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Ecommerce by 2020: Up-and-Coming Trends in Central Europe

From hiring the first AI “employees” to the new VR buying experience, to quantum computers and in-car ecommerce, the future of online retail seems to be both exciting and overwhelming. Although most of the predictions are based on valid data, it is still pretty unlikely that Central and Eastern Europe’s sellers will experience these futuristic trends in the years to come. What is a more realistic picture of CEE’s ecommerce scene by 2020?

Customer data platforms

Definitely a trend already, online stores and sellers will gather and use much more customer data in the upcoming year or two. Customer data platforms (CDPs) integrate everything from social media, websites, direct e-mailing, text messages etc., as well as customer information such as onsite behavioral data, engagement and transactional data, and personal and demographic information – all in one place. Then they use it further via a comprehensive and data-driven marketing strategy to boost sales, revenue, and profit – or to reach other business goals.

“Nowadays, most stores put emphasis on customer value and attribution models, and this goes a step beyond. Trend-setters and/or bigger retailers are already building those platforms, allowing them to know an unprecedented amount of customer data and marketing to customer segments better than before,” CEO of Dataweps Jan Mayer informs. Even with ongoing discussions on the ethical side of tech disruption, it is very likely that more and more stores will build their own customer data platforms or buy software from companies such as Salesforce.

 

“Amazonification” of the European market

There is an ongoing consolidation of ecommerce going on in our region. A growing number of stores couldn’t exist on their own anymore, and therefore they are being made part of a bigger body, such as marketplaces or other platforms. We have seen similar consolidation in South East Asia and umbrella platforms such as Ceneo, Heureka, Árukereső, Emax not to mention Amazon itself and others aiming to bring more homogeneity into a scattered market like Europe, namely Central and Eastern Europe (CEE).

Integration into rather unified marketplaces will make it necessary to adapt to new ways of branding, customer care, logistics, pricing and so on.

 

Expansion not as an opportunity, but rather a necessity

The aforementioned trends create more pressure on individual sellers to either become part of something bigger or expand – or both! In order to survive the ongoing integration of CEE’s ecommerce, sellers need to look beyond their borders and current comfort zones. “With the saturation occurring in domestic markets and external trends, expansion becomes more of a necessity,” Jiri Cerny of EXPANDO explains.

Ecommerce in the Czech Republic felt that effect in 2018 when German brands like Zalando and About You entered the market and created a considerable ripple effect, resulting in a couple of leading retailers being shaken to the core or even closing their businesses altogether.

The growing power and presence of Amazon in Europe is causing another kind of pressure (as well as other opportunities), and if we take into account China’s massive growth, it is safe to say that smaller markets such as Slovakia, Hungary, the Czech Republic and the Balkans have some very dynamic times ahead.

 

Boost of B2B Marketplaces

On a more positive note, finding new customer segments doesn’t mean that we have to expand to five new countries in five months! The growing numbers of B2B sales only show what an interesting opportunity awaits for those who have goods or services to sell to other businesses.

Especially on Amazon, B2B segments were the fastest growing in 2018, and this trend is expected to maintain its pace. Worldwide, profits from the Amazon Business platform are twice as high as B2C. There are more than a million business accounts already, which seems small compared to 300+ million customer accounts worldwide, but look at this: global annual sales outreached 10 billion dollars in 2018! Worth considering? 

Hand in hand with market integration are legal procedures as well as taxes. A new EU legislation is expected to make VAT maintenance easier starting in 2019, especially in correlation with selling in multiple countries via marketplaces. Amazon has taken charge in making sure its sellers obey current laws as tax-payers, and eBay is expected to do the same in the next year.

 

Automated pricing and AI

Companies like Amazon have embraced dynamic pricing – not only does the company alter its prices more than 2.5 million times a day, but it also changes the price of around 20% of its total inventory every day. With more and more retailers implementing machine learning in their re-pricing process, it’s less likely you would measure up without revamping your pricing strategy. “A still popular method is random pricing changes followed by a wait-and-see attitude, and the lack of overall strategy is ceasing to work if it ever did!” Dataweps’ CEO Mayer predicts.

“With more data being gathered and put into further use, stores will realize how this lack of pricing strategy is keeping them behind. It’s one thing to assume things are going quite alright, and another to see the actual numbers and realizing where you could have been if only you had put machine learning or other dynamic strategies to use,” he adds. Machine learning is, for example, able to use input data and key metrics to simply calculate the optimal price for a given product on a given day. And put a different price tag on it tomorrow! Emphasis on effectivity and maximizing profits while being able to build a long-term stable business all call for dynamic pricing.

For more pricing trends in CEE including customer and product segmentation, read the full article we wrote on this topic.

 

Seamless shopping experience

With brick and mortar shops and online stores growing more and more inside each other and the millennial generation preferring to shop both on the phone and in store, it seems unlikely for a future store to thrive as either purely digital or purely physical. “Seamless economics is tightly connected to multichannel sales and it is all about creating a shopping experience for the customer. This trend already urges sellers to build in their values throughout the selling process, and the pressure to maintain their brand’s integrity throughout the channels will only grow higher from here,” Mayer explains. “Merchants will have to master the combination of showrooming and webrooming, events, product demos, in-store experiences and more,” Absolunet sums up.

In other words, Amazon Go may be a cool experience nowadays, but will become more of a standard within the next couple of years. Tech revolution and personification will go hand in hand to ensure these models are viable, as well as the ever-evolving gathering of customer data, which brings us back to square one of this article. With this full circle, we are leaving it to you to take the discussion further in the comments below! What are you experiencing in your market and where are the trends taking you?


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