Last year, the e-commerce market in Ukraine slowed the pace of growth - instead of the projected 25%, it increased by 17%. This year the situation will repeat, predict retailers.
Recent years, the annual growth rate of online market of Ukraine money was 20-30%, which is comparable to the dynamics in the market of China, said the founder of the group EVO Mykola paliyenko. Market participants expected that these figures will continue in the next few years. But in 2019, something went wrong.
For the first time about the decline in the growth rate of market growth the group said EVO. According to them, the market for the first 11 months of last year increased by 17%, instead of the expected 25%. “Indeed, the growth rate decreased. If in 2018 we had an increase of conversion of about 30%, but this year 25%,” says Director of marketing network “Hello,” Arthur matkovskiy. Indirectly, this confirms the number of visits to online-shops. According to Similar Web, last year it dropped 11 players from the TOP 20, in particular from Rozetka (-18,3%), Citrus (-31,8%), Comfy (-21,6%), Kasta (-17,7%), Intertop (-1,3%), MakeUp (-2,6%), etc.
What is the reason?
Market participants referred to a variety of causes the suspension of growth of e-commerce market.
Shipping. In EVO said that the reason for this increase in the cost of delivery. For the year, on average, it increased by 10%, the company said in early December last year. “On average, the buyer pays for the item and 5-15% of the value of the goods, which by world standards is expensive, noted in the company”, — explained in the EVO. The increase in the cost of delivery was not through tariffs, but at the expense of growth of cost of services, said a top Manager of a large market-place, asked about anonymity. “Last year, significantly increased the wages of employees in this sector,” adds the source Retailers.
The share of delivery to the Department of logistics of the company or to the customer's door is reduced, says Deputy General Director for commercial issues, Logistics Denka Anton Poverin. Thus, according to him, increasing delivery to the distribution points that belong to the online store or brick stores antonline players (there are offline and online stores). The majority of retailers still leave this service free for the customer. In Moyo noted that for the past year they have significantly increased the share of services pick-up (ordered online — took in the brick store), but did not specify by how much.
Do not agree with these findings a top Manager of a logistics company: “shipping has not played a significant role in reducing the dynamics of the online market. After all, the consumer was able to shift to other delivery channels. The reason is that the players focused on improving warehouse processes at the expense of speed of delivery”.
Crossborder. Another reason is the growth of crossborder (cross-border purchases — Ed.) influenced, in particular, the strengthening of the hryvnia, said a top Manager of one of the logistics companies, asked about anonymity. The hryvnia began to strengthen last year, for the first time in the last few years down in December below $ 23,7 UAH/$. Over the past year, the hryvnia has appreciated against the dollar by 19%, and the average value was 25,85 UAH/$.
In “Ukrpochta” said that for 10 months of the 2019 orders on AliExpress increased by 70% — this brought the country on the 2nd place on rates of growth in the marketplace. The “New mail” in 2019, the number of international shipments increased by 26% to 3.4 million In particular, 20% more orders from the US, three times more than Poland, two times more from the UK and 30% more from China. The automatic parcel terminals MeestExspress mainly orders coming from overseas stores.
The decline in the segment of household appliances and electronics. In 2019, it rose by 5%, while in 2018 — 23%, writes the edition “New time”, adding Retailers that data is provided by GfK.
This segment has a significant market share in e-commerce. In the TOP 20 most visited online stores and marketplaces of Ukraine of 11 companies engaged in sales of home appliances and electronics.
The complexity of the transformation of online and offline players. “The market is hampered by the complexity of the transformation within companies: the speed of implementation of new technologies, the lack of strong professionals working with these technologies and the cost of implementation,” says marketing Director of group of companies Argo (develops a network of Benetton, Parfois, Orsay, Piazza Italia, Desigual, OVS, Penti and Mango) Alexei Popov.
Network MebelOk note that the growth of e-commerce slows low dynamics of growth of purchasing power.
Consumer power and the Internet penetration. E-Commerce director Foxtrot Kirill Popov-Cherkasov says that the dynamics of growth of the online market directly connected with the share of Internet users in the structure of the population, the average age of the user, accessibility and dissemination of technology and communication channels.
In 2019 in the major cities, Internet penetration grew by 3 percentage points to 74%, and in settlements with a population of less than 100,000 inhabitants — by 17 percentage points to 70% (data Association). However, infrastructure and logistical capabilities, the purchasing power in large cities is higher. That is, we see a good positive trend in overall audience growth and penetration, but it disproportionately affects increase of consumption. As a consequence of the slowdown previously observed growth, summed up Cyril Popov-Cherkasov.
Predictions for 2020
Expect that trend will continue in 2020, says Arthur matkovskiy of “Hello”. “We do not exclude that for beginners, it's still "numerowana", that is, more active growth. For larger players - slow the pace,” he says. For example, last year, For example, of the TOP 20 attendance increased significantly from Eva (+65,5%), the Internet-store of electronics Elmir (+41.8%) and children's clothes Panama.ua (+51,72%).
The decline of e-commerce is a natural process, if there are no surprises with the projected macroeconomic indicators such as GDP, inflation and average exchange rate of the dollar, we can expect and count on further increase in the online segment in the future, says Kirill Popov-the magazine of the Foxtrot.
Author: Liudmyla Budina