Updated: Dec 1, 2020
In an uncertain economic environment, e-commerce digits in Romania have been decidedly good over the past year. Overall, US$2,360m of revenue will be generated by the end of 2020, which corresponds to a year-by-year growth of 38.7%. Buyers have also grown, with estimates now at 8.3m, an increase of 10%. This means that not only new consumers are entering the market, but existing consumers are buying more.
The latter figure had been – in other ways – anticipated 4 weeks ago by the CEO of eMag, who explained in an interview with Stirile Pro TV how the number of purchases per user, during the pandemic, rose from an average of 2 to 4 per year.
So, all is well, even if 2020 is ending with a series of indicators that do not take the growth forecasts for the next year for granted. There will certainly be an increase, even double digit, but it seems difficult to replicate the growth of the last 12 months
What will be decisive for the growth of e-commerce?
Pervasion among social media users who do not buy online.
The Romanian population is not infinite, on the contrary, it’s decreasing year by year. Domestic demand for goods and services doesn’t benefit from a significant increase in households. So, the possibility of growth remains in the mere ingress among users who today choose not to buy online, despite being exposed to this message. To date, there are just over 8 million e-commerce users. Considering the total number of social platforms users of 11 million, we can estimate a potential market of an additional 3 million.
We decided to rely on social platforms users, more active than all internet users in the country (15 million), precisely because of a higher frequency of use of the medium and stimuli related to online advertising.
This must, however, be mitigated by the purchasing power of the households. In 2021 we won’t probably witness a significant increase in jobs. Since 2015, unemployment has fallen by one percentage point each year, except in 2020, where it has stabilized to the same levels as in 2019. The effects of the second lock-down in progress at work are not yet certain.
A good estimate for the growth of online buyers for 2021 is therefore 9 million, an increase of 700,000 buyers.
The performance of the fashion industry
While the current situation has led many families to use the web to buy goods of basic necessities, we must not forget that it is the fashion industry that accounts for 40% of online sales in 2020 (US$943 / US$2,360m) and significantly supports annual spending per user (US$282.83).
The determining factors for the fashion growth in Romania are the adoption by retailers of more "inspire and sell" features, through social channels. In this case, checking out via Instagram for all the fashion sector, is one of the most important growth drivers. On this platform – which, however, is not the most important in the country – much of the game is played between Fashiondays.ro, eMag.ro, Epantofi.ro. Determinant, for us, is the development that the international HM and Zara will bring , strong presences in the country and potentially with more access to innovative solutions.
Our forecast is an increase in annual expenditure per user, resulting from better demand and a much easier conversion of those who already buy more, than an enlargement of the segment.
The improvement of the logistics model compared to urbanization
In Romania, shipping costs – compared to more developed markets – still affect the development of the sector. In this regard, the e-commerce doesn’t attend 50% of the extra-urban population and there are no significant changes in the rate of urbanization in 2021. We will, therefore, no longer have more people who can benefit from a cheaper and faster shipping system.
Yet an improvement in the logistics network remains crucial. New players are organizing, especially under the influence of the development of drop-shipping. Here, the last mile of the game is in customer service. Frequent closures between cities, unpredictable lock-down scenarios make the logistics world less certain and do not allow forecasts.
How will e-commerce go in 2021? Do you have a company that sells or wants to sell online?
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