E-commerce: the future of business in 2012
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Two years and a half after the beginning of the economical world crisis, the World Bank predicts that Romania and Bulgaria will have in the near future the most significant economical growth rate among the ten former communist Member States of the European Union.
According to the report that has been issued at the beginning of October 2011, therecovery rate of the economical activity in these ten states will increase during what is left of this year and the next and Romania is supposed to take the lead in 2012 with an economical growth of 4,4%. Moreover, Romania might benefit in 2012 from a certain fiscal relaxation as the Government might at least partially renounce itsprevious austerity measures in view of the upcoming parliamentary elections. Under these circumstances, Romania’s GDP is expected to increase by four percents in 2012, according to the Vienna Institute for International Economical Studies (WIIW),whereas the economical growth rate might only slightly decrease in 2013 to about 3%.
Although Romania has been confronted with one of the longest and most profound recessions in Europe and a recovery to the boom levels experienced in the years before the economical crisis is virtually impossible due to the lack of external financing, 80% of the small and medium sized privately owned Romanian enterprises that have been part of a study conducted by the National Council for Small andMedium Sized Private Enterprises believe that commerce continues to offer very good opportunities for sales increase, whereas 44% see the use of the new technologies as the means to increase their turnover.
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“During the first nine months of 2011, the e-commerce transactions involving on-linepayment have generated EUR 121.4 mn.“
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Right on cue, electronic commerce presents itself as an almost unbeatable sector which seems to have been especially designed to accommodate difficult economical conditions. Usually requiring only minimal investments and unpretentious storagefacilities which do not cost an arm and a leg to rent, e-commerce practically overshadows most traditional retailers by offering lower prices, easy access to complete product ranges, simplicity in comparing and choosing offers as well as saving time and money. In the context of the continual increase of Internet access and the development of secure electronic payment methods, one can say that on-line sales currently represent one of the fastest developing commercial segments in Romania. As a result, during the first nine months of 2011, the e-commerce transactions involving on-line payment have generated EUR 121.4 mn, increasing by 11% in comparison to the year 2010, according to RomCard, one of Romania’s leading providers of services for card payment systems.
In spite of 2011 being markedly affected by economic instability, the e-commerce industry has continued to grow and remains a permanently developing domainwhich offers companies more efficient solutions, with easily quantifiable results and lower costs.
According to the CEO of the on-line payments integrator ePayment, the e-commerce market might reach as much as EUR 1 bn by the end of 2012 given that the Romanian market is home to over 2,000 active online shops and has been estimated to generate over EUR 300 mn by the end of 2011. This amount is ten times bigger than the figures for 2005, when the aggregate value of Romanian online businesses was estimated to only EUR 30 mn. The increase rate has been surprising, with up to 100% in the last years, in spite of the difficult economic situation.
Following the evolution of the American market, where online sales have by far superseded classical commerce, the specialists believe that Romania might experience a boom in e-commerce, considering the fact that at present the number of online transactions taking place in Romania is comparable to the European average. It is possible for the Romanian online commerce to increase almost three times when the local market will see the entrance of large retailers that, even though not directly selling online, will instruct and guide the consumers towards the online culture and familiarize them with electronic shopping.
As a maturing market in Romania, e-commerce is influenced by the general economical context, but offers good growth perspectives compared to the previous years and to other industries. The truth of the matter is that nowadays one cannot really conceive of a profitable and complex business that has not “gone online” via a website or a blog. Moreover, the online environment is home to a wealth of profitable business ideas which can usually be implemented easily and cost-effectively. Threestatistically profitable sales ideas involve the online commerce with shoes and clothes, weight loss and cosmetic products and with books (or their environmentally friendly alternative, the e-books). Apart from that, important growth engines are the websites selling discount coupons and generally those dedicated to the feminine shoppers. The electronic shopping basket has also diversified, whereby certain products’ categories have been demanded more than others. Significant salesincreases have been reported for flowers, books and gifts, followed by toys and textiles.
The Romanians have become more confident where online payments are concerned, as electronic payments methods have become more secure. Consequently, the payment upon delivery which has up to now been overwhelmingly used starts todecline, as alternative online payment methods are developed and improved. Online payments are still dominantly linked to the paying of utilities’ bills and the purchasing of tourist packages, including plane tickets, but lately new domains such as onlinedonations have increased with as much as 27%.
The websites selling discounts coupons seem to have played a major role lately in the increase of the consumers’ number willing to pay with their credit/debit card, thereby acting as a catalyst for the whole e-commerce industry. As a result, the number of online payments has increased in the first six months of this year with 8%, up to 1.3 million transactions (according to the statistics of RomCard). At the same time, the average value of a single online purchase has increased, one good example being the market for electric, electronic and IT products, whose value has increased up to EUR 250 mn.
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“The Romanian e-commerce market has been estimated to generate over EUR 300 mn by the end of 2011. This amount is ten times biger than the figures for 2005.“
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Taking into account the specifics of the online stores, such as distance selling and/or payment, the Romanian Association of Online Stores (ARMO) has developed a Code of Best Practice for the online commerce, aimed at the protection of interests of the consumers who access these online stores. All the ARMO members abide by the provisions of this Code, as well as any non-member online stores that expressly adhere to this soft-law instrument. The Code of Best Practice is divided into six sections, namely regarding the correct and comprehensive consumer information; products’ price, payment, sale and delivery; returns and complaints; abiding by the Code of Best Practice; relation to other websites; spam and intellectual property.
According to the provisions of this Code, its signatories undertake to provide their complete and accurate identification details on their respective websites and to update such information when necessary. The terms and conditions for the sale ofthe advertised goods must include information such as the sellers’ duties, invoicing, payment, penalties, acceptance of the order, the transfer of property and risks as well as warranties. The final price posted on the website at the time of the completion of order must include all legal fees, delivery and transport charges, as well as those for any additional services in connection with the purchased goods, so that no hidden fees may be invoiced to the consumer. The use of online payment methods must not imply any additional charges and must abide by the relevant Romanian legal provisions in force at the time of purchase. No used or refurbished products may be sold as new ones. Products that have been returned by the customers must be accepted within 10 working days, whereas the purchase price has to be refunded or any other relevant legal solutions in force at the time of the products’ return aimed at guaranteeing the consumers’ satisfaction for online shopping have to be employed.
