Commercial due diligence in the Netherlands

If you are going to invest in a company with international expansion plans, you want to make sure that their product or service has good chances of being successful in the countries where you have ambitions.

This of course is also important for the Netherlands. Only with the right knowledge about demand, competition and regulations it is wise to invest in market entry.

Business opportunities in the Netherlands

The Netherlands is a highly developed and open market with specific characteristics that businesses need to be aware of before entering.

Key Market Numbers

The Netherlands is a stable and prosperous market with a strong economy and a high standard of living. Here are some key statistics to consider:

Population: Approximately 17.8 million (2023)
GDP per capita: Around $59,000 USD (2023), reflecting the country’s high economic output per person
Urbanization: Around 92% of the population lives in urban areas, with major cities like Amsterdam, Rotterdam, and The Hague driving much of the economic activity.
Economic Structure: Services account for around 70% of the Dutch economy, making it a services-oriented market, followed by industry and agriculture.
Ageing Population: Yes, the population is ageing, with a growing share of people aged 65 and over. This has implications for sectors like healthcare, retirement, and leisure services. The median age in the Netherlands is around 43 years (2023).

Language and Documentation

The official language in the Netherlands is Dutch, which is used in all official documents, government communication, and most business contexts. However, the Netherlands is one of the most English-proficient countries in the world.

Language Considerations: English is widely spoken, especially in business settings, with around 90% of the population fluent in English. This makes it relatively easy to use English for communication, packaging, and documentation. However, while English is acceptable for many, having Dutch translations for customer-facing materials may enhance your brand’s credibility and reach, especially in local markets.
Packaging and Documentation: While Dutch is preferred for certain sectors (such as food products or consumer goods), English packaging and documentation are generally acceptable, particularly in international business settings. However, in highly regulated sectors like pharmaceuticals and food, Dutch translations may be legally required.

Consumer and B2B Buying Behavior

Understanding local buying behaviors is crucial for success in the Dutch market. Dutch consumers and businesses share some common characteristics that influence purchasing decisions:

Consumer Behavior: The Dutch are known for their pragmatic and price-conscious approach to purchasing. They value quality, transparency, and sustainability. Consumer purchasing decisions are heavily influenced by clear and honest communication, as well as environmental impact. The Netherlands has a high rate of online shopping, with approximately 94% of internet users shopping online in 2023.
B2B Buying Behavior: In B2B transactions, Dutch businesses value directness, efficiency, and long-term relationships. Negotiations are typically straightforward, and transparency is highly regarded. Digital platforms are commonly used for procurement and business-to-business interactions.
Online Shopping: E-commerce is well-developed in the Netherlands, with a significant percentage of the population (around 94% of internet users) engaging in online shopping. This makes it a highly favorable market for e-commerce businesses.

Market Challenges and Opportunities

While the Netherlands offers many opportunities, it’s important to understand which products and services may struggle in this market. Below are some insights:

Products/Services that May Struggle: Products or services that do not align with sustainability and eco-friendliness may face resistance in the Dutch market. Dutch consumers are highly environmentally conscious, and businesses that do not consider sustainability may find it difficult to attract customers. Additionally, products that do not meet high-quality standards or lack transparency may struggle to gain traction.
Test Market Potential: The Netherlands is often considered a good “test market” due to its open economy, high levels of innovation, and digital readiness. It is particularly strong for testing technology-based solutions, e-commerce models, and sustainable products or services.

Comparing performance in existing markets

If the company the we are assessing already has sales in different countries, you can determine distributor performance or sales staff performance.

One do this by correcting the actual turnover with data about:

the buying power in the market;
the geographical reach of the distributor or sales team;
the competition intensity;
the number of years active in the market.

Combining the data of the various countries over time leads to a growth curve where overperformers and underperformers can be easily identified.

You can then do selective interviews what causes any underperformance, and you can take corrective measures.

A curve like this also helps to estimate the potential in a new market.

Before you focus only on the Netherlands

Please note that there are many countries in the world and the biggest ones or the ones nearby are not automatically the best choice. It all depends of the market growth, the competition and the barriers for entry.

Therefore we would advise you to make a short-list of at least three, but preferably five potential new markets and compare them against the same criteria.