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E‐Commerce » Trends, Country Focus | 02/04/2015

The emerging opportunities in European e-commerce


Eastern Europe might not be your first choice if you are expanding overseas, but it’s the fastest growing region on the continent when it comes to e-commerce – with opportunities for those prepared to make the first move.

Looking at the numbers, Ecommerce Europe expected the region to post growth of 47% for 2014, taking total turnover to $23bn (€20bn). In 2013, the growth rate was 37%.

That’s despite internet penetration of around 50%, or lower, and the fact that currently less than 25 per cent of people, on average, shop online.

As the digital infrastructure and logistics networks improve the potential is obvious. And already, retailers are taking advantage.

Germany’s Otto Group, for example, credits Eastern Europe with driving growth for its multichannel fashion retailer Bonprix over the past few years.

Which countries?

The definition of Eastern Europe varies. Otto Group specifies Poland, the Czech Republic, Slovakia, Ukraine and Russia. Ecommerce Europe focuses on Russia, Ukraine and Romania, but also includes other countries in the Balkan peninsula in the figures mentioned above. Research company yStats includes Turkey and Poland.

But whichever markets you look at, you’ll find a similar story as consumer trends slowly but surely follow their Western neighbours.

  • Russia is the largest market in Eastern Europe, with 24 million online shoppers recording sales of €15.5m. In 2013, it was the fifth fastest growing e-commerce market in the world in its own right. The same year, cross-border sales doubled and rich Russian consumers were no doubt responsible for web traffic to top international retailers growing by 400% that year.

    It has been predicted that revenues could reach €30bn by 2018, although a combination of politics, economics and the tightening of customs procedures could dent prospects for overseas players. News website has recently reported that China has managed to take advantage of the situation, and the weak currency, increasing its share of parcels being shipped into the country from 40% to 70% over the course of 2014 – at European retailers’ expense.
  • Ukraine might be another market you pass over because of the current tensions with Russia. But in November, Forbes magazine wrote an article asking whether the country could produce the next Silicon Valley (its tech industry is already worth $5bn). UK retailer Next launched its online service to the market the same month, offering free delivery, taking 5-7 days, on orders of more than €13.50. And the local postal network Ukraine Post announced in December that it wanted to accelerate deliveries for goods from the US and the UK.

    The e-commerce market in Ukraine is already worth in excess of €1.4bn, split between 18 million online buyers. And mobile shopping is growing quickly – according to yStats, 40% of smartphone users have already bought online (a similar figure to that seen in Turkey – a market where e-commerce has crossed the €1bn mark).

  • According to a report from software company Dotcom River, e-commerce turnover in Poland has reached €6bn, with more than 30% of consumers stating that they shop online. In 2013, it predicted online revenues would reach €11bn by 2015.

    According to Paypal, 10% of Polish consumers also said they made purchases from foreign retailers, and 83% said they would do so more, if those retailers offered free returns.

The cross-border trend

It seems cross-border shopping is particularly attractive in Eastern European markets, as consumers look for products they cannot source at home. Cross-border e-commerce grew by 48% in the Czech Republic in 2013, and more than half of its online consumers said they purchased goods overseas. In Poland, the figure was 45% and in Romania (a €600m e-commerce market) it’s 36%, according to PayPal.

Asendia key account manager Günter Kopp has seen an increasing number of clients interested in selling and marketing their goods in Eastern European countries. Many more are already comfortable shipping outsourced printed products from these markets, he adds.

"...the young generation will close the gap soon."

But he warns retailers not to forget about their potential target market in these countries. “The average purchasing power of those over the age of 55 is far below average when compared with Western Europe,” he says, referring to Gfk research that puts Germany’s purchasing power four times higher than Poland’s. “But the young generation will close the gap soon.”

The differences continue when you’re considering marketing strategies, he explains. Similar strategies will work wherever you are in Europe, but it’s better to target the over 55s in Eastern Europe with traditional communication, including catalogues, mailings and mass media advertising – and save web-based communications for the younger generations for the time being.

And, as always when you’re expanding overseas, Kopp suggests that you consider whether to adapt your website and product range, delivery and payment methods to the local market; ask yourself how you will handle returns; and spend time working out who your local competitors are, and what they’re doing. 

About Günter Kopp

Günter Kopp is Account Manager at Asendia Germany and specialised in E-Commerce for European markets.