A growing number of Internet users and demand for convenient, quick and comfortable shopping, boosted Ukraine’s e-commerce market in 2007
Boosted by the rapidly growing number of Internet users and demand for convenient, quick and comfortable shopping, Ukraine’s electronic commerce market experienced an unprecedented boom in 2007, with overall market volume growing by several hundred percent, according to industry insiders.
The rapid expansion and growing affordability of broadband Internet, along with a growing culture of making Internet purchases among Ukraine’s emerging middle and professional classes, have stimulated the Internet commerce boom.
“The major tendency determining the development of e-commerce in Ukraine is that the market is assuming a mass character and is becoming more and more affordable. Buying things via the Internet is becoming more commonplace in Ukraine,” said Svitlana Bryl, co-founder and director of Znayka – a leading online store for children’s toys and games that has been operating on the Ukrainian market since 2001.
The fierce competition on the e-commerce market in Ukraine demonstrates that the market is far from being saturated and is still open to new players, according to analysts.
Industry insiders noted that some goods occupy a disproportionate share of the e-commerce market with electronic appliances leading the list. But certain types of everyday goods, such as clothing and foodstuffs, are insufficiently represented. Among several hundred online stores in Ukraine, roughly 300 deal with electronics and household appliances, comprising the largest share of the e-commerce market, according to industry insiders.
A more significant problem is the presence of unreliable suppliers that undermine customer trust in e-commerce by not meeting demand for quality goods.
“It is often the case that an Internet shop exists only as a website, but in reality is almost or completely non-functional. When customers turn to such an e-shop and get no reaction to requests, distrust towards Internet commerce as a whole falls,” said Bryl. She added that improper business organization can lead to a situation where advertised goods are not even in stock.
Consumer rights awareness among online customers is on the rise, resulting in greater demands concerning the quality of services offered by online stores.
Almost every online shopper knows that an Internet shop is required to provide a warranty for its products, quality guarantees, a timely delivery service and polite customer service, according to Bryl.
Despite these challenges, the market is experiencing impressive growth and is forecasted to speed up development in the short term.
“In the near future, e-commerce will enter our lives on an even larger scale, and its growth rate will probably increase according to the tendencies being observed today. And this is natural because electronic commerce makes it possible to significantly cut expenses for rent and for office personnel,” said Vasyliy Shvets, general director of Florist floral delivery company. Customers are increasingly recognizing the ease of electronic shopping, said Shvets, whose company has operated on the Ukrainian market since 2002.
Denis Oleynykov, director and owner of FUTBOLKA.ua, a Kyiv-based online store that specializes in holiday gifts, souvenirs and custom-printed clothing, said Ukraine’s e-commerce market will become more “professional” with weak players gradually leaving the scene and stronger ones further strengthening their positions.
“I expect that in 2008 around five large Ukrainian Internet shops will find new owners. They will be purchased by private investors and investment funds, primarily Russian ones,” said Oleynykov. He said to expect many merger and acquisition deals in the e-commerce sector in Ukraine in 2008.
