Unlocking E-Commerce Potential: Expanding to Central and Eastern Europe in 2024

16. 07. 2024 Autor

Are you planning your next market expansion? Explore the high-growth potential and cost advantages of Central and Eastern Europe. Local marketplaces often present the best opportunities for boosting online sales. This article introduces the benefits of expanding into the CEE region and offers key tips for successful market entry, also without relying on local marketplaces.

Why CEE?

The CEE region is no longer a hidden gem. It’s a rapidly growing e-commerce market with potential for businesses seeking expansion.

The region offers several advantages for online expansion:

Emerging Potential: Compared to Western Europe and the US, competition in CEE can be less intense, offering opportunities for businesses to establish a strong presence.
Cost-effective Expansion: Operating costs, such as labour and logistics, can be lower in CEE compared to Western Europe, potentially increasing your profit margins.
High Growth Rates: E-commerce in countries like Poland, Romania, the Czech Republic, Hungary, and Estonia is growing tremendously due to dynamic technological development and the increasing popularity of online shopping.
Consumer Openness: Customers in the CEE region are more open to cross-border shopping due to the limited availability and variety of local products.
Diverse Markets: The CEE region’s diversity in terms of culture and consumer preferences means there are many segments to explore and capture, providing fertile ground for tailored marketing strategies and product offerings.
Supportive Market Practices: The region’s markets often collaborate logistically, making it easier for businesses to enter multiple markets simultaneously.
Legal and Regulatory Alignment: Most CEE countries are members of the European Union, meaning that legal regulations regarding online sales are similar to those in other EU countries, simplifying compliance and reducing legal barriers for businesses expanding within the region.

Expanding into the CEE region provides a fertile ground for growth, with lower competition, lower costs, and a receptive consumer base, all within a supportive legal framework.

Expansion via Marketplaces

Advantages

Low Entry Costs: Compared to setting up your e-commerce store, online marketplaces require minimal upfront investment. You typically only pay fees when you make a sale.
Reduced Infrastructure Needs: You don’t need to worry about building your website and managing logistics (if you choose fulfilment by the marketplace),
Large Customer Base: Marketplaces have a built-in audience of millions of potential customers who are already actively shopping on the platform.

💡 Consideration To Keep in Mind: Each marketplace has its own rules and regulations

Disadvantages

Competition: Marketplaces are typically crowded with sellers, so you’ll need to stand out with competitive pricing, high-quality products, and excellent customer service.
Marketplace Fees: While entry costs are low, ongoing marketplace fees can eat into your profit margins.
Less Control: You have less control over branding and customer experience compared to having your own online store.
Customer Support With Local Language: Marketplaces require you to communicate with customers in the local language of the marketplace.

CEE Marketplace Overview

Allegro (Poland): The dominant player in Poland, Allegro oﬀers a vast product range and a loyal customer base. With over 128,000 sellers from CEE and beyond, it is the top choice for 82% of online shoppers in Poland.

+Fulfillment by Allegro (One fulfilment) It aims to simplify logistics and improve delivery times for sellers on the Allegro platform. Allegro handles the picking, packing, and shipping of the product directly to the customer on behalf of the seller. With one fulfillment, delivery time is reduced by up to half which can have a significant impact on sales.

+ There is no monthly fee and commissions range from 2-13%, which is less than competing marketplaces in most categories. So you may have lower prices or higher margins.

– Allegro is a very price-competitive place due to the characteristics of the market and it is very difficult to get the best price for customers

Pro tip: Get the SMART! Badge. Studies show that Allegro Smart! sellers can experience a sales increase of up to 20% and see their oﬀerings viewed by more active customers who are more likely to buy.

MAG (Romania, Hungary, Bulgaria): The number 1 marketplace in Romania, Hungary, and Bulgaria, known for its competitive prices and wide selection.
+Fulfillment by eMAG (FBE), like other marketplaces, aims to simplify logistics and improve delivery times for sellers.
+ There is no monthly fee + product matching via product XML feed or API
-Commission is between 7-25% on each order, the category system is quite complex and so it hinders eﬀective pricing.
-It is important to use partner carriers or fulfillment by Emag, otherwise keeping on-time delivery and policies is quite difficult

Kauﬂand (Czechia, Slovakia, Poland, non-CEE Germany, and Austria): Primarily a brick-and-mortar retailer, Kauﬂand has launched online marketplaces in several CEE countries, oﬀering additional reach.

+Fulﬁllment by Kauﬂand (FBK): As well as other fulfilments, better chances of winning a buy box and more conversions through faster and more reliable shipping.

+Geographic Reach: A single marketplace can give you access to a wide range of CEE countries, allowing you to tap into a broader market without needing individual expansion strategies for each nation.

+Localized Support: Many CEE marketplaces oﬀer localized support in terms of language, currency, and even marketing tools, making it easier to connect with customers.

Not Expanding Through the

Marketplace?

What You Should Keep in Mind:

Market Analysis and SEO: Conduct a thorough market analysis for your product, including competitor analysis and developing an expansion strategy. Don’t forget to optimize for local SEO to reach your target audience effectively.
Website Localization: Tailor your website for local customers by translating content, using local currencies, and adapting to cultural norms. Continuously update your site to reflect current trends.
Transparency with GDPR and Policies: Ensure compliance with GDPR, cookies policy, e-shop rules, delivery, and payment methods. Providing detailed information builds trust, especially as a foreign brand.
Communicate Uniqueness – USPs: Highlight your unique selling points (USPs) prominently to differentiate from local competitors, like for example sustainability support.
Legal, Accounting, and Technical Support: Obtain local legal, accounting, and technical support to navigate diverse regulations, such as different VAT rates.
Local Trust Signals and Certificates: Secure local trust signals and certificates like Laur Konsumenta in Poland or the Arukereso badge in Hungary to enhance credibility.
Payment and Delivery Methods: Adjust payment and delivery methods to local preferences, such as BLIK for Poland or Hungarian Post delivery, which is mandatory by law. Be prepared to process different currency payments and offer cash on delivery, especially in Hungary and Balkan countries.

Central and Eastern Europe (CEE) presents a high-growth potential and cost advantages for e-commerce expansion. Unlike other regions, Amazon doesn’t dominate the CEE market, making local marketplaces a viable option.

Key benefits include less intense competition, lower operating costs, high growth rates in e-commerce, and consumer openness to cross-border shopping.

While expanding we emphasize the importance of localizing websites, complying with GDPR, highlighting unique selling points, and adjusting payment and delivery methods to local preferences for successful expansion. Utilizing local trust signals and securing legal, accounting, and technical support is also crucial for establishing a strong market presence in the CEE region.

This article was created in collaboration with EXPANDO, one of the top five Amazon agencies in Europe.

Are you considering expanding your business to CEE through marketplaces?

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or contact Expando on ceo@expan.do.

Special offer for readers: Get started with EXPANDO for free! They’ll waive their fees until your sales hit €3,000.