In recent years, Eastern Europe has witnessed a surge in e-commerce, presenting ample prospects for business growth. This review delves into the distinguishing statistics of this region compared to the rest of Europe and explores the unique attributes of specific countries.
- E-commerce in Eastern Europe is in a phase of significant growth, with immense potential yet to be fully realized. Despite the remarkable expansion observed in 2020, the market remains relatively immature compared to other European regions in terms of volume. However, specific countries within the region exhibit the highest e-commerce growth rates in Europe.
- The ongoing digital revolution and the prevalence of a youthful population are exerting a positive influence on the region’s development. Estimates indicate that by 2025, e-commerce will constitute approximately 16% of the total retail trade. This progression is expected to give rise to new business models, commercial ecosystems, and innovative distribution channels.
- Moreover, there is a noticeable evolution towards omnichannel approaches in response to the escalating demand, as retailers experiment with diverse delivery and omnichannel strategies.
- Furthermore, marketplaces have emerged as influential leaders in the realm of e-commerce. Many brands have embraced marketplace models as a means of navigating the challenges posed by the pandemic, and this approach is advancing more rapidly than traditional trade, aligning with global trends.
Comparison to Other European Regions
The region includes: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, North Macedonia, Romania, Serbia, Ukraine, Moldova, Belarus.
According to the European Ecommerce Foundation’s 2022 report, 88% of the Eastern European population uses the Internet, with 48% engaging in online purchases. These figures represent the lowest indicators among all European regions.
The majority of Eastern European countries trail behind the rest of Europe in terms of both internet usage and online shopping participation.
Yet, when examining these metrics over a five-year period, it becomes evident that the region holds promise. Projections from the European Ecommerce Foundation suggest that the number of online shoppers in Eastern Europe will surge to 62% by 2023.
While Eastern Europe may lag behind Western and Northern Europe in market volume, it excels in terms of growth rates. As per ECDB, Serbia leads the top 10 in this regard. Serbia’s e-commerce is projected to expand by 23.6% between 2022 and 2026, which is twice the European average, and it is expected to reach a market value of $1.4 billion by 2026.
Belarus (21%), Bulgaria (20.5%), and Romania (19.6%) are also among the top ten most promising countries in terms of e-commerce growth rates. Despite their impressive growth rates, these countries are currently not positioned to compete with the leading European countries in terms of overall market volume. However, they do hold promising prospects and offer numerous untapped opportunities. The rapid progression of e-commerce is influenced by factors such as digitalization, the advent of the 5G network, and the impact of the coronavirus. Furthermore, there is a gradual increase in digital literacy among the population in Eastern European countries, and digital payment methods are gaining popularity.
According to Statista, Romania leads the region in terms of the volume of the B2C e-commerce market in 2022, with an estimated value of $10.8 billion, followed by Ukraine with $5.1 billion, and Bulgaria with $1.3 billion.
Serbia boasts a relatively high percentage of internet users, standing at 84%, a figure comparable to that of many European countries. Statistics reveal that in 2021, only 53% of consumers in Serbia engaged in online purchases. However, by 2022, this figure had ascended by 10% to reach 63%. This increase can be attributed to Serbia’s relatively youthful population, with 72% of all online shoppers falling within the 25 to 54 age bracket. Consequently, the e-commerce market in Serbia is poised for continued rapid growth.
As previously noted, Serbia takes the lead among European nations in terms of growth rates, with its e-commerce projected to expand by 23.6% from 2022 to 2026, resulting in a market size of $1.4 billion.
As per ECDB in 2022, the Serbian e-commerce market featured the top five largest online stores, which were:
- Gigatron.rs ($47.9 million in revenue).
- Tehnomanija.rs ($43.8 million in revenue).
- Bcgroup-online.com ($36.5 million in revenue).
The market is dominated by the three largest online stores, which collectively represent 26.2% of the market share.
In 2022, the online trading sector in Romania experienced an 11% upsurge compared to 2021, achieving a market size of $10.8 billion. Statista predicts that the market will demonstrate a compound annual growth rate (CAGR) of 16% from 2022 to 2025.
In 2022, 89% of the Romanian population accessed the Internet, and 51% engaged in online purchases. Despite 87% predominantly utilizing mobile phones for Internet access, more than half of online transactions, about 54%, were carried out using desktops. According to the GPeC study, nearly a third of Romanians, approximately 27%, favor purchasing from Chinese retailers, establishing AliExpress as the leading international marketplace in Romania.
- Legislative Updates: The Romanian government is in the process of crafting measures to boost e-commerce development, including the implementation of an electronic identification system, the introduction of digital ID cards, and the establishment of a regulatory framework for electronic signatures.
- Sustainability Initiatives: There is a noticeable shift towards greater environmental sustainability, with investments in logistics and the electrification of transport driving the growth of the C2C (consumer to consumer) market.
- Technological Advancements: According to a PwC survey, approximately three-quarters of Romanian companies are transitioning to cloud solutions and have intentions to enhance their capabilities in areas such as data analytics, cybersecurity, artificial intelligence, and machine learning.
- Sales Expansion: Despite substantial economic and geopolitical challenges, online retailers in Romania have experienced sales growth. This increase has been linked to heightened engagement from rural consumers, adaptable delivery and payment alternatives, and improved internet accessibility in rural regions.
As per ECDB in 2022, the Romanian e-commerce market featured the top five largest online stores, which were:
- Emag.ro ($845.3 million in revenue).
- Drmax.ro ($204.7 million in revenue).
- Philips.ro ($182.6 million in revenue).
The market is dominated by the three largest online stores, which collectively represent 29.4% of the market share.
The e-commerce revenue in Bulgaria amounted to $1.3 billion in 2022. Projections indicate that the e-commerce market in Bulgaria will grow to $1.588 billion by 2025. Presently, the share of B2C e-commerce in the total GDP is 2.14%, which is half of the European average.
In 2022, 83% of the Bulgarian population accessed the Internet, and 49% engaged in online purchases. The preference for purchasing from domestic sellers was prominent, with 96% of the population favoring national sellers, while cross-border sales constituted 36% of the transactions.
Despite over 60% of the population using smartphones, Statista’s data for 2022 indicates that the majority of online purchases, approximately 59%, were carried out using desktop devices.
Technological Advancements: E-commerce players in Bulgaria are guided by international trends in the use of technologies: artificial intelligence, machine learning, virtual reality, and Big Data. These technologies are widely used in marketing to automate recommendations, personalized content, and chatbots.
D2C Expansion: The surge in direct-to-consumer sales and subscription-based purchases is a noteworthy trend in Bulgarian e-commerce, particularly within the household chemicals and fast-moving consumer goods (FMCG) sector.
Market Dynamics: Major marketplaces and online retailers continue to dominate the Bulgarian e-commerce landscape. Despite many small and medium-sized enterprises maintaining their independent online stores, they also leverage marketplaces to extend their sales channels.
Sustainable Consumption: Increasing numbers of consumers are expressing interest in environmentally friendly products, compelling companies to revamp their product offerings and adopt more environmentally conscious shipping and packaging methods.
As per ECDB in 2022, the Bulgarian e-commerce market featured the top five largest online stores, which were:
- Emag.bg ($333.9 million in revenue).
- Technopolis.bg ($46 million in revenue).
- Obuvki.bg ($43.7 million in revenue).
The market is dominated by the three largest online stores, which collectively represent 32.8% of the market share.
In 2022, the e-commerce sector in Ukraine achieved a revenue of $5.1 billion. Projections indicate that the market size is anticipated to surpass $7 billion by 2025, displaying an annual growth rate of 18.76%.
In 2022, 90% of the Ukrainian population accessed the Internet, while only 57% engaged in online purchases. Analyzing the trend over a 5-year span reveals that even the pandemic did not significantly drive the growth of online shopping. Nonetheless, forecasts indicate that by 2023, the proportion of online shoppers is expected to rise to 73%.
As per ECDB in 2022, the Ukrainian e-commerce market featured the top five largest online stores, which were:
- Rozetka.com.ua ($246.2 million in revenue).
- Apple.com ($108.9 million in revenue).
- Makeup.com.ua ($46.3 million in revenue).
The market is dominated by the three largest online stores, which collectively represent 38.9% of the market share.
Statista forecasts that Croatia’s e-commerce volume is poised to attain $1.18 billion in 2023, with an anticipated annual growth rate of 9.73% continuing through 2028.
In 2022, 83% of Croatians accessed the internet, and 68% engaged in online shopping, with 36% making monthly online purchases. Furthermore, 98% of the population in Croatia uses smartphones to access the internet, signifying their expected prominence as the primary device for online shopping.
As per ECDB in 2022, the Croatian e-commerce market featured the top five largest online stores, which were:
- Ekupi.hr ($54.8 million in revenue).
- Pevex.hr ($45.4 million in revenue).
- Konzum.hr ($43.1 million in revenue).
The market is dominated by the three largest online stores, which collectively represent 43.1% of the market share.
Popular Payment Methods
As per Statista’s report, approximately 50% of e-commerce transactions in Eastern Europe were conducted using bank cards by 2022. E-wallets and bank transfers also emerged as popular payment methods, accounting for 24% and 15% of transactions, respectively.
Forecasts suggest that the utilization of digital wallets is projected to rise to 29.9% by 2024. This anticipated growth is attributed to the active use of smartphones by the younger demographic in Eastern Europe, leading to a preference for more convenient payment options.
Сhallenges and Risks
The transport infrastructure, encompassing road, rail, and air networks, exhibits subpar quality compared to the rest of Europe and necessitates further enhancements.
Underperforming D2C Market:
Direct-to-consumer (D2C) sales from manufacturers to consumers lack popularity in most Eastern European countries (with the exception of Bulgaria), despite holding potential, particularly within the fashion and fast-moving consumer goods (FMCG) sectors. To foster the expansion of the D2C market, resolving logistical obstacles is imperative, ensuring swift and cost-effective goods delivery to customers.
Legislative Underdevelopment in Environmental Practices, Returns, and Recycling:
Several Eastern European countries, being relatively new to the EU, have nascent legislations pertaining to ecological issues, return policies, and recycling practices. Inadequate adherence to consumer protection laws results in a lack of accountability for product durability, waste management, and environmental conservation by manufacturers and retailers. Non-governmental organizations advocate for sustainable and environmentally friendly consumption and production to address these challenges.
Adoption Hurdles for Modern Technologies:
While small and medium-sized enterprises have a strong presence in the online market, establishing their own digital storefronts or partnering with marketplaces, they encounter obstacles in embracing modern technologies, such as ChatGPT, machine learning, and other AI-driven solutions. The implementation of disruptive technologies is impeded by funding shortages, inadequate digital skills, and gaps in legislation, hindering substantial transformations within local Eastern European markets.
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