In Eastern Europe and the Commonwealth of Independent States, the value of e-commerce is growing at a rate of 14%. This is eye-opening, given that recent months have been challenging in the region. In October 2019, the World Bank revised its forecast for the Russian economy, predicting it would grow by just 1% rather than 1.2% as previously forecast. The Ukrainian economy was expected to grow by around 3% in 2019, down from 3.3% in 2018. In Romania, the economy was expected to grow by 4% in 2019; respectable yet significantly down on the incredible 7% growth rate posted in 2017. The region covered by this report is large and diverse. But in all the countries, despite global headwinds, economies and e-commerce markets are showing strong growth.
The Local Payment Culture
The most common payment method across the region is credit or debit card — used in 34% of all online transactions. However, this average figure hides wide regional discrepancies. In Kazakstan, for instance, consumers pay for 60% of online transactions with cash and only 20% using a card. In Latvia, these figures are almost completely reversed, with consumers using cards in 49% of e-commerce purchases and cash in just 12.5%1. Even when a large percentage of transactions are paid for by card, the cards used may be local, rather than the big international brands. In Russia, for instance, 20% of the card market has been captured by local schemes.
The E-Commerce Market
To understand what was happening in e-commerce in Eastern Europe and the Commonwealth of Independent States, PPRO researched eleven of the region’s most promising markets. These markets were Bulgaria, Estonia, Kazakhstan, Latvia, Lithuania, Romania, Russia, and Ukraine.
E-commerce in these markets is growing at an average rate of 14%. 5% of all retail sales are made online. The average online consumer spends $702 a year. The growth in e-commerce is driven by the same factors as in other markets — the increasing ubiquity of high-speed Internet, consumer price sensitivity and the improvement in delivery networks. For the region as a whole, 21% of all online sales were cross-border.
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PPRO Country Insight Bulgaria
The latest consumer data for Bulgaria show consumer confidence flatlining throughout much of 2018 but up 2.3 points on the end of 2017. According a report by the EU Commission, wages in Bulgaria are growing faster than productivity is rising, one of a few countries in which this was the case.
PPRO Country Insight Estonia
Sometimes it feels as if Estonia, a nation of just 1.3 million, is trying to turn itself into a sort of online Switzerland. Having digitised almost every aspect of its own society – Including voting, applying for a driving licence, or filing taxes – it is now attempting to recruit new, and entirely virtual Estonians from abroad.
PPRO Country Insight Latvia
Latvia is one of the three Baltic republics which gained independence from the Soviet Union in 1991. Historically, the country is Lutheran but is now largely secular. Just over 60% of the population speaks Latvian, a Baltic language closely related to Lithuanian. Around a quarter of the population speak Russian. The country’s population is just under 2 million.
PPRO Country Insight Lithuania
Once part of what was, at the time, Europe’s largest state – Polish-Lithuanian Commonwealth – Lithuania is now a small, Baltic republic. Its population of just under three million is around 80% ethnic Lithuanian. The largest minority are ethnic Russians.