bne IntelliNews – E-commerce rising stars of the Western Balkans
With their small populations, relatively low incomes and large informal economies, the six countries of the Western Balkans aren’t the best environment to nurture e-commerce champions. The barriers to cross-border trade and existence of two distinct language families – South Slavic and Albanian – have also inhibited the emergence of pan-regional e-commerce platforms.
Despite these factors, there are a growing number of e-commerce platforms in the region that have achieved success in their local markets and in some cases in neighbouring countries as well. Not only that, but Serbia’s Delta Holding, hitherto mainly focused on real estate and retail, has announced plans to create an “Amazon of the Western Balkans”, Ananas, with investments of €100mn over the next five years.
A spokesperson for Ananas says the region “has been deprived of quality e-commerce platforms and services for too long”. “All of us are witnessing the expansion and potential of the online retail market which became even more evident since the beginning of the pandemic. All major global brands are starting or investing in the development of online trade. The potential of the online market in this region is significant and we are determined to use it in the proper way, by creating an amazing platform that will change the shopping experience of Western Balkan consumers.”
A World Bank report, focused on Albania but with data on the whole region, also highlights the significant potential for online markets in the Western Balkans region, because of both the limited existing penetration of e-commerce and fast growth rates.
Data from the 2020 Balkan Business Barometer published by the Sarajevo-based Regional Cooperation Council shows that 83% of the population across the region are internet users, up one point since the 2018 survey. The keenest e-shoppers, according to the survey, are Montenegrins, though only 26% of respondents said they shopped online; the lowest level was among Albanian respondents at 15%. Overall, respondents were most likely to use the internet for entertainment – as high as 79% of respondents in Kosovo – and least likely to use it to access government services.
Among those who are active internet users, the share of e-shoppers is reasonably high. For example, citing data from North Macedonia’s statistics office, Grouper’s co-founder Nina Angelovska said in an interview with bne IntelliNews that 40.1% of individuals with internet access in North Macedonia had made online orders and purchases in the 12 months to early 2020. That is twice as many people as in 2017.
Pandemic shopping habits
The pandemic gave a push to e-commerce development in the Western Balkans as elsewhere as non-essential bricks and mortar shops were closed. The World Bank survey carried out on social media (therefore targeting the internet-savvy segments of the population) confirms that the coronavirus (COVID-19) pandemic has accelerated the use of online shopping; 62% of respondents said they had increased the use of online shopping during the pandemic, of which 85% said they will continue to shop online more frequently once the pandemic is overcome.
This wasn’t always instant, though, as in some cases online purchasing patterns changed rather than increased, leaving e-commerce companies catching up.
Milan Nicetin, chief marketing officer of Serbia’s LimundoGrad, tells bne IntelliNews: “When COVID-19 arrived in Serbia, we noticed a sudden drop in sales for about 25-30% during the first two months of the pandemic. People were frightened and didn’t know what to expect, so they were mostly buying necessities like flour, sugar, oil, toilet paper… About two months later, things started to get better and we saw growth compared to the previous year.”
The restrictions on movement and fears of spreading the coronavirus have changed people’s habits in North Macedonia, leading to increased online shopping and payment of bills online, according to Angelovska, who says the pandemic “really opened up an opportunity for e-commerce that has never existed before”. She cites a survey of 2,800 e-shoppers, of which 37% said they had increased their online shopping volume since the start of COVID-19.
Still, she adds, “Regarding Grouper, although it is an online e-commerce company, somehow the automatic thought is that we have had growth during the crisis, but it was not the case.” This was because travel and other services accounted for a large share of the company’s revenues, and these sectors were the most affected by the crisis.
Grouper was forced to adapt, launching new products such as the ‘Stay Home Stay Smart’ campaign offering over online courses, food delivery service Grouper Food or #HranaDoDoma and Grouper Shopping Mall. The last is a new project that “incorporates 10 years of experience in online sales and marketing and actually represents the best of e-commerce and digital marketing,” Angelovska notes.
At the same time, local retailers have stepped up their online presence to allow them to continue reaching customers. Podgorica-based digital innovator Amplitudo worked with local retailer Voli to set up the voli.me online store. Commenting on the launch, Amplitudo sales co-ordinator Nikola Plavsic says: “we know that in the first 24 hours after releasing Voli online stores there were 1.5mn clicks and Montenegro has around 600,000 citizens, so one can tell that the interest shown was huge.”
In Kosovo too, during the pandemic “many companies started to receive orders online, from food delivery, coffee, beer and alcoholic beverages,” says Besnik Skenderi, director for professional and development products at UBT – Higher Education Institution in Pristina.
Building on an existing trend
While pandemic gave a boost to e-commerce, it was building on an existing trend. The World Bank survey on the Western Balkans showed that people in the region already saw advantages in online shopping, specifically time saving (80% of respondents) and greater product choice (57%). For example, 50% of Albanian respondents said they went online to buy goods not available in local shops, while only 15% mainly used online shopping to buy from local stores. In Montenegro too,“People tend to buy through international resellers. In most cases prices are better when you buy from abroad and the variety of products is also better,” comments Amplitudo’s Plavsic.
Meanwhile, main motivation factors for online shopping in North Macedonia, as Angelovska says, are lower prices and free delivery. Additional reasons include saving time, the flexibility to buy anytime, anywhere, and to buy more safely during the COVID-19 pandemic.
The World Bank study showed that the most popular channel was via domestic sellers’ own app/site, but large numbers of purchases were also made from foreign sellers’ own sites and foreign e-commerce platforms, as well as through social media.
Instagram is a popular channel in Montenegro, according to Plavsic. He tells bne IntelliNews: “Most of the online retail in Montenegro works over the Instagram platform. Small and medium companies boost their accounts in order to have more followers to reach more customers and sell their products via the direct message system. In research that we conducted, 54% of Montenegrin companies do not have an online retail site at all, and of those who do 58% have a low quality site.”
Holding back the market
There remain a raft of obstacles holding back the development of e-commerce in the region. While the 2020 Balkan Barometer shows a high level of confidence among Kosovan respondents, of whom 81% respondents said they had no concerns about using the internet for online banking or to buy things, the figure was considerably lower at 46-49% in most countries in the region and as low as 34% in Montenegro and 38% in Bosnia.
The main fears when it comes to online transactions concern security and misuse of personal data. A fair number also said they preferred to do transactions in person so they could inspect the product or ask a real person about it.
According to the World Bank survey, “A key constraint for growth of online markets is a lack of trust in webshops, particularly when it comes to domestic sellers”, as cited by 83% of respondents across the Western Balkans. 30% listed the risk of identify and payment theft as their main concern. Additional issues were high delivery costs and customs duties, along with access to accepted payment methods, lack of English language skills and lack of internet access.
Representatives of Albanian e-commerce companies told World Bank researchers that the large informal economy was also a constraint on the development of the formal digital economy. While this is a general issue across the economy, “in the context of emerging online markets, pressures from the informal economy are heightened. Digital markets make it easier for informal businesses to reach more customers – accentuating competitive pressures. As many customers form their first impressions of online markets, a negative experience with an informal company offering inferior services can undermine consumer confidence in the e-commerce sector in general,” says the report.
The informal economy is a problem across the region, as shown by a recent study from the Center for Policy and Governance from Sarajevo, which estimated the size of the grey economy at around 30% of GDP in Bosnia, Montenegro and Serbia.
In North Macedonia, analysis conducted by the e-commerce association found that the biggest challenge for the sector is the low level of digital skills among the population, but another issue is finding suitable staff, Angelovska says.
E-retailers consider the barriers to the development of e-commerce are: low level of consumer awareness for online shopping (79%); distrust in online shopping (79%); low level of digital skills among customers (65%); and unfair competition from unregistered traders and the shadow economy (55%).
These are followed by banking conditions and e-commerce procedures (39%); payment system and insufficient use of payment cards (31%); small supply on the market by domestic companies (26%); and banks’ high fees for online payments (24%); with security concerns in the last place on the list (23%).
In Montenegro, according to Plavsic, “[The] main obstacle is not having trust in online retails (fear of scams), also most people are not used to paying with credit cards online and a lot of people don’t have enough knowledge of basic computer science. And there is the issue of small market size.”
Cash on delivery remains the most popular way to pay for products from domestic vendors. according to the World Bank report, though most buyers paid by card when purchasing from international sellers.
In Kosovo, according to Rina Bulliqi, education programme and communications co-ordinator at Kosovo United States Alumni (KUSA) non-profit association, there are two major problems for opening e-stores: the small market size (Kosovo is a country of 1.8mn people) and the weak judicial system. In establishing their e-commerce platforms, businesses listed other challenges such as payment security, followed by low consumer awareness of how to shop online, low desire to shop online, and product delivery issues.
“This means the market is not suitable for businesses that require large economies of scale. For businesses wanting to shift to e-commerce, this may be concern because they have to also consider how willing and capable citizens are to buy online, shrinking the market even further,” Bulliqi says.
“On a positive note, businesses suggest an increased trust in online payments, with more people paying with cards instead of cash compared to previous years. It will be interesting to see what happens to online shopping in the next few years. I believe we will see a positive growth in online shoppers compared to when the pandemic first hit – once customers return to their full responsibilities,” Bulliqi adds.
Despite surveys showing a strong appetite for e-commerce, Kosovo has particular difficulties: “[S]ometimes credit cards that are issued in Kosovo are not accepted in the global market. This also has to do with the issue that Kosovo still doesn’t have its own state domain internet,” says Skenderi. “We have potential but we need to build our own information systems, since at this stage we are just consuming and we are using third-party online platforms.”
A long-term change?
The question now is whether the momentum from the pandemic will translate into higher levels of online shopping in the longer term.
Most of the industry insiders interviewed by bne IntelliNews take a positive view of the future growth of e-commerce in the region.
“I think that we should be very optimistic about e-commerce in Serbia,” says Limundo’s Nicetin. “We can see that many offline retailers saw the potential of online retail and are already planning to offer their goods online. Customers have become very comfortable buying online and retailers should adapt to this trend by offering their buyers the best experience they can.”
In North Macedonia, Angelovska states that online orders have increased under the influence of COVID-19, but the main question is whether e-shoppers will continue to buy online at the same pace even after the crisis. The indications are that most will.
On the other hand, according to Bulliqi, in Kosovo “businesses noticed a significant rise of online shoppers right after the pandemic first hit; however, this was only the case when movement restrictions were very strict. Almost one year after the pandemic outbreak, businesses are now more likely to report drops in online shopping compared to a few months ago and more likely to report an increase in customers inside the stores. This behaviour suggests that people consider shopping as a leisure activity, and would rather do it in person.”
A new regional giant
The e-commerce sites from the Western Balkans are active alongside both international giants like Alibaba and Amazon, and companies from the wider region such as Croatia-based eKupi that has sites for several of the Western Balkans countries. They will now face competition from a new regional player, Serbian Delta’s Ananas platform, currently under development. Initially targeting the Serbian market, Ananas will later be expanded to other markets of former Yugoslavia as well as Albania.
Delta’s main activity is real estate, but 2021 will mark “the company’s entry into a completely new business – online shopping,” it said in a press release. This will be part of its investment cycle over the coming years, amounting to around €500mn, with €100mn to be directed at the Ananas platform over the next five years.
The launch of the Ananas e-commerce platform is planned for summer 2021, and in the meantime, the team is working with potential customers and gauging their needs, developing the platform, creating partnerships, onboarding merchants, developing the marketing strategy, and many other things, the spokesperson tells bne IntelliNews.
“With the financial strength and investment experience that Delta has, we are convinced that we can create a regional giant in online trade. Pineapple will offer customers something they are not used to in domestic trade, and which only the biggest global retailers like Amazon or AliExpress have. At the very beginning, we will cover the Serbian market, but with the intention of being present in the markets of the former Yugoslavia very soon, plus Albania,” said Marija Desivojevic Cvetkovic, Delta’s vice-president for strategy and development, at the time the project was announced.
Via the platform, companies and businesses will be able to offer and sell their products on Ananas at fixed prices. According to the company spokesperson, the idea is to have various sellers of the same product, so each consumer can find the perfect solution for themselves at the best price. There are plans for a user-friendly and easy-to-navigate platform that Ananas is developing with HTEC Group, and a logistics system aimed at minimising delivery time and making the return process easier.
While acknowledging that “Being a pioneer at something always comes with certain challenges”, among them creating brand awareness and customising communications to the local market, the company official expects the project to benefit from being a startup launched by the biggest Serbian company, Delta Holding. And, despite the differences across the markets in the region, “Customers are the same, not only in the region, but worldwide. All of us would like to have the best experience and value for money.”
NORTH MACEDONIA: Grouper.mk
Grouper.mk was launched as a start-up company in 2011, when it was the first platform for group discounts in North Macedonia, a small Balkan country with a population of 2.1mn. Now it serves over 200,000 customers in co-operation with over 3,000 companies that sell their products and services online.
Its co-founder is Nina Angelovska, a former finance minister (2019-2020) in the Social Democrat government of PM Zoran Zaev, as noted by bne IntelliNews. In 2018 Angelovska was named on the Forbes 30 Under 30 in e-commerce and retail for Europe list. She is also the president of the first Macedonian E-Commerce Association.
With an emphasis on the travel and service sectors pre-pandemic, Grouper moved quickly into new segments as consumer habits were forced to change drastically in spring 2020. “As agility and quick adaptation are our strengths, ad-hoc campaigns were constantly launched to cushion the impact – such as the ‘Stay Home Stay Smart’ campaign, which offered over 100 online courses in collaboration with foreign providers, which attracted great interest and sales,” Angelovska says. It also launched the Grouper Shopping Mall marketplace that had been under development since 2019. So far over 100 companies that joined the Grouper Shopping Mall and opened their own e-shops now have a new sales channel with an online presence and access to new potential customers.
“The challenges of the pandemic worked most for the benefits of those companies that were willing to adapt quickly,” Angelovska says.
Grouper.com is also present in neighbouring Kosovo. Grouper Kosovo (www.grouperkos.com) is a franchise of the local company WEBSPOT, owner of the Grouper brand.
SERBIA: Limundo.com / Kupindo.com
Serbia’s Limundo.com started out as an online auction website but upgraded to have fixed prices as well. Its sister site Kupindo.com is for fixed prices only. According to LimundoGrad’s Milan Nicetin, Kupindo.com is a very popular website with over 1.5mn monthly visitors. In total, the two sites Limundo.com and Kupindo.com share an unique base of over 1mn registered members. Over 90% of these members are based in Serbia.
The most popular items are books, clothing, music (mostly vinyl records) and comics, says Nicetin.
The company faces competition from popular local websites like “classifieds Halo oglasi and Kupujem prodajem, big consumer electronics retailers who went online like Tehnomedia, Gigatron, and of course global marketplace Amazon”.
Looking ahead, “We are working on Limundo mobile app improvement and we started building a new website which we hope will suit our members even more. The new website will have some new features,” he adds.
Nicetin says the site initially saw a drop in sales when the pandemic struck and Serbia was put under lockdown as people started panic buying food rather than other products. However, sales revived after a couple of months, and Limundo has since seen growth compared to the pre-pandemic year.
Kupujem prodajem is one of the longest established e-commerce portals in the region. By the time it celebrated the 10th anniversary of its launch in October 2017, it had listed over 50mn classified ads, had more than 1mn registered users and 12bn page views. In its first 10 years of operation it sold 4.75mn items with a total value of €630mn, including 710,000 mobile phones, 570,000 computers, 205,000 musical instruments, 35,000 cars, 21,000 tractors and 7,000 properties.
Founder and director Bojan Lekovic said at the time that Kupujem prodajem would continue, together with its users, to “build an online infrastructure for trade in our country”.
Lekovic, a one-time electrical engineer from Nis who is now based in the Netherlands, started Kupujem prodajem as a hobby alongside his brother. He later published his memoir “Bears on the road”, in which he talked frankly about his experiences in starting and running a business in Serbia.
When ebuy.al launched back in 2013, online retail was almost non-existent in the country. The aim of its founders, who already ran the ikub.al portal, was to create an Amazon of Albania with everything in one place.
With no competitors on the market, ebuy.al quickly exceeded expectations. “It has been a challenge and a difficult path, of course, because the Albanian market is not so easy to reach, but to our surprise, it exceeded expectations in the first year. Ebuy.al quickly became the main destination for online shopping for Albanians,” said ebuy.al business development manager Iralda Mitro in a 2019 interview with Business Magazine Albania.
Clothing, especially for women, is the most popular category on the site, but Mitro also listed Albanian national team t-shirts, jewellery, selfie sticks and mobile phone accessories as some of the best-selling products.
Commenting on the name of the site – which bears an uncanny resemblance to international e-commerce site eBay – Mitro said it was a shortened form of “electronic buy”, but admitted to Business Magazine Albania that the resemblance to eBay was “somewhat problematic”.
Gjirafamall.com is the biggest e-commerce company in Kosovo offering a various products and services from food and clothing to health services, electronics and car accessories.
In February 2021 Gjirafamall.com launched a ‘Shija e Kosovës Online’ (A Taste of Kosovo Online) online sale platform to facilitate a new sales channel and promote some 30 local businesses offering finalised food products. The platform is a result of collaboration between GjirafaMall and the Swiss Agency for Development and Cooperation project: Promoting Private Sector Employment.
Gjirafa runs a variety of offline to online internet consumer services in the Balkans region and Albanian Diaspora. It is an Albanian search engine and a news aggregator for a market of 12mn people who speak the Albanian language worldwide.
It claimed to be the fastest growing internet services company in the Balkans. In November 2020 Gjirafa was ranked 11th on Deloitte Technology Fast 50 growing Central Europe tech companies and first in the Balkans, with over 1,500% growth in the last four years.
“What makes this recognition even more important is that this is the first time a company from Kosovo [has been] ranked in the list,” Mergim Cahani, a founder and Gjirafa CEO said at the time.
Southeast Europe’s smallest country with a population of just over 622,000, Montenegro doesn’t have the scale to grow a domestic e-commerce industry. However, online classifieds site patuljak.me has emerged as the largest platform in Montenegro for the sale, purchase, rental and exchange of goods and real estate.