Ecommerce vs Retail: Where the Category Actually Trades

The tidy story we told ourselves in 2019 was that online would eat physical, and by the end of the decade the specialist shop on the high street would be a curiosity. The tidy story was wrong in both directions. Online did not eat physical, and physical did not stage the analogue revival that a certain kind of trade-press writer kept predicting. What happened instead is that the two channels quietly stopped being competitors and started being complementary limbs of the same customer journey. The 2025 numbers make that clearer than any argument could.

Online now accounts for roughly 60 to 65 percent of category GMV across Western Europe, and something closer to 50 to 55 percent across the Balkans, Central Europe and the Iberian markets. Those are aggregate figures and they conceal a wider spread: in the Nordics online share is nearer 75 percent, while in Italy and Greece physical retail still holds close to half the market. The direction of travel is uniformly toward digital, but the pace of that travel is set by local logistics infrastructure and consumer trust in home delivery, not by any one operator’s strategy.

The unit economics have converged more than people realise

Ten years ago the online operator had a structural cost advantage: no rent, lean staffing, and inventory turns that a physical shop could not match. That advantage has narrowed to almost nothing at the smaller end of the market. Digital marketing costs have climbed sharply — customer acquisition on paid social is running at two to three times the levels of 2019 for this category — and the operational overhead of running a compliant payments stack, discreet fulfilment and a real customer-service function has grown into a proper cost line. The healthier online operators now run gross margin structures that look remarkably similar to those of well-run specialist chains, with the difference showing up mostly in fixed-cost intensity rather than variable margin.

That convergence explains why the online tier has professionalised so visibly in the last three years. A renomirani distributer or well-run D2C operator now looks and behaves like a proper retailer — inventory discipline, forecasting, real category management — because the margin cushion that once forgave amateurism has evaporated. Sites like eroticshop.me that treat category management as a real function are the ones consistently gaining share against both marketplaces and legacy physical chains.

What each channel does better

The channels have settled into fairly clear specialisations. Online wins on assortment breadth, discretion, price transparency and repeat purchase. If a consumer already knows what they want, or wants to browse widely in private, the online experience is materially superior and no amount of physical merchandising will bring them back into a shop. The category is at roughly 70 percent repeat-purchase share online, which is higher than any physical operator can plausibly match.

Physical retail wins on discovery, tactility and expertise-led selling. A shopper who does not know what they want, who wants to feel the product weight, or who wants to talk through a category — first-time BDSM buyers being the archetype — is materially better served by a well-staffed boutique than by any website. The physical operators still trading well in 2025 are almost universally those who have leaned into that expertise-led role, rather than trying to compete with online on price or assortment.

There is a third case that both channels are still working out: click-and-collect. It sounds obvious, and in categories like fashion it is table stakes, but for adult retail the discretion economics are complicated. A significant share of the customer base would rather receive a plain box at home than walk into a shop with a branded bag, and click-and-collect only works where the collection point is itself discreet. A diskretna dostava proposition remains, for now, the winning bet.

Regional variation matters more than the headline

The Balkans are worth calling out because they show the pattern in miniature. Cross-border logistics into and out of the region have improved sharply since 2022, which has enabled operators like https://eroticshop.me/ to run a serious multi-country D2C proposition without the infrastructure burden that pan-European players carry. Roughly a third of orders in the region now cross a national border on their way to the customer, which was closer to one in ten five years ago.

That regional dynamic tells us something the aggregate figures obscure: the boundary between online and offline is being redrawn along logistics lines rather than product lines. Where a specialist operator can deliver in two to three working days across a currency zone, the online share expands quickly. Where customs paperwork, VAT reconciliation or last-mile fragility slow things down, physical retail keeps its position. The Balkan situation, with its mix of EU and non-EU jurisdictions, is a real-time laboratory for how those trade-offs shake out.

The next three years

I expect online share to keep grinding higher, at maybe 150 to 250 basis points a year across the bloc, with physical retail stabilising rather than collapsing. The physical operators who have made it this far have largely done the painful work of narrowing assortment, raising service standards and repositioning as specialists. Their footprint may not grow, but their per-shop economics are, in most cases, healthier than at any point in the last decade.

Meanwhile, the online tier will keep concentrating. The middle-tier operators — too small to have proper category management, too large to be a hobbyist project — are the segment most exposed. The winners at the top of the online market will be those who look, in every respect that matters, like a proper retailer. The kompletan katalog model, executed with real operational rigour, is what a mature category looks like when the growth story stops being about channel and starts being about execution.