I launched my first online store, MarketOnline, back in 2005. At the time, telling someone you sold things on the internet earned you the look reserved for a man selling ice at the North Pole. Orders arrived by e-mail, sometimes by phone, and half the customers called before paying just to make sure we actually existed. Then came Floria, an online flower shop I started in the middle of the financial crisis, and I learned how hard it is to deliver on time a product that forgives no delay: flowers.
Now, at the start of 2016, I am looking at the market from a new angle. For a few years now, with Retargeting, we have been building marketing automation and personalization tools for online stores, so every day I see how visitors behave, what they abandon and what brings them back. Romanian e-commerce has had its boom: strong yearly growth, Black Friday turned into a national holiday, hundreds of new stores every year. The question is no longer whether Romanians shop online. The question is what comes next.
The boom is over. The good part starts now
I am not saying the market has stopped growing. It is growing, and it will probably keep growing for years, because we are starting from a small base compared to Western Europe. What I am saying is that the days when a website and a Google budget were enough to sell are gone. In 2010 you could win simply by being among the first in a category. Today, in almost every category, you face five to ten serious competitors and one big player that sells everything.
That means we are moving from the conquest phase to the efficiency phase. The winners of the next few years will not necessarily be the biggest, but those who know their customers best and keep their costs under control. Bad news for those who relied on luck, good news for those who know how to work.
Mobile is not the future, it is the present
I see more and more stores where a large share of traffic comes from phones. The problem is that mobile conversion is usually far below desktop. People browse on their phones, on the metro or in bed at night, and then buy, if they buy at all, the next day on a laptop. Or they give up, because the checkout form asks for 14 fields and the on-screen keyboard is torture.
A responsive website is not enough. It has to be designed for the thumb: big buttons, few steps, a search box that actually finds things, images that load fast on 3G. Anyone who treats mobile as a shrunken version of the desktop will lose customers without knowing why. And one more thing: Google has already started to take mobile-friendliness into account when ranking sites in mobile search.
Cash on delivery still rules, but cards are gaining ground
Romanians pay at the door. Cash on delivery (paying the courier in cash when the parcel arrives) is still, by every market estimate, the payment method for the vast majority of orders. I understand why: trust is hard to earn, and many people have heard at least one story about a parcel that never showed up. But cash on delivery has a huge hidden cost: refused parcels, money stuck with the courier for days, shipping paid both ways for nothing.
I believe card payments will grow steadily over the coming years, especially among younger people and in big cities. But it will not happen by itself. Stores need to make online payment simple and safe and give people a concrete reason to use it: a small discount, free shipping, hassle-free returns.
The courier is now part of the product
At Floria I quickly learned that, for the customer, there is no difference between the store and the courier. If the flowers arrive late, the store is to blame. Full stop. The good news is that Romanian courier companies have grown together with e-commerce, and next-day delivery in the big cities has become almost standard.
The next step is control: customers want to know when the parcel is coming, choose a delivery window, and pick it up from a nearby point if they are not home. And they want easy returns. Stores that negotiate well with couriers and seriously integrate their systems with them will have a real edge. Those that treat delivery as someone else’s problem will lose customers by the second order.
Marketplaces: friend or foe?
One trend I am watching closely is the big platforms opening up to third-party sellers. eMAG (Romania’s largest online retailer) has started down this road, and OLX (the leading classifieds site) has already changed the way Romanians buy and sell from each other. For a small store, a marketplace is tempting: instant traffic, borrowed trust, no marketing headaches.
But it is a double-edged deal. On a marketplace the customer is not yours, it belongs to the platform. You compete on price with the seller next to you, you pay a commission, and the data about your buyers stays with someone else. My advice: use marketplaces as an extra channel, not as your only foundation. Your brand and your direct relationship with customers are the only things nobody can take away from you.
Personalization and the returning customer
I have a bias here and I admit it: this is exactly what I have been working on for the past few years. But I say it because I have seen it from both sides of the desk. Most store owners spend almost their entire budget bringing in new visitors and very little keeping the ones who have already come. It is like pouring water into a leaking bucket and complaining that it never fills up.
Here is what Romanian stores could start doing tomorrow:
- send an e-mail to people who abandoned their cart, showing the products they left behind;
- recommend products based on what each customer has viewed or bought, not the same best-sellers for everyone;
- segment the e-mail list instead of sending the same newsletter to all;
- track not only how many new customers they get, but how many come back and how soon.
None of this is science fiction. Big American retailers have been doing it for years. The difference is that in Romania it is still a competitive advantage rather than the bare minimum. But that window is closing.
The competition is no longer only local
More and more Romanians order directly from China on AliExpress, or from the UK and Germany on Amazon and other big stores. For cheap, mass-produced items, the price is hard to beat. For branded goods, foreign stores often have a wider selection. And Romanian shoppers are increasingly comfortable ordering in English and waiting two or three weeks for a good price.
I do not think Romanian stores can win this fight on price. They can win on speed, service, language, warranty, returns, and on having a real person answer the phone in Romanian. And why not go the other way too? The European market is open to us as well, not just to others. With Retargeting we looked to the United States from day one precisely because we believed a Romanian product could compete abroad.
What I would do if I started an online store today
I would pick a narrow niche where I can be the best, not a general store. I would build the site for phones first. I would negotiate delivery before negotiating with suppliers. From day one I would measure how many customers come back, not just sales. And I would put as much effort into the second contact with a customer as into the first.
Romanian e-commerce is coming of age. It is no longer the Wild West of ten years ago, but it is not a saturated market either. This is exactly the moment when well-done work starts to matter more than boldness.
How do you see 2016? Are you shopping more on your phone, still paying cash on delivery, or have you switched to cards? I would love to hear from you, especially if you run an online store.