E-commerce in Ukraine: current state and features of further development
The development of Internet commerce is one of the most dynamic sectors of economic development in Ukraine. In recent years, the e-commerce market has expanded significantly, many new companies and large online stores have appeared. The demand for goods of various purposes has grown significantly. In order to retain and attract customers owners of e-commerce sites resort to new solutions with the help of updating the assortment with new products and implementing innovative solutions in their own sphere of activity. According to the E-commerce Work Program, the term “E-commerce” means the production, distribution, marketing, sale or delivery of goods and services by electronic means [2, c. 76].
E-commerce increases due to the number of orders, not due to the average check. While the number of online shoppers continues to grow, the number of online orders is growing primarily due to increased shopping frequency. Accordingly, there is an increase in competition between the companies of e-commerce sites owners and the pace of completion of the assigned tasks, which indicates the dynamic development of this industry.
E-commerce allows buyers to make purchases without leaving home, and retailers — to get additional sales volume and savings on the rent of commercial premises, as well as the salary of sellers, developing an omnichannel system of sales of goods. The trend of the modern economy informatization, as well as the electronic commerce development became noticeable with the appearance of Internet technologies in Ukraine, which cover an increasingly large territory of the country year by year, as well as the development of the smartphone market, including more affordable price segments.
Online trading via mobile devices is growing at a great pace, which is also a significant factor of the domestic trade market transformation, reorienting the tools of competitive struggle to a radically new approach that is effective exclusively for the online space, in particular:
- optimization of the site for a quick Google search, presence in the first positions when searching for keywords;
- presence of the retailer in price aggregators (hotline.ua, price.ua) and online hypermarkets and marketplaces (prom.ua, olx, rozetka.ua);
- high-quality content on the sites, which fully describes the product specification using comprehensive photos, video reviews, encouraging feedback from those who have already purchased the product;
- personalized offers (remarketing, product offer to a narrow circle of buyers, exclusively to the target audience);
- collection of data about online shoppers and the use of CRM tools, which allows for conducting more effective marketing campaigns and making personalized offers for buyers.
The e-commerce market is constantly growing, this positive dynamic is evidenced by constantly growing sales volumes in the industry. Analysts predict a significant increase in sales volumes in the coming years, largely due to the pandemic. The world retail E-commerce index figures in relation to retail trade are presented in fig. 1
Source: constructed by the author based on [9]. The pandemic didn’t just affect the E-commerce industry, it fundamentally changed people’s perception of the shopping process. According to research, 52% of consumers avoided visiting stores and public places, 36% avoided going shopping until they receive a vaccine against the virus [5, c. 83].
In 2014, total E-commerce sales were just $1.3 trillion, but in 2022 this has increased by more than 3 times to $4.2 trillion. As expected, sales volumes will maintain positive dynamics over time. In fact, experts predict that the industry’s annual revenue will grow to $6.5 trillion in just three years [9]. If this trend continues, global E-commerce sales could reach $8 trillion annually by 2025. This turn of events is very favorable for the largest E-commerce companies represented on the world market, because such statistics emphasize the potential for further development of the industry. It is worth noting that against the background of the E-commerce market representatives incomes growth, further increasing competition in the industry will be observed.
In Ukraine approximately 67% of Internet users visit E-commerce relaterd sites. Internet trade is the most dynamically developing trade area (fig. 2).
Annual Internet trade volume growth index, % Annual retail trade volume growth index, %
Fig. 2 — Dynamics of retail trade development indicators in general and retail E-commerce in Ukraine.
Source: constructed by the author based on [7].
Thus, the evolution described above has led to the fact that the main players of the domestic trade market are large chains, supermarkets and Internet platforms for the sale of retail goods with a significant specific weight, stable positions, protected from competition from other formats. Today, it is the big players who are shaping the new standards of customer service, followed by the smaller players; create the rules by which the entire domestic trade market functions, create a new institutional environment at three levels: “networks – customers”, “networks – suppliers”, “networks – other formats of trade”. Trade formats such as kiosks, pavilions, and small architectural forms are gradually disappearing from the market due to the low quality of the offered service [8, 10 c. 211]. Shopping centers are becoming widely developed, цшер the advantage of the offer of additional services for the purpose of better and high-quality customer service.
Informatization of the modern economy and the development of electronic trade in the presence of modern logistics companies allow residents of even remote regions to buy products anywhere in the country. In order to increase the volume of purchases of goods and increase the number of visits by users, it is advisable for domestic Internet stores to focus on increasing direct traffic and forming the optimal structure of other types of traffic, taking into account their impact on brand recognition, the costs of ensuring the company’s activities and creating optimal models for the development of E-commerce, which will be the direction of further research.
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