In upcoming years, the traditional stores will transform into showrooms that will utilize advanced technologies to showcase and sell products. They will compile the product directly to you, print it out at the store, or send it to you by courier. Let's discuss the exciting challenges in the online shopping world with Mr. Cicmanec, a country manager at a fast-growing Central European online store.
Q: What is the current development of "e-shops" in Slovakia?
I perceive the development of e-commerce very positively. Even though there are currently more than 7 thousand e-shops in Slovakia and 37 thousand in Czechia, #Internet use is rising. We belong at the top of Europe together with CZ. Therefore, every good new e-shop has a positive effect on this development and awareness among customers. The Slovak market is very saturated, and it is a challenge to become a successful e-shop. I can see a window of #opportunity for specialized e-shops to bring a more segmented offering to the customer. They can create significant value for the customer by #personalization and wider offering in a specific segment.
Q: It is true that e-shops "kill" the traditional shops? Why many customers still prefer to visit the conventional store over the virtual one?
I don't think #e #shops kill traditional shops. I think they make traditional shops #evolve and vice versa. Internet shopping has an average market share of about 20% in Europe, 29% in Slovakia, and 39% in Czechia. Still, the numbers are growing each year dynamically. This growth can go up to 50%, where it may stop, and it will depend on the market-specific whether it will continue to grow or decrease.
Customers' shopping #habits do not change from year to year. It is a lengthy process and depends on the culture in the country itself. Maybe in Central Europe, we have adapted to the Internet as quickly as other parts of Europe because we have not been influenced for decades by other means. Our shopping habits began to reshape relatively recently.
I think traditional stores will have their customers because the whole shopping process is about #consumption and #emotion. Emotion is currently the big thing online shopping needs to face. Furthermore, some specific commodities of daily consumption such as fresh vegetables or other complex solutions such as technological solutions may be difficult to sell over the Internet.
But to answer the question, people choose traditional stores because of the immediate availability of goods, the need for advice, out of habit, or distrust of the Internet. But what is positive for online, we are working on most of the above factors and improving. On the other hand, there are advantages in favor of the Internet, such as lower #prices, time savings, #product range, or the #ability to #buy everything in one e-shop.
Q: Owners of the traditional shops often claim that customers visit their shops for viewing & touching the product, but finally, they buy the product online. What drives this behavior?
Yes, this trend has been noticeable for years. We are also very socially diversified in Slovakia and do not have a strong enough middle class on which the entire retail business stands. Therefore, if people do not have enough resources, they are looking for ways to buy products #cheaper, but at the same time, they want to make a good deal. Therefore, they consult in a traditional shop, physically touch and #explore the #product and then buy it online.
Still, the number of traditional shoop is more significant than online.
It's also about the fact that many retail players on the market have ignored e-shops for years and pretended that online customers were different from retail customers. In between, e-shops grew in the market, improved the offer, services and gained new customers.
Q: Amazon, Alibaba, eBay, Aliexpres lead the way. Large traditional retailers are starting to cooperate with these internet giants. Is this the future trend?
Years ago, it was clear that the path is to be "#multichannel," meaning to sell everything to everybody by all possible channels. It can be challenging for established traditional retailers to switch to entire #online #shopping in the Central European market. Mainly because of customers. They like their conventional retail stores, and they may perceive online channels as only a supplement to traditional stores. Therefore cooperation between channels is necessary.
Likewise, the online shop cannot be limited to just one brand and rely on consumers to buy only in my shop. All the companies you mentioned are not retail companies or e-shops. They are so-called "#Marketplaces" sellers, foreign outlets where various sellers worldwide sell, end customers, and sell to other sellers and competitors. That is why we are currently developing this sales channel in our company at the international level, and we already have up to twenty partners who sell their goods through our e-shop. And that's why we will be happy to sell our goods through another Market place o such as Amazon, Aukro, and others.
In the future, this form of sales is essential for your business to grow because, at a specific volume limit, you will always hit your internal capacities, whether managerial, commercial, technological, or logistical.
And on the other hand, as I said, there will always be a group of smaller e-shops specializing in specific segments of products and making them better than more prominent companies. So why not use their know-how and not offer them a "marketplace." At the same time, they cannot perceive us as competition but rather a tool for their growth.
Q: You operate in Central and Eastern Europe. How does customer behavior change in these countries?
I have already said that the share of internet usage in individual countries is different. In #Czechia and #Slovakia, this share is the highest in #Europe. We also operate in Hungary, Poland, and Slovenia, where there is an average Internet usage share but excellent growth potential.
Of course, in the Czech Republic, Slovakia, and #Slovenia, the market is already saturated. On the contrary, we have significant growth opportunities in #Hungary and #Poland due to our current market share and the business opportunities these markets offer. In Hungary and Poland, the customer is sensitive to the price. On the contrary, in the Czech Republic and Slovakia, the customer is already demanding and expects perfect #services and #communication. But in general, the customer decision is driven by the price, the seller's brand and credibility, personal experience, services offered, and reviews.
Q: Increasing number of online shopping is reported each year. Does this mean that customers trust online shopping?
Specifically, the Slovak online shopping market increases about 25% each year, which means a very dynamic development. Overall, there was an increase in retail sales, including online shopping, economic growth, good prospects for the #future, and increased consumption.
I think increased online shopping is due to the #growth of the #quality of e-shops in the range of offers, services, and, of course, customers' trust. Customers rely much on reviews, ratings, and recommendations from acquaintances and customers.
Q: How do you perceive the future of retail? Do you think that e-shops will conquer traditional shops?
I don't need a traditional shop from my perspective and needs, so if I had a food replicator at home, I wouldn't even have to go to the store for those products. I also order food online and groceries. I buy almost everything in our online shop.
Of course, traditional shops will always survive. It's our human nature to #meet, #communicate, #trade. But it depends on how will traditional stores adapt. The market is constantly evolving, and companies are merging to have a more #vital position. The local player has to offer something very unique to survive, especially in smaller markets.
In decades, the traditional stores will #transform into #showrooms that will utilize advanced #technologies to showcase and sell products. They will compile the product directly to you, print it out at the store, or send it to you by courier.
Q: What are the most requested and best-selling commodities online?
The best sellers worldwide are usually #clothes, #books, #tickets, and #perfumes. #Electronics follow them. In our regions, electronics come in the first place and then follow the non-electric commodities. Then there are currently growing categories as needs for home and #garden, #sports, children's equipment, #clothing, or animal #food. There are categories, such as food, drugstores, medicines and nutritional supplements, or furniture, which are rising, and these categories are still rising sharply.
Q: Customers often claim poor online shopping experience. How should on lines store improve their customer experience?
A successful e-shop today is far beyond a low product price. It must offer a #fair #price for the customer. And those sellers who focused only on the price are no longer on the market, but there are still new ones trying. A demanding customer expects a #reasonable price, a broad #offering of #products in one place, immediate #stock #availability, #fast and reliable #delivery with #free #shipping, or other customer services. Such as the possibility of personal product pickup, call center, extended product warranty, online payment by credit card, bargain purchase, and others.
All these additional services come up with additional costs for the online store, and it is not realistic for an online store to offer a very low price of the product. The business concept of such an online store is very short-lived because it is unsustainable, and at a particular stage, you will run out of resources, and your customers will pay the price.
Q: How significantly EU regulations affect your online business?
EU is striving to protect the customer, but sometimes they do not consistently deliver the expected results. However, our authorities are sometimes swiftly adopting #EU directives even sooner than the surrounding countries. It results in unnecessary administrative burdens on fair trading companies because non-fair sellers do not respect the law usually do not respect it.
But it's not just about the warranty on the products or a more extended option of returning the product, these are things that are #customer #oriented, and we don't have a problem with them. On the contrary, we like them because they give customers more security and more motivation to buy online. Some regulations restrict sellers directly in sales and define specific things that must be displayed and written. Yet, it has nothing to do with selling the product, and it causes another complication for the customer.
Thank you Marek
About Mr. Cicmanec
Marek Cicmanec is an expert and country manager at Mall.sk. His expertise comes from traditional and online stores. Marek helped to create one of the leading online stores in Central and Eastern Europe. Marek holds a Master's degree in Economy from the University of Zilina.
A series of MENITY Leaders Talk interviews.
Interview with Mr. Cicmanek by Mr. Nemcok, a partner at MENITY.
Pictures © MENITY.