Eastern Europe & The Commonwealth of Independent States

In 2020, the economy of Russia shrank by 3.1%, Ukraine’s by 4.2%, Bulgaria’s by 3.8%, Estonia’s by 2.9%, Latvia’s by 3.6%, Lithuania’s by 0.8%, and Romania’s by 3.9%. Although specific conditions varied, all of the states in Eastern Europe and the Commonwealth of Independent States were hit hard by the pandemic.

In Russia, the economy suffered from the fall in demand for oil and gas. Rosneft, for instance, one of Russia’s leading oil and gas extractors, saw a 10% decline in output in the first quarter of 2020 alone. Russia crude exports for 2020 were down 11% on the previous year. This was offset somewhat, however, by an increase in non-energy exports, particularly in agricultural products, of 20% on the year before.

In Ukraine, the contraction of 2020 ended four years of growth. The economy suffered not just from the impact of the pandemic, but also from the ongoing drain imposed by the seven-year war and Russian occupation in the country’s eastern provinces. According to one study, Ukraine’s per capita GDP shrank by 15% over the course of the first four years of the war.

The economies of the EU and eurozone countries such as the Baltic states and Romania are tightly bound to the fate of the other single-market countries. According to a report by Estonia’s parliament, the Baltic economies were cushioned from the worst impacts of the COVID-19 pandemic by their close links to the Nordic economies. The latter performed relatively well during the pandemic, enabling trade with their neighbours to continue with as little interruption as possible.

Bulgaria’s economy was impacted significantly by the reintroduction of lockdown at the end of the 2020, as a second wave of the virus swept over the country. The pandemic was particularly damaging to one of the country’s main sources of income: tourism. The World Bank has highlighted the importance of not withdrawing government economic support too quickly, even once the crisis phase of the pandemic has passed.

Another good economic performer was Romania. After a decade of solid growth, the government reacted quickly to the crisis, imposing lockdown and pumping a stimulus worth over 4% of GDP into the economy. Sectors such as tourism and hospitality were severely affected by the pandemic. But the overall economy is expected to bounce back at a rate of 7% in 2021.

Nor is Romania alone in this. All the countries covered by this report are expected to return to robust growth in 2021. Russian GDP, for instance, is forecast to grow by 3.8%, Ukraine’s by 4%.

Eastern Europe & The Commonwealth of Independent States
E-commerce % of total retail 6.3%
E-commerce completed on a mobile device 34%
World
E-commerce % of total retail 20%
E-commerce completed on a mobile device 53%

E-commerce in Eastern Europe & the CIS

The e-commerce market

On the eve of the pandemic, the e-commerce market in Eastern Europe and the CIS was worth US$46 billion and was growing at a rate of 14% a year. Eastern Europeans complete just under 30% of their online purchases using a mobile device. The average online shopper spends US$271 a year with e-commerce merchants.

According to one preliminary estimate, the e-commerce market in Russia grew by up to 40% in 2020 and is expected to grow by 10-15% a year. In Ukraine, e-commerce grew by an estimated 41% during 2020, in Romania by 30%. Eastern Europeans and citizens of CIS states are turning to e-commerce for public health reasons but also for convenience.

  • Card-based payments
  • Cash-based payments
  • Bank Transfer
  • Wallets
  • Other
[{"label":"Card-based payments","value":"33"},{"label":"Cash-based payments","value":"24"},{"label":"Bank Transfer","value":"17"},{"label":"Wallets","value":"23"},{"label":"Other","value":"3"}]

The Payment Landscape in Eastern Europe & the CIS

The local payment culture

The most popular form of online payment in this region is card based payment, with a 33% market share of all e-commerce transactions. This is despite just 18% of people having a credit card. This suggests a large number of people who are connected but who aren’t shopping, or at least aren’t shopping regularly, online.

Online shoppers use cash in 24% of e-commerce transactions, e-wallets in 23%, bank transfers in 17%, and a range of other payment methods in the remaining 3%. The card market is split between Mastercard (43%), Visa (40%), and various other and local card schemes (18%).

E-commerce market size ($USD billion)
Eastern Europe and the CIS 49
World 4269
E-Commerce spending per capita ($USD)
Eastern Europe and the CIS 271
World 1080

Enabling and limiting factors

Almost 70% of the population of this region has a bank account. But this figure masks significant differences in financial inclusion in different markets. In Latvia, for instance, 93% of the population has a bank account; whereas in Ukraine it’s just 63%. Understanding the financial maturity in a market, and how its people save and pay, will be an important part of any merchant’s entry strategy for this region. There is no “one size fits all”.

Seventy-eight percent of the region’s inhabitants have an Internet connection of some kind. And 60% have a smartphone connection. Again, however, this figure masks significant disparities. In Estonia, these figures are 91% and 65% respectively. In Bulgaria, this drops to 71% and 60%. The EU members among this group all have digital inclusion and development plans which are updated annually.

Russia, the largest country in this region, is 75th in the World Bank Global Logistical Performance Index. Particularly in sparsely populated rural regions, delivery may present a challenge. Even in some of the region’s smaller countries, logistics may provide challenges. Latvia, for instance, is 70th on the index. Even though it’s a comparatively small country, particularly in comparison to its neighbours, it’s still roughly a third again the size of Denmark with a population less than half Denmark’s five million. Companies entering the Eastern Europe and CIS market should investigate local delivery arrangements and costs, particularly for the last mile. 

Conclusion

Eastern Europe and the CIS are a highly diverse group of countries with different challenges and consumer preferences from one market to the next. A strategy that works in Estonia, for instance, may not be right for Ukraine or Russia. In general, however, these markets are well connected, with their citizens increasingly used to shopping online. And lockdown has, as everywhere, brought new demographics online for the first time.

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Eastern Europe & The Commonwealth of Independent States

General Information

  • Population 313m
  • Population 15 + 252m
  • Online Population 244m
  • GDP ($US billion) 2,540bn USD
  • GDP per capita ($US) 8,103 USD
  • Card-based payments
  • Cash-based payments
  • Bank transfer
  • Wallets
  • Other
[{"label":"Card-based payments","value":"33"},{"label":"Cash-based payments","value":"24"},{"label":"Bank transfer","value":"17"},{"label":"Wallets","value":"23"},{"label":"Other","value":"3"}]
Banked population
  • Eastern Europe & The Commonwealth of Independent States 67%
  • World 67%
Internet penetration
  • Eastern Europe & The Commonwealth of Independent States 78%
  • World 62%
Credit card penetration
  • Eastern Europe & The Commonwealth of Independent States 18%
  • World 19%
Smartphone penetration
  • Eastern Europe & The Commonwealth of Independent States 60%
  • World 70%

Eastern Europe & The Commonwealth of Independent States

The E-Commerce Market

E-commerce % of total retail
  • Eastern Europe & The Commonwealth of Independent States 6.3%
  • World 20%
E-commerce completed on a mobile device
  • Eastern Europe & The Commonwealth of Independent States 34%
  • World 53%
  • E-commerce market size ($US billion) 49bn USD
  • E-commerce spending per capita ($US) 271 USD

Eastern Europe & the CIS

Eastern Europe & the CIS payment methods

BitPay Type Wallet Regions Asia Pacific + 5 Hyperwallet Type Bank transfer, Gift card, Prepaid voucher Regions Asia Pacific + 5 Market relevance High PayPal Type Wallet Regions Asia Pacific + 5 Market relevance High PaysafeCard Type Prepaid voucher Regions Asia Pacific + 5 Market relevance High PaysafeCash Type Cash Regions Eastern Europe & The Commonwealth of Independent States + 2 Paysera Wallet Type Wallet Regions Asia Pacific + 5 Market relevance High PayU Type Bank transfer Regions Asia Pacific + 4 Market relevance High SEPA Direct Debit Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States + 1 Market relevance High Skrill Type Wallet Regions Asia Pacific + 5 Market relevance High Trustly Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States + 2 Market relevance High TrustPay Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States + 1 Allied Wallet Type Wallet Regions Asia Pacific + 5 Market relevance High Apple Pay Type Wallet Regions Asia Pacific + 5 Market relevance High Amazon Pay Type Wallet Regions Asia Pacific + 3 Market relevance High Boku Type Carrier billing Regions Asia Pacific + 5 Market relevance High DaoPay Type Carrier billing Regions Asia Pacific + 5 Market relevance High Google Pay Type Wallet Regions Asia Pacific + 5 Market relevance High Luminor Estonia Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States Market relevance High Masterpass Type Wallet Regions Asia Pacific + 5 Market relevance High MAXIMA Type Cash Regions Eastern Europe & The Commonwealth of Independent States Market relevance High MIR (National Payment Card) Type Local payment card Regions Eastern Europe & The Commonwealth of Independent States Market relevance High Mobiamo Type Carrier billing Regions Asia Pacific + 5 Market relevance High MobilePay Type Wallet Regions Eastern Europe & The Commonwealth of Independent States + 1 Market relevance High MTS Money Wallet Type Wallet Regions Eastern Europe & The Commonwealth of Independent States Market relevance High Orange Money Type Wallet Regions Eastern Europe & The Commonwealth of Independent States + 2 Market relevance High PayPoint Type Cash Regions Eastern Europe & The Commonwealth of Independent States + 1 Market relevance High Razer Gold Type Wallet Regions Asia Pacific + 5 Market relevance High Samsung Pay Type Wallet Regions Asia Pacific + 5 Market relevance High SEPA Credit Transfer Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States + 1 Market relevance High QIWI Wallet Type Cash, Wallet Regions Eastern Europe & The Commonwealth of Independent States Market relevance High SWIFT Type Bank transfer Regions Asia Pacific + 5 Market relevance High WebMoney Type Wallet Regions Asia Pacific + 3 Market relevance High YooMoney Type Wallet Regions Asia Pacific + 2 Market relevance High AirCash Type Wallet Regions Eastern Europe & The Commonwealth of Independent States Market relevance Medium GoPay Type Wallet Regions Eastern Europe & The Commonwealth of Independent States + 1 Market relevance Medium Huawei Pay Type Wallet Regions Asia Pacific + 1 Market relevance Medium Secure Remote Commerce (SRC) Type Wallet Regions Asia Pacific + 5 Market relevance Medium SelfPay Type Cash Regions Eastern Europe & The Commonwealth of Independent States Market relevance Medium SEPA Instant Credit Transfers (SCT Inst) Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States + 1 Market relevance Medium Wallet One Type Wallet Regions Asia Pacific + 4 Market relevance Medium Boloro Type Wallet Regions Asia Pacific + 5 coop pank Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States EasyPay Type Wallet Regions Eastern Europe & The Commonwealth of Independent States ePay.bg Type Wallet Regions Eastern Europe & The Commonwealth of Independent States G2A Pay Type Wallet Regions Asia Pacific + 5 i-Unija Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States LHV e-invoice Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States Medicinos Bankas Lithuania Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States Moneta.ru Type Wallet Regions Eastern Europe & The Commonwealth of Independent States NETELLER Type Wallet Regions Asia Pacific + 5 PayPost Type Cash Regions Eastern Europe & The Commonwealth of Independent States Perlas Type Cash Regions Eastern Europe & The Commonwealth of Independent States Swedbank Type Bank transfer Regions Eastern Europe & The Commonwealth of Independent States Twisto Type Wallet Regions Eastern Europe & The Commonwealth of Independent States + 1 Splitit Type Instalments Regions Asia Pacific + 5