According to recently published global research, the e-commerce market (e-commerce) will account for twenty percent of global trade in 2022, which is even ten percent more than five years ago. The online retail space is becoming increasingly crowded with competition. The rapid rise of e-commerce can be attributed to many factors, but the COVID-19 pandemic is certainly the main and largest one.
Both domestically and globally, it was expected that the growth of e-commerce would slow down after the pandemic. However, those who were ‘hooked’ by the corona during the lockdown have not completely unhooked from the lure. For example, the main players in the largest e-commerce market, the American one, still plan to grow sales this year despite a significant return of customers to physical stores. The top 15 are expecting sales revenue of $645 billion, with Amazon, Walmart, eBay, Apple, and Home Depot among the top five. Unlike last year, when the top ten online retailers in the U.S. achieved a record 51 percent sales growth, this year that growth is expected to slow to 17 percent.
Opportunities for Growth
In Croatia, unfortunately, we still do not have exact data that would be comparable, and online retailers are not willing to go public with their business results.
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—– We do not yet have any data for Croatia, but the situation in the world shows that e-commerce continues to grow. It grew the most from 2019 to 2020, but even after the lockdown, growth continues to be above average because now online shoppers are people who previously did not have that habit. According to our survey of online shoppers conducted last year with over 4,000 participants, as many as 38 percent of them shop at least once a month – emphasized Marcel Majsan, founder of the eCommerce Association of Croatia.
He also added that during the pandemic, the home and electronics equipment category profited the most, and the largest jump was observed in the food and beverage category and in the gaming industry.
– In our food and beverage category, Konzum currently dominates because other FMCG chains have not yet moved online, which is why we believe there is the greatest opportunity for growth. Additionally, the largest growth has been observed in the marketplace sales model, where Bazzar is growing the most – noted Majsan.
In Food, Konzum Dominates
It is unclear why other FMCG retailers have not invested in the online sales channel until now; it remains to be believed that only Konzum has managed to organize logistics and organizational capacities, recognizing the market potential back in 2002.
– Today, our customers choose from over 12,000 items and many options for pickup and delivery, such as regular Konzum delivery to the door, the ‘Pick Up for Collection’ option at selected stores, ‘Delivery Partner in Collaboration’ with Uber, or drive-in options in Zagreb’s Vrbanima, and we are constantly working on new solutions. Konzum’s online store recorded a demand increase of up to ten times in 2020 compared to the previous year. In addition to the increased number of orders, the quantity of products in orders doubled compared to regular business. We quickly responded by increasing our own capacities, utilizing additional resources, technological innovations, and launching additional delivery and pickup options – they stated at Konzum.
In the first half of 2021, Konzum’s online store continued to grow, 19 percent compared to 2020, but this slowed down at the end of the year due to a favorable epidemiological situation, which again recorded higher sales growth in physical stores. More than 15 percent of purchases are made through Konzum’s mobile app, and that share will continue to grow.
Big and Small
The largest online retailers in Croatia are also the largest retailers: emmezeta.hr, xxxlesnina.hr, links.hr, sanctadomenica.hr, elipso.hr, sportvision.hr, bazzar.hr, aboutyou.hr, as well as lutrija.hr and supersport.hr. Majsan says they will always have more successful online businesses than those that only engage in e-commerce sales. There are not many successful internet stores in Croatia that sell exclusively online, except for the E-kupi platform, one of the first marketplaces in Croatia, and Bazzar, which is rapidly growing every year, along with mall.hr.
There are many small web stores whose owners do not have an established large business system behind them, which is why they struggle with legislative changes and adaptation. Many of them, unfortunately, especially from the domain of family farms, did not survive the corona. When you start selling as a producer, you are not aware of all the challenges you must face – from the legal aspects you must satisfy to tricky logistics, especially in food delivery that is transported under special conditions, to understanding the customer journey, that is, the path a customer takes from discovering a brand to the post-sale process.
– Fifty percent survive the first year of business, but those who do well grow every year. There is no webshop that was successful two years ago that is performing worse today – said Majsan.
The most common inquiries his association receives from merchants are related to legislation; a lot has changed in the last year.
– For example, many new rules affecting VAT regulations, those related to cross-border online sales to end customers, began to apply from July last year, and from May 28 this year, a new Consumer Protection Act is in force, which brings changes to the complaint process, advertising methods, and planning and implementing discounts, and from August we must start displaying prices in euros and kunas. Webshops must constantly adapt, and many of them either do not have enough knowledge in the company or do not have the time to deal with it. That is why we have introduced a mentoring program for our premium members, who now have 25 hours available that they can use with twelve of our mentors – explained Majsan.
Spoiled Customers
Regarding new trends in the e-commerce market, he mentioned the rise in popularity of new payment methods (cryptocurrencies, KEKS Pay, Aircash, buy now, pay later) and new forms of delivery (parcel lockers, or pick-up points).
– The popularity of Black Friday promotions and cross-border sales is globally increasing, which is why it is more important to check the security of web stores. More and more customers decide to purchase based on reviews, and that is why we at the eCommerce Association of Croatia have enabled the collection of reviews using our trustmark, Trusted Shop, which allows customers to easily discover which online stores are safe – concluded Majsan.
Customers today are spoiled, they have many choices, and you must be at their service all the time. Therefore, a whole new marketing ‘science’ oriented exclusively towards e-commerce sales and understanding the preferences and habits of already ‘hooked’ customers has developed in the global market, in order to keep them on the same hook.
