with electronic commerce 
activities" and "producers respectively manufacturers with electronic commerce activities".  However, 
our analysis concluded that this distinction is not necessary to identify the critical problems in the area 
of electronic commerce.  To obtain valuable respon ses, we focused our analysis on the sale of goods.  
Another methodical necessity was that the paper does not solely focus on SMEs selling over the 
Internet but also on larger companies.  This appr oach provides a more representative picture of the 
electronic commerce reality in Switzerland and perm its us to compare various aspects between SMEs 
and larger companies. 
5. As a consequence, the objective of this paper is  to provide a general presentation of electronic 
commerce activities in Switzerland and to identify in  which market(s) Swiss companies and SMEs in 
particular sell over the Internet.  Finally, the objectiv e is to identify the various barriers that SMEs are 
confronted with when exporting their products. 
II. ELECTRONIC COMMERCE ACTIVITIES IN SWITZERLAND - AN OVERVIEW 
6. Electronic commerce in Switzerland has its origin in the mail order selling.  It were probably 
the Brothers Ackermann, the founders of a dye wo rks company in the area of Lucerne, who in 1871 
first sold their products systematically by mail.  Later, more and more companies discovered the 
advantages of mail order selling and an increasing num ber of specialised distributors sold various 
products, such as stationery and various tools, to  private and business clients.  These facts suggest 
clearly that at the end of the 19th century most of  the core elements of modern electronic commerce 
activities already existed:  Private (B2C) or business clients (B2B) made their choice at home or at 
their office on the basis of a clearly defined produ ct offer, ordered and received their products by 
mail. 
7. In 2008, 75 percent of all companies in Swit zerland used electronic commerce for purchase of 
merchandise and services, whereas 31 percent sold their products over the Internet.
3  In the year 2000, 
only slightly more than 40 percent used the Internet  for purchase and less than 20 percent to sell their 
products online.  With a view to the different sector s, it can be said that in 2008 nearly 80 percent of 
all companies of the building and construction sector  as well as of the industry (for instance chemical 
and pharmaceutical industry, mechanical engineering, electrical engineering and less technical industrial sectors) used electronic commerce for aqui sition.  In the case of the services sector, it was 
72 percent.  Large companies with more than 250 F TEs do generally more frequently use the Internet 
for aquisition than SMEs with less than 250 employ ees (80 percent respectively circa 72 to 75 percent 
for SMEs).
4 
8. In 2001, just 2,9 percent of the procurement expenses from companies using the Internet were 
spent online (electronic commerce intensity).  One ye ar later these figures increased to 4, in 2005 to 6 
and in 2006 it reached the 10 percent mark.  This  continuous expansion c ontinued and in 2008 15,1 
percent of the procurement expenses  were made online.  If we consider all companies in Switzerland, 
i.e.  those with or without electronic procurem ent, the intensity of electronic commerce was 1,9 
percent in 2001 and 7,2 percent in 2008. 
9. Companies with more than 49 FTEs are generally  more active in online selling activities than 
smaller companies.  More precisely, in 2008 circa 43 percent of the companies with more than 249 
                                                                                                                                                                     
the sector "wholesale trade" can be considered as a sector, in which ICT technologies generally play a 
fundamental role. 
3 Unless otherwise indicated:  All statistical info rmation provided by Federal Statistical Office, 
Neuchâtel, Switzerland. 
4 FTE = Full Time Equivalent  S/C/W/345 
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  FTEs and 38 percent of all companies with 50 to  249 employees used the Internet to sell their 
products online.  Only slightly more than 30 per cent of the small compani es with less than 49 FTEs 
sold online. 
10. In 2010, for every million inhabitants ther e were 1873 secure webservers (with SSL 
certificate), compared to only 21 in 1998 - a re markable increase of almost 9'000 percent in only 
twelve years.  This figure confirms the high inter est of many companies in Switzerland to integrate 
new developments. 
11. Why do companies buy and/or sell over the Intern et? Statistical data provide a detailed 
picture about the most relevant reasons: 
(a) Online procurement5:   
(i) possibility to increase ma rket transparency; 
(ii) acceleration of business processes. 
(b) Online selling: 
(i) to open up new markets (new customer segments); 
(ii) to strenghten the customer orientation; 
(iii) image cultivation; 
(iv) to enter into new geographical markets. 
III. ELECTRONIC COMMERCE IN SWITZERLAND - EXISTING OBSTACLES 
12. The following obstacles restrain electronic commerce activities within Switzerland:   
(a) the product itself (unsuitable for selling over the Internet);  
(b) the lack of willingness of the consumers to buy online; 
(c) security problems with respect to payment; 
(d) substantial additional investment costs; 
(e) uncertainties with respect to the commercial advantage6; 
(f) organisational matters (requirement for amendment); 
(g) logistical concerns; 
(h) uncertainties with respect to the legal framework; 
(i) concerns regarding data protection; 
(j) company-internal resistan ces (management, staff); 
                                                      
5 Other factors, such as lower buying prices or stockholding costs do not play a key role. 
6 This applies primarily to comp anies without e-selling activities. S/C/W/345 
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  (k) technological uncertainties; 
(l) the lack of relevant information (market potential, technology). 
13. It can be assumed that additional investment costs and logistical concerns primarily restrict 
small companies.  Company-internal resistances ma y more frequently occur in SMEs than in large 
companies, probably most typically in lo cally focused family-owned enterprises. 
14. The most important conclusion of our analysis is:  Even in the year 2011, electronic 
commerce activities in Switzerland are still geographi cally limited economic realities.  Switzerland's 
online suppliers mainly sell within the country, cross-border selling only plays a negligible role. 
IV. CROSS-BORDER SELLING - EXISTING OBSTACLES 
15. Many SMEs in Switzerland produce and/or sell niche products, such as electronic 
components, tools, mechanical spare parts or accessories for machines.  It is frequently the case that 
the national market turns out to be too small to generate substantial and sustainable revenues by 
offering this sort of (high-tech) products in one single market.  As a consequence, many of these 
enterprises are forced to enter in to new markets.  However, also companies focussing on niche 
products in much larger markets are confronted with  market saturation, in the end, it is merely a 
matter of time. 
16. Why is the Swiss online market still primarily a national market and not a highly 
internationalised one? According to our research, SM Es and the so-called big companies are generally 
confronted with the same obstacles when doing cross-border selling by Internet.  The most important barriers to resolve when selling in other markets are (provided the product is appropriate for online 
selling and the technical feasibility is given)
7: 
(a) the absence of knowledge of the foreign ma rket (e.g.  consumer preferences); 
(b) the absence of linguistic knowledge; 
(c) legal uncertainties; 
(d) uncertainties with respect to payment m odalities and conditions (other means of 
payment, absence of interoperability); 
(e) concerns regarding data protection; 
(f) substantial additional investment costs; 
(g) logistical concerns (e.g.  costs of cust oms procedures, difficulties in establishing 
reverse logistics)8. 
17. Concerning the costs of customs clearance it can be said that it is mainly a question of the 
different VAT rates between Switzerland and other countries.  Furthermore, some additional costs 
incur for the freight forwarder and possibly industrial tarrifs. 
18. Niche products are generally less influenced by costs related to exporta tion.  Such products 
are often comparatively high-priced goods and the de mand is more or less inelastic.  The same applies 
                                                      
7 No statistical data available. 
8 "border effect"  S/C/W/345 
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  to certain collector's items and to (classic) spare pa rts for veteran and vintage cars, frequently sold by 
specialised distributors.   
19. It is also important to be aware of the significance of market dynamics in general and the 
dynamics in other fields, for example in the lega l sector.  The information about the markets must 
always be updated.  The complexity of this conti nual process increases with the number of penetrated 
markets.  There is also the fact th at the companies must reach the critical size in their target-market(s) 
within a certain (and limited) time. 
V. MAINLY A LACK OF KNOWLEDGE 
20. Some pioneers have refined the invention of catalog selling by transforming it into an ICT-
based activity.  The accessibility of potential c onsumers increased dramatically.  Nowadays, 
theoretically everybody has access to various produ ct offers without ordering catalogs.  Moreover, 
people do not even have to know the companies that offer the requested produc ts, a simple Internet 
search helps. 
21. In seven areas we identified key obstacles when selling abroad.  Apart from the factor 
"invenstment costs", all the obstacles are primarily attr ibuted to a lack of knowledge.  In other words, 
online cross-border selling is a knowledge-based cha llenge.  According to our research, these gaps 
could be closed, the knowledge is theoretically ava ilable.  The questions here are:  Where is it 
available and what does it cost? 
22. Larger companies probably have an easier access to the required knowledge, possibly even 
company-internal.  Additionally, they do more of ten have higher financial power to buy the know-
how from specialised enterprises.  Hence, it can be  said that SMEs generally have to cope with 
additional investment costs and cost s for the increase of knowledge.  Especially the latter is in general 
time consuming - and time is a critical element. 
23. According to our research, it would be a si gnificant facilitation for many SMEs, if the 
required knowledge was easier and cheaper to acces s and if the know-how was more or less bundled 
available.  This would also allow them to bette r pre-estimate possible benefits, additional costs and 
eventual risks by expanding the business. 
VI. CONCLUSIONS 
24. Electronic commerce consists of online procurement and online selling activities.  Both 
aspects indicate the importance of electronic businesses.   Most prevalent are electronic procurement 
activities, whereas electronic selling activities are of lower importance.  The most vital reason for 
doing electronic procurement is the increased ma rket transparency.  To open up new customer 
segments is the most important reason for entering into the online-selling market. 
25. Electronic commerce is still a national phenomenon.  The larger the company, the more it 
sells via Internet.  A possible explanation could be:  Large and financially powerful enterprises are 
more likely to cope with existing obstacles and they generally have a higher ability to effect additional 
investments.  Furthermore, it is easier for them to  have access to specialised knowledge.  It can be 
assumed that large companies with subsidiaries are in the best position for expanding into foreign 
markets.  However, in summary it can be said that  SMEs and the so-called large companies encounter 
the same obstacles. 
26. Doing electronic commerce is primarily a ques tion of knowledge.  The know-how is from an 
interdisciplinary and dynamic natu re.  Managing and applying it requi res high flexibility.  The more 
markets into which a company enters, the more challenging it is to deal with difficulties. S/C/W/345 
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  27. It would be a significant facilitation for many companies and especially for SMEs, if the 
required knowledge was easier to access.  This mi ght reduce additional costs and simplify the process 
of opening up new markets.  It would be appreciat ed if members could examine their strategies to 
overcome the challenges regarding electronic commerce. 
 
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