CEE: 5 most important areas for e-commerce in 2017
As I have been traveling through Central and Eastern European countries and meeting people involved in e-commerce, I have noticed similar challenges that they must face. It’s even more evident when I see the reports we produce at Gemius for specific countries ─ writes Marek Molicki, regional manager at Gemius.
Trust is one of the most important factors in business, including e-commerce, but in this sector, it is especially visible. On one side, you buy some products, and you expect that they will be as good as described on the website. On the other hand, you sell, and when your client chooses to pay on delivery, you expect that customer to stay true to his commitment. And this something that those involved in e-commerce need to work on in CEE. When we released an e-commerce report for Poland, I learned that 39 per cent of customers selected this method as their preferred one.
In our report for Lithuania, it was an even bigger number – 47 per cent of people, but when I saw the number from Serbia… 75 per cent of clients prefer to pay the delivery man. What does it mean? Simple – for some reason, customers don’t trust bank transfers or credit card payments. In some cases, the reason is that there are not good enough (or trustworthy enough) payment systems; in some cases, the opposite is true, but people have limited trust that the package will be delivered if they pay in advance.
For e-shops, this kind of payment is less than ideal for a few key reasons:
- you get your money after some period of time, which depends on some external factors that you can’t easily control
- or you don’t get your money at all because the consumer decided not to pay and pick up the package
- you pay for delivery, and you have no guarantee that you won’t lose that money; when point (b) happens, you surely won’t
- the goods are outside of your warehouse, so you can’t sell them to anyone else; the only thing you can do is wait and pray that point (b) won’t happen
Looking at the other side, when we asked people who don’t buy online what their reasons were for not buying anything online, many of them answered:
- I don’t trust the payment methods – 20 per cent in Lithuania, 29 per cent in Poland and 14.6 per cent in Serbia.
Remember: People prefer to shop in e-shops they consider trustworthy
It’s something that many in e-commerce leave until the end when creating an e-shop. Teams are very focused on layout, UX, product pictures and descriptions, promotions, marketing, and even data reporting. Logistics is not addressed, which is a big mistake. The way of ordering, choosing the method of delivery, and managing possible returns are crucial, especially now, when multichanneling is more and more important. But it is more than this. Customers are increasingly impatient and cost-sensitive, meaning that many of them expect not only next-day delivery but same-day delivery. And in some cases, if they don’t get this option from your e-shop, they will search for another. The same goes for delivery prices. You can’t win on product price alone, as people are aware that final price also includes the cost of delivery. And this is what people are saying.
When we asked people „Which of the following obstacles have you encountered while shopping online?” they very often gave two answers:
- Delivery costs too much – 34 per cent in Lithuania, 33 per cent in Poland and 26.9 per cent in Serbia
- Delivery takes too long – 32 per cent in Lithuania, 35 per cent in Poland and 16.8 per cent in Serbia
In my experience, I know that you can negotiate good conditions with delivery companies on both fronts, but most of the time it requires time to do so. In one instance I was party to, it took us over half a year to secure both; in another, even longer. However, it was worth every single second. If you still don’t believe it, let’s look at the data again.
When we asked people „What could motivate you to make more online purchases?” they very often answered:
- Lower delivery costs – 52 per cent in Lithuania, 62 per cent in Poland and 55.7 per cent in Serbia.
Just look at these numbers again and imagine how much money you are possibly losing because you didn’t spend enough time negotiating delivery conditions. What’s more important, many people don’t shop online because of delivery. Look at the answers we received to the question “What could motivate you to shop online?”
- Faster delivery – 29 per cent in Lithuania, 22 per cent in Poland and 11.5 per cent in Serbia
- Lower delivery costs – 28 per cent in Lithuania, 33 per cent in Poland and 14.8 per cent in Serbia
Logistics is one of the most important parts of e-commerce. There is no doubt.
Remember: People expect fast and cheap (or free) delivery
In Poland, 61 per cent of users started shopping on their smartphones, but finished on a tablet or laptop. This information should shake every e-commerce owner to the core. In the course of one year, the number of people who shopped this way grew about 9 per cent.
When we asked people what type of devices they used to do online shopping, they said:
- Mobile – 41 per cent in Poland (+4 per cent year to year) and 53.6 per cent in Serbia (+6.6 per cent year to year)
- Laptop – 81 per cent in Poland (+3 per cent year to year) and 90.1 per cent in Serbia (-2.9 per cent year to year)
One question arises, and it is very simple – is your e-shop is mobile ready? I mean really ready, not just RWD-ready?
Everyone who has participated at least once in building an e-shop knows how complicated it can be to fit all the necessary features into the different resolutions that devices have. In most cases, it means that when designers are preparing mobile versions, they need to get rid of some features. It means that product cart will look different on mobile than on the laptop, that sign-in and account creation will vary, and that it’s also possible that the payment process will be different. All that means that it’s very easy to make a mistake that will make your potential customer feel uncomfortable and potentially abandon their purchase in your e-shop. What’s also important when we talk about mobile is the operating system. There is one king only, and it’s Android. The difference between No. 1 and No. 2 is so great that it’s hard to even talk about the competition. Android wins, and there are no signs that the trend will change in the near future.
Remember: Your customers use different devices to do shopping. If it’s not easy in your e-shop, they will leave.
Unfortunately, I can’t count how many hours I spent together with designers when we were preparing layouts for one e-shop I was responsible for in the past; I can just say many. It took months to create a final product cart that everyone was happy with. But this is not the end of the process; it’s rather just the beginning. The fact that designers and those responsible for e-shops like the final version means nothing if customers don’t like it. Sure, based on knowledge and experience, you know what mistakes to avoid, but post-launch testing should be an ongoing task. Sometimes really small details make the difference in whether the customer buys or not. Today, there are many different tools that help you measure everything that happens on the website, so it’s much easier to eliminate obstacles that prevent people from buying in your e-store. And people agree.
When we asked people who buy online „Which of the following obstacles have you encountered while shopping online?” there were two relevant answers among the others:
- Misleading information – 23 per cent in Lithuania, 10 per cent in Poland and 21.5 per cent in Serbia
- Lack of information – 22 per cent in Lithuania, 12 per cent in Poland and 15.4 per cent in Serbia
When asked „What could motivate you to make more online purchases?” they often answered:
- More information on e-commerce sites – 34 per cent in Lithuania, 20 per cent in Poland and 26.2 per cent in Serbia.
When you set up your e-shop, you have to remember that your client can’t experience the product physically. All you can do is deliver as many details as possible, starting from a detailed description and ending with high-quality pictures showing the whole product. Pay attention to details or count your losses.
Remember: Clients want to experience the product as much as possible in the shortest possible time. They can’t touch it and smell it. Deal with it.
Have you ever heard about the ROPO effect and the reverse ROPO effect? If you have anything to do with e-commerce, you should have. ROPO is the acronym for “research online, purchase offline.” Reverse ROPO is “research offline, purchase online.” The ROPO effect is very commonly encountered in industries like electronics, clothing, and home&garden, as well as pharmaceuticals. If we talk about reverse ROPO (research offline, purchase online), we see cosmetics and perfumes, electronics, shoes, sportswear and items for children being most popular according to the e-commerce report Gemius published in 2016. But it’s no secret that a similar conclusion can be reached in all CEE countries.
When we asked people who never bought online „What are the reasons you have not bought anything online?” they answered:
- I want to see the product before buying it – 49 per cent in Lithuania, 52 per cent in Poland and 46.8 per cent in Serbia.
In many cases, for example, if you are selling online only, you have to talk about online product experience. I wrote about it in point 4, so you can go back there if you missed it for some reason. But if you have a stationary shop and you are online, omnichannel is something you can consider as a „MUST-HAVE.”
Let’s imagine that you want to buy a brand new laptop. First, what you do is research. You read articles written by professional journalists and bloggers, then you hit social media and ask your colleagues and relatives. You also use price comparison engines and product comparison options. Equipped with proper knowledge, you visit the stationary shop to buy the product you have chosen (ROPO) or at least to physically experience it. You find it and touch it. Then, the seller approaches you and starts to talk. He recommends you a different model that is, in his opinion, better equipped and – also important – the price is somewhat lower. Unfortunately, this laptop is not available in the store, but you can buy it in the e-store. You check it on your smartphone, for example, and after quick research, you decide to buy it (reverse ROPO). It’s Omnichannel. Or at least one face of Omnichannel.
It’s something that is normal, and everyone is used to it in Western Europe and the USA. In CEE, Omnichannel is still more often a buzzword repeated during industry conferences than something that we experience. And what do clients want? Customers expect quick, comfortable shopping. Customers (see above) want to experience a product and buy it offline or online, and it’s possible that they do that on a laptop or a mobile device or both. Your task is to open all possible doors, to integrate all sales channels – it’s Omnichannel.
What are the biggest problems in CEE in terms of Omnichannel?
- not all stock or even a small part is available online
- no possibility of making a complaint online about an item bought offline
- lack of opportunity to return items purchased online in the stationary shop
- no possibility of picking up items bought online in a stationary shop
In 2011, Forrester Research reported that 48 per cent of retail sellers who went into „omnichannel commerce” saw growth in sales and 25 per cent of them said they increased their profitability.
Five years later, in November 2016, Forrester Research predicted that “the line between digital and physical retailing will vanish” and that “retail eBusiness pros would face numerous challenges in 2017, from wooing cautious consumers and creating rich, personalized customer experiences, to offering free and fast delivery (without breaking the bank) in the battle for customer loyalty. They must also pivot (even if painfully) to true mobile-first thinking and manage through the still-acute shortage of ‘digitally fluent’ talent from operations to the C-suite. This brief outlines how retailers will tackle these issues, and it uncovers some areas that they will not have to deal with in the next year.”
A few days ago, on the 1st of February, Forrester Research published a report entitled „The State Of Digital Store Investments 2017: Firms Must Prioritize Digital Operations,” writing: „The retail store is in the midst of major change, upending business models, formats, and locations that have been in place since the dawn of the suburban mall. Today, customers are empowered by information and increasingly expect streamlined and personalized experiences both online and in stores. Digital in-store technologies are transforming the in-store experience for both customers and associates. To document this trend, Forrester surveyed eBusiness leaders to understand how they think about and plan to invest in digital store technologies.”
Remember: Unifying various sales channels is a must in 2017.
This article could be longer and I could point out many more factors that everyone involved in e-commerce should consider necessary. The truth is that there are many important areas to cover when you conduct e-commerce, but I believe that 5 above are the most important for business in CEE. Why in CEE? Because the West has already addressed many of these troubles and client doubts. I am not talking even about Amazon; they are a different story. I am referring to small e-commerce websites that implemented what should be implemented and are running successful businesses, like the small German pharmacy I did online shopping at some time ago. My experience was so great that I promoted the shop to a few people. But there are other examples, too. Sure, there are successful e-commerce businesses in CEE which are on the Western level, but the general picture is outlined above, and the numbers in reports Gemius produced for few CEE countries show it. People in the e-Commerce industry in CEE must understand that there are two options: implement global standards in their e-shops or foreign e-shops will take their place. It is not only nature which abhors a vacuum; business does, too, even more.