Without a doubt 2020 is the year of ecommerce. It is not a secret that the Pandemic has accelerated the shift towards online shopping all around the world. The manufacturers who already had an e-shop benefited the most. Others have had to embark on this type of business or transform their existing ones to meet consumer needs and to survive the crisis.
At the same time COVID-19 brought one more advantage to online retailers and manufacturers – new opportunities for international online trading have opened up for them. Of course, this endeavor requires some investment of time and money, but at the same time opens the door to new markets and more customers.
The effect of COVID-19 on e-commerce and the challenges that retailers had to face is a topic that deserves more in-depth analysis. That is why in Mediapost Hit Mail Bulgaria we took on the difficult task of organizing a large-scale online survey. It included manufacturing companies based in 6 countries in Central and Eastern Europe – Bulgaria, Greece, Romania, Slovakia, Hungary and the Czech Republic.
We are proud that both large and recognizable brands and small companies joined this interesting project. Our goal was to better understand how COVID-19 crisis impacted the way manufacturers sell their products online. We have summarized some of the conclusions in a detailed report. Some are seemingly obvious, while others are unexpected and surprising. But it is those that shed light on the real problems faced by producers in these countries.
What makes the biggest impression is the fact that more than half of the producers don’t even have their own website through which to sell. The reason? Mainly lack of time and/or lack of expertise. The good news is that the number of companies planning to develop their own e-shop is also high.
But building an online store is just one of the many activities that accompany local or international ecommerce. To it we must add, customer service, last mile delivery, marketing campaigns, significant legal or tax requirements, payment management, the translation and localization of the website, etc. All these activities are still unfamiliar and rather frightening for most manufacturers and thus they are postponing opening their business to foreign markets.
What do the survey results show?
Let’s start by clarifying that the analysis we have prepared is based on the responses of local independent manufacturers of products. They are the majority among all participants – 60%, but they are also the target group that inspired us to conduct the survey. It also included companies that are part of larger international groups, as well as service providers or distributors. However, their answers were not taken into account because they are beyond the scope of our study.
Among the responding companies, the largest percentage is of food and beverage producers – approximately 35%. They are followed by a variety of categories – from sanitary supplies, through agricultural products and even steelwork. Companies that produce printed materials (e.g. books, posters, paintings, etc.) are a smaller percentage.
As for the platforms through which these manufacturers sell their goods, this most often happens through e-commerce websites or a Facebook store. The percentage of manufacturers that use marketplace platforms such as eMag, Amazon, Etsy and others is relatively high. – 23%.
Since the easiest way to test a new market is through a marketplace, we wanted to find out what the biggest advantage for businesses when working with this channel is. Manufacturers identified the following indicators as top benefits: good quality traffic of the marketplace (36%), clear requirements from the marketplace (23%), and commission-based payments to the platform, so that they don’t spend additional marketing budgets there (20%).
In order to be as objective as possible, we also wanted to understand the biggest downsides in online sales through the marketplace. The leading position is occupied by the high commission fees from the platform (27.59%), followed by the large number of competitors gathered in one place (24%). Surprisingly for us, working with an external company to take over the initial customer service was not identified as a disadvantage of the marketplace. This goes to show that companies in the region are becoming more and more comfortable delegating activities to third parties that they cannot handle on their own for one reason or another.
56% of the respondents sell online in Bulgaria
Each manufacturer faces different challenges in different countries when selling online. Therefore, it was important to understand which countries the respondents make online sales in. The results show that Bulgaria (56%) and Romania (29%) occupy the first positions, but we also received the most answers from these two countries. The third place is shared by the Greek and Hungarian markets (15%), and the fourth – the Czech Republic and Slovakia (6.94%). More interestingly, 18% of producers sell in more than one country and only 7% in three or more markets at the same time.
In addition to the current situation, our study aimed to understand the future plans of the participants. It turned out that the most preferred market for online business growth by the participants was Romania – 28% of manufacturers chose this answer. This is somewhat logical, given the size of the Romanian market and its geographical location compared to other countries. At the same time, a large percentage of surveyed companies plan to sell in other countries, outside the parameters of our study. The good news for international e-commerce is that participants who refuse to sell online abroad are a minority (only 4% of respondents).
We also had to ask the producers about the main obstacles that stop them or scare them away from developing their business in a foreign market. They identified the last mile delivery to end customers in the foreign country as the biggest challenge (40%). Difficulties in translating and locating the e-shop in the respective language, as well as orders fulfillment, are the other two main concerns of the participants.
Lack of time and expertise stops manufacturers from selling online
Unlike the above-mentioned external factors, there are also inhouse reasons, which hinder e-commerce in the country and abroad. Very curious is the answer of 45% of manufacturers who say that their products are not suitable for online sale. At the same time, most of them offer furniture, books, cosmetics and even auto parts. These are all categories that have been proven to sell online, with excellent success. Some of the participants produce more niche categories of products such as industrial machines and steel elements, which, of course, are not so attractive for online trade.
In addition, manufacturers also acknowledge that lack of experience, expertise or even time is one of the main reasons they do not sell online at the moment.
These specific observations on internal factors are due to the fact that the majority of survey participants occupy high positions in their companies. 65% of them are owners and managers, as well as marketing managers/sales managers (23%). Thus, they not only have a realistic view of the whole company, but also have the power to expand their business in other countries with the right guidance or external assistance.
The surveyed companies also revealed their approximate turnovers for the past year. The highest percentage of participants has a turnover of less than 100,000 euros (34%), but the number of companies with an annual turnover of between 1 and 10 million euros is quite impressive – 21%.
Survey report and our main recommendations for manufacturing companies
The analysis of the study reveals a long list of problems and new areas that participants must explore in order to have a successful online business in their own country or abroad. To help manufacturers, in addition to a detailed survey report (in English), we have included a section with ideas and guidelines to guide them and make it easier for them to adapt to online commerce. From operations and logistics, through testing new markets and all the way to translation and website localization, our list contains the most important starting points for business growth in the field of e-commerce.
If you also want to view the detailed report with practical advice and recommendations (in English) that will inspire you to conquer the online market, you can download it from HERE. You can count on us for additional advice on the subject if you contact us.