The market is diversifying as customers are becoming more demanding

The eCommerce and logistics/courier sectors have registered significant positive developments in recent years. At Re:Focus on eCommerce, Retail & Logistics, an annual event organized by Business Review that reached its sixth edition, the audience, onsite and online, found out what is going to happen in these sectors and what are the expectations of the most important companies in these industries.

Raluca Radu, Country Manager at Answear.ro, shows that the eCommerce market has grown by less than 10 percent last year, which meant a market consolidation. During the COVID pandemic, several buyers started online shopping and got into this habit, and last year the smaller growth meant that the tendency of online shopping is consolidated. “Last year the buyers returned to the travel area, of physical stores, so it is normal for the reduced growth recorded by eCommerce. The online fashion market was increasing last year and that is because overall the fashion market had a positive evolution. At Answear.ro we had a 40% increase in value compared to 2021. This happened because people left the house and wanted to renew their wardrobes. We expect this year the fashion market will continue to grow or maintain it to high values,” says Raluca Radu.

Romania follows the trends of western markets, and this year it is certainly provocative. “It has been observed since last year that consumers are much more careful with their budget, they have started looking for alternative payment methods, such as payment in installments or Buy Now, Pay Later.

It also buys more in the promotion campaigns. Instead, the Black Friday phenomenon is getting more and more of its importance as a unique event, but throughout the year you can see a focus on promotions and a good ratio between price and quality,” says Raluca Radu. She added that no decreases in sales or focus on discounts are seen on the premium segment, which is constant.

Answear.ro is now focusing on the professionalization of the services offered. “Now we deliver from Poland, which means some delays. That is why we started the steps to open a warehouse in the southern area that will allow us to deliver faster. We also look at and delivery through lockers, alternative payment methods. We hope that the warehouse will be ready by the end of the year, we still do not know if it will be located in Romania, Bulgaria or Greece, but it will certainly improve our delivery times in Romania. The customer portfolio has diversified a lot since the launch, but the retailer focuses on the area of customers between the ages of 35 and 55, and the premium segment is accessed most of the 45-55 years category.”

Difficulties created by the Ukraine war

Adrian Mihai, CEO FAN Courier, shows that 2022 was an atypical year, with a normal start, but with all the data after February 24, when the war in Ukraine began. “We have a great fight to keep the prices under control, our costs. I thought the war would end quickly, but it didn’t happen, and we had to take a lot of measures to counteract the price increases. We were glad that the consumption did not decrease, the eCommerce I think it increased by about 10 percent, at least that’s what we saw from the deliveries, and it was good because we represent about 60 percent of deliveries,” says Adrian Mihai.

Another trend, not only in Romania, is related to the courier and its status.

“The courier becomes more and more important and not just in Romania. I was, last year, at a training and I had a speaker in London, we were about 50-60 people in the room and I was waiting to tell us different things. At one point he took a break, called the courier and left. I realized that the courier becomes an important part of the family; Leaving 5-60 people to wait for you to take the package from the courier is something important. He apologized, he told us that it was something he ordered and if he didn’t take him, he didn’t leave him. It is clear that we, the couriers, have to do everything we can to get up to the expectations of our clients, because otherwise we will not resist in the market, ”says Adrian Mihai.

“Romania is far behind the countries in the West in terms of online sales. In Romania, in total sales we are somewhere at 9%, while in the UK I am somewhere at 35-40%. I think Poland is much higher than, somewhere at 20% or more, as well as the other countries in the region. Our market saw a growth and I think that in the next period it will grow more and more,” explains Adrian Mihai. He adds that he sees growth for different reasons.

“Somewhere in the country, we had a branch where the director came from and told us that he needed more cars. I asked him what happened, and why sales increased. And he told us that internet was introduced in some villages that didn’t had it before. Connected to the internet, people started ordering online. So, the development of eCommerce is also linked with the development of infrastructure and the Internet. This is where the growth will come. And I also think that the success for retailers will come to those who have a mix, and online and offline,” explains the head of FAN Courier. He also showed that FAN Courier also devoted a fixed -point delivery network, including lockers, through the FANbox network, which has reached 1,000 locations.

“In 2023 we want to continue investments. In 2022 we invested about 36 million euros in deposits, in automation, we continue to develop a hub in Sibiu. I also started a digitization plan for all the deposits in the country,” says Adrian Mihai.

Expansion in foreign markets

Lucian Baltaru, CEO at Sameday Courier, also sees a slight growth in the eCommerce market, even though the 10% increase was also driven by inflation. “For us it was a good year in which we grew up and developed outside Romania, in Hungary. The result is 28% growth throughout the group, for Romania the increase was about 23%. A year full of uncertainties, in which we tried to be agile in decisions. It is not good to have a fleet too large, because you enter a loss if you do not have orders, but it is not good to be too small, because it suffers the quality of the services if the request is too high,” says Lucian Baitaru.

No one knew what would happen, that’s why business agility is the best solution. As 2023 seems to maintain a high level of uncertainty, agility remains the good strategy.

“Romania really has the chance to grow significantly in the online area. Internet access to Romania is 84%, quite large, but only 50% of those who have the internet ordered at least once online. I think here is the secret of growth: to see how we reach those who have the Internet, but who have never ordered online. From our point of view it is a mix, an ecosystem between retailer and courier, and we will provide a fast and simple service,” shows Lucian Baltaru.

As for a recommended strategy for online retailers, the Sameday boss believes that there are two factors that can help. “On the one hand, the recurrence of the old clients, and on the other hand, the new customers who will come online. To succeed, I think the shops should offer all the methods of delivery available on the market, not only door-to-door, but also Easybox. We have already exceeded 50% of deliveries in Easybox, and the studies we do show us that 60-70% of online customers prefer this method of delivery. Another method of growth is the extension of the markets in which it operates. Currently, you can easily sell in Bulgaria or Hungary using Sameday services. What we intend to do is a cross-order delivery, without borders. Let’s have the same time and delivery cost in Bucharest and Budapest. And online stores can be competitive in other markets with stocks in Romania and can deliver as quickly as local stores. It is a huge opportunity to access other markets. And Sameday did the same thing, we took the experience we have here on other markets, where we managed to optimize ourselves very well,” explains Lucian Baltaru.

“In the last three years we have invested 50 million euros annually, very much in the technology area, the Easybox area and the automation area. This year we have not closed the budget yet, we still work on the budget and we are a little lucky because we can see how January and February evolve. But I think we will set somewhere at 30 million euros, we will invest in the infrastructure, but also to prepare to be more agile because I think there is another two or three years of uncertainties,” Baltaru shows.

Growth Will Continue in Double Digits

Yannick Mooijman, CEO at Cargus, believes that there are many opportunities in the eCommerce and courier market. “2022 Was a difficult year, very different from other years, but nevertheless we have tremendous growth and we invested in different areas. We invested in buildings throughout the country, we set up our second hub in Bucharest. We expanded in other countries, we put feet on the ground in Poland, and invested in infrastructure. As far as the growing eCommerce sector in Romania, I think there are many businesses in Europe that realized the potential of Romania and these businesses have been looking for opportunities to invest. And we can help them grow their business in Romania,” says Yannick Mooijman.

“In terms of the opportunities I think we will start growing in other countries like Germany, the Czech Republic, Slovakia and Hungary and we will connect those countries with Romania. I think an important thing we did in 2022 was the out-of network. Prior, we have about 500-600 locations and we boosted that to 3,000 locations. And we started with our own locker network. At the same time, we have to achieve what our core business is and that is delivering great services. It is still our number one focus,” stated Mooijman.

Looking at 2023, the Head of Cargus sees that opportunities continue and growth will continue in double digits. “The challenges that I see are inflation and costs, so we need to be agile, to operate at lower costs. Secondly, last year we saw how difficult is to find workforce, especially drivers. Something that was not mentioned before is the way we can help our customers. It is important to be close to them. So we look at their processes and our process, where they overlap and where they are. And actually start sharing information about customers. By doing that we manage to run one ecosystem instead of two ecosystems. I think that is an important trend and we want to put that in steroids from now on ”, explains Yannick Mooijman.

The transformation of Bucharest into a regional hub

Ana Dumitrache, country head at CTP Romania, shows that the trends in the eCommerce market are also found in the logistics industry. “We saw a tendency to emphasize it, we talked about it two years ago, that of decentralizing the large distribution centers in Central Europe, Czech Republic and Poland. To be closer to the client, to shorten the distribution times, to reduce the carbon imprint, the retailers have chosen to come to Romania, emphasizing the tendency to transform Bucharest into a regional hub,” says Ana Dumitrache.

“Cargus has a very modern center and we developed together in western Bucharest, the area where we managed to build a business ecosystem. The products leave this center throughout the Balkan area, throughout southern Europe, but not only. If we manage to transform this development into an opportunity we have chances that the infrastructure will develop with it,” adds Ana Dumitrache.

Infrastructure is essential for trade and logistics, including transport. The transformation of the capital into a regional hub will also force the authorities to lean more toward road infrastructure. “We have done everything that was related to the infrastructure within the projects and we continue to work and I can say that the authorities came and appreciated that we were working on very high standards,” explains Ana Dumitrache. “If we look at how it was ten years ago it is obvious that it is much better. But now we have these opportunities and it would be a shame not to get involved all the actors, including the authorities, to make them.”

What Bucharest highlights against other cities in the country, first of all, is the number of inhabitants, the city being the fifth largest in ECE, which turns it into a very good market. Then we have the location, being close to the EU borders and can quickly distribute to them. Last but not least, shows Ana Dumitrache, Bucharest has an educated workforce, and this is an argument for the whole country in front of foreign investors. The cities in the West, such as Timisoara, Arad, Cluj, Oradea, are already quite well-developed,” explains Ana Dumitrache.

Ensuring all customer needs

Raul Filip, Acquisition Director at Altex, explained how changes in retail started several years ago. “Several years ago, Altex started on the omnichannel way by anticipating the development and digitization of sales processes and consumers’ needs to buy comfortably. Of course, the offline part has developed, we have improved the logistics and supply side, and we make big investments in the IT infrastructure and the online platform. We consider that the selling channel is the client’s decision, we have a general offer valid for any channel, including Call-Center. Investments come in order to homogenize services, so that the client’s experience is at the highest possible level. And their expectations are at a maximum level, they are more technologically educated, and the level of services offered must increase to keep up,” explains Raul Filip.

The quality of courier services are very important, the courier is often the last contact of the client with the store. “The great exposure we have through the shops helped us to better understand the needs of the clients and we tried to raise the quality of the services, which can be seen through the results,” says Raul Filip. Ever since the pandemic began, from now on, it has been an intense learning period for everyone, with major changes.

“On the one hand I saw the online growth, but this depends on the product, not all are sold online like Electro-IT. During the post-pandemic period we had many hybrid orders, the client goes to the store to see the product and order it later online, we have customers who order online directly in the store, or customers who order from the office to pick it up from the store. It is a mix of the needs of the clients,” explains Raul Filip.

“Decreased purchasing power last year influenced the market negatively. Indeed the market increased in value but if we look at the volumes sold on the total market we see that they are below 2021. The most affected segment was the one with low incomes, which out of the need to ensure the payment and basic needs, thus postponed the purchases. Instead, the premium and medium to premium segment increased, those with high incomes who are interested in technology, better performance to have more free time or access to information ”, shows Raul Filip.

Payment methods are diversifying

Twispay is an e-money financial institution, similar to a bank, not just a payment gateway. The company obtained its license in 2013, but studied the industry until 2016 to create its own product suitable for the e-commerce market, explained Augustin Dobre, CEO at Twispay.

“In the first phase, we focused only on the acquiring process. We do not use Third-Party applications, we are Visa and Mastercard principal members. We are audited by the Romanian National Bank, that is, we offer great safety for merchants’ funds. Our clients’ money is held in safeguarding accounts at key banks, like JP Morgan, for example. This way, no matter what happens, our merchants’ funds are safe and may only be accessed by their sole beneficiaries.”, explains Augustin Dobre.

“Retail and eCommerce players are not a focus for commercial banks, which is why we decided to make a specific and advantageous product for them.” “So far, the role of the payment gateway was seen as limited in e-commerce. Now we see a maturation from the merchants’ side. I say this because our main role is not only to facilitate the payment but it is to increase the merchants’ sales. This is very simple and may be done in various ways. For example, we look at the transactions of a store and see that three in ten payments have been refused due to insufficient funds. We can target those three customers, automating emails their way and inviting them to try using another card or another payment method. We have a total of 20 alternative payment methods, Cirro Pay, Idea, etc.” says Augustin Dobre. He also says Twispay’s services are available everywhere in the European Economic Area, as the institution’s license is passported in the EEA.

Regarding the challenges for the next period, Dobre showcases that safety and regulatory aspects play a crucial part. “Things in the industry have changed in the past years. At first, the registration process for e-commerce merchants could only be done offline, in brick-and-mortar locations. We were the first to do it online because we understood that this is where these companies operate. They offer speed and convenience and expect the same from their providers.”, explains Augustin Dobre.

Of course, things don’t stop here. Technology evolves, transactions as well, and new ways of registration and settlement appear, and companies are obliged to keep up with all the changes to be sure to offer the best services to customers.

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