Q&A with Yuriy Gagen, head of the marketing and advertising department with the MATRIX.UA electronic commerce company
Yuriy Gagen is head of the marketing and advertising department with the MATRIX.UA electronic commerce company where he has worked since 2003. Kyiv-based MATRIX.UA began operating in 1999 as a pioneer of electronic commerce in Ukraine. The company currently has 60 employees that run an online store offering some 10,000 items for purchase, including mobile phones, computer accessories, office equipment and household appliances.
The company works with leading distributors and cooperates closely with the regional offices of global electronic giants such as HP, Apple, Western Digital, and General Electric.
In his interview with the Post, Gagen noted the majority of Internet shops in Ukraine lack the reliability and resources needed to effectively run an e-business.
KP: What tendencies are guiding the development of Ukraine’s young e-commerce market? In what direction is the market evolving?
YG: Today’s e-business in Ukraine is experiencing a rapid upsurge for several reasons. First, a tremendous number of people become new users of the Internet every day. They are getting to know the Internet as a unique means of communication, an excellent and a very convenient source for all kinds of information and a nearly inexhaustible source of entertainment. Generally speaking, our potential client base grows as the number of new Internet users increases in Ukraine. On the other hand, lots of young and ambitious people these days have started to hastily create websites without a clear idea of the issues they are likely to run into and what kind of financial means and other resources they should have in order to start and organize an Internet shop. As a result, the market currently includes several hundreds of Internet shops that are lacking resource bases, knowledge of business ethics, experience in working with clients and no understanding of service quality.
KP: From mobile phones to laptops to toys, what are the most popular e-commerce goods and products?
YG: Undoubtedly, cell phones, personal computers, computer equipment and various household electronic appliances garner the most demand.
KP: Regarding e-commerce clientele, what demographic groups are the most frequent customers?
YG: Today every electronic shop attracts the type of clients it is looking for, and vice versa. Unfortunately, a large group of unreliable clients has appeared in Ukraine’s e-commerce sector thanks to the myth which can be summarized as “Internet goods are always cheaper.” These people look for the lowest market prices and are ready to sacrifice fast delivery, quality service and even supplier reliability in order to save a few hryvnias. These clients are unreliable for several reasons. First, there is a high probability that a company may be wasting its time making a delivery since unreliable customers sometimes refuse payment, claiming they have found a cheaper product. Secondly, these customers often return products for a variety of reasons. Client loyalty is also an issue in these cases, since unreliable clients are less likely to become regular customers and are more likely to shop around for the lowest price.
But there is another group of customers. They work high-stress and well-paying jobs but have little time for shopping. These customers were the first to test the benefits and drawbacks of Internet purchases. Clients in this group, which we consider our primary target, value quick responses to their needs, professional consultations, warranty and post-warranty assistance and have faith that products will match their orders.
Our clients are primarily people who value their time and who appreciate suppliers that keep their word.
KP: What are the major challenges facing e-commerce companies and what obstacles prevent e-businesses from expanding faster in Ukraine?
YG: Challenges include relatively low incomes and the absence of a culture of “remote purchasing” which results in a certain lack of trust in e-business. Another important problem is the large number of tiny Internet-shops launched without sufficient financing and without an understanding of the consequences of ignoring client requests or providing poor service quality. Regretfully, once people have a negative experience with these types of e-businesses, they will likely not give e-shopping another chance.
KP: How tough is e-commerce competition and which niches remain relatively vacant?
YG: E-sales of cell phones and accessories and computer appliances are the most saturated sectors. The number of e-shops dealing with these types of goods in Ukraine is simply astonishing, especially when you take into account the fact that only around 20 of them actively work on the market, provide real services, have regular staff, permanent office premises and possess material bases and resources sufficient to run a contemporary business. Therefore, there is still enough room for new players in every niche of e-commerce in Ukraine. I have to warn those interested that the times are gone when it was possible to launch an Internet business and achieve high turnovers relying only on enthusiasm and little start-up capital. Running an Internet shop today requires significant financial investments and effective management.
KP: What are your thoughts on the future of Ukraine’s e-commerce market? What factors will define its continued development?
YG: The market will continue to develop, grow and mature. A lot of Internet resources are currently stuck in “idle mode” and are not expanding. They will simply have to drop out of the race or will be acquired by larger retail companies looking to increase their sphere of influence and extend their sales markets. I also expect that European retailers will soon enter the Ukrainian e-commerce market. Technologically, Internet shops will increase their mobility in order to provide a more comfortable shopping experience with the aid of mobile phones. When it comes to the demand for certain goods and business trends, we do not expect any major changes within the next few years.
