The DACH region is a highly developed market with massive purchasing power. However, expanding within the region can be challenging due to strong competition, high market saturation and associated marketing costs on any channel.
On the other hand, the markets of Central and Eastern Europe (CEE) can be easier to penetrate. Customers respond well to fully localized websites and product lines, good prices and trustworthy/recognizable brands. How to get the most out of the business expansion, what to focus on and what are the specifics of each market? Let’s take a look at the facts, comparisons and recommendations for successful expansion into the CEE region.
Do you have a really good product?
Congratulations, you have matched the most ideal time to expand into CEE. Being ready to grow, having refined processes and a clear marketing strategy gives you a significant advantage. However, keep in mind that profitability is crucial. It’s not worth expanding an e-shop that is not generating a profit or is in the red; moving to another market won’t solve an unfavorable situation. A proper financial management is a key factor for successful expansion.
The CEE region offers many advantages where you can leverage your know-how and experience to gain a competitive edge.
How to choose the most suitable market for expansion?
Conduct a detailed analysis of individual countries and do thorough market research. As you already know, the most important indicators include:
- Basic information about the country, such as its population, GDP, and currency.
- Demography, which is the study of the population, including its size, age distribution, and ethnic composition.
- Economic indicators, such as inflation, unemployment, and interest rates.
- Legislation and legal requirements for an online shop, such as licensing, taxes, and consumer protection laws.
- Taxation, which is the amount of money that businesses and individuals are required to pay to the government.
- The level of digitalization of the country and internet accessibility. The number of online shoppers, the most popular e-commerce platforms, and the average purchase price.
- Competitor analysis, such as the size, market share, strengths and weaknesses of local online businesses.
- Regional specifics, such as cultural norms, language barriers, and shipping costs.
CEE e-commerce markets can be divided into saturated markets and developing markets. Czechia, Poland and Slovakia are primarily saturated markets within CEE. It may be more challenging to enter the Czech Republic compared to developing markets such as Romania, Hungary, Bulgaria, Croatia and Slovenia. However, Romania has been one of the fastest-growing e-commerce markets in Europe for several years.
CEE e-commerce markets bring tangible advantages. As these markets develop and are not as saturated, there are fewer experienced competitors. Generally, there are fewer e-shops than in Western countries. Expansion is less demanding because the groundwork for expansion, such as marketing agencies with good experience in expanding to these countries or logistics partners, is well-established. Cheaper logistics is another advantage. It is important to mention also the downsides, including a fragmented region, different domestic currencies and languages.
The total population of the CEE is as large as that of the DACH, with over 100 million people considering Poland, Czechia, Slovakia, Hungary, Bulgaria, Romania, Slovenia and Croatia their home. You will find purchasing power throughout the whole CEE but make sure to pay attention to the product sold. For example, if you sell high fashion, you should focus on places that are economically powerful, like Prague, Bratislava, Budapest, Warsaw and Bucharest. More affordable products, on the other hand, gain traction in all eastern regions.
Concerning the number of internet users, Bulgaria, Croatia and Romania have a 10 to 20% lower percentage of internet users than Germany. This is a significant advantage for expansion because it means the number of users will continue to grow, increasing the number of shoppers and attracting new customers. These countries are also among the fastest-growing e-commerce markets in Europe.
Top e-commerce categories
The most popular e-commerce categories in the CEE region clearly mirror global trends. If your e-shop falls into these categories, expanding is a viable option as you are in the right place:
- Toys, hobbies and DYI
- Food and hygiene
Customers and shopping behavior
Customers in the CEE region prefer less conservative content and modern design. Outside saturated markets, e-shops don’t focus on attributes like website responsiveness. They have a more established personal contact with customers, often verifying orders over the phone. Local phone numbers inspire extreme credibility.
What applies to the entire CEE region is that customers are price-sensitive. Especially in Poland, Slovenia and Croatia, where customers constantly compare prices of their desired products and are willing to wait weeks to catch the best offer.
DACH region customers like a lot of information and text on websites which is something CEE customers miss. They are not accustomed to finding information themselves, so it’s essential to clearly communicate vital information, such as delivery times. Eastern customers are more temperamental, so make sure to be truthful since inaccurate information can lead to problems. Flooding the helpdesk with calls about late orders are very common and can cause unwanted damage to your business.
The primary sources of information are Google and Facebook. When expanding to Romania or Hungary, Facebook is a must-have; customers here respond much more to advertising on social media which is very effective and much cheaper than in the DACH region.
DACH Customer vs. CEE Customer
While DACH customers are very concerned about sustainability, which also applies to customers in the Czechia and Slovakia, the primary indicator in CEE regions is price. This is mostly due to lower income compared to Western countries. Another important factor is the delivery time. After COVID, customers have become more sensitive to delivery times. Three days for delivery is a kind of metaphorical ceiling.
Price comparison websites
It’s essential to note that the Heureka group dominates all price comparison websites in the CEE region (all mentioned above except for Poland). Thanks to Heureka, you can obtain information and insights from all these markets in one place.
Delivery specifics for CEE region are:
- High number of uncollected packages
- Statutory time limit for returns
- Delivery speed is a dealbreaker
- Couriers waiting for goods to be tried
- Free shipping as a necessity
- And popularity of local carriers
“Collection points expedite the process of returning goods at local collection points and assessing claims. Thanks to them, you can save time, costs and gain equally important positive reviews.” – Tomas Vrtik from Expandeco
While PayPal is most common in DACH, cash on delivery reigns supreme throughout the entire CEE region. This may cause problems such as unclaimed shipments, but unfortunately, it’s something you have to contend with because cash on delivery is essential for the CEE customer. To avoid issues with unclaimed shipments it’s recommended to invoke a sense of responsibility, either by calling the new customer to confirm the shipment or by sending an SMS. When it comes to online payment methods, card payment is gaining popularity, especially in saturated regions.
An interesting fact is that Slovenians are among the most crypto-friendly nations globally. So if you’re an enthusiast, introducing cryptocurrency won’t hurt and can be used for marketing purposes.
Beware of taxes which differ across the region. It’s essential to note reduced VAT; if you simply sell products that fall into this category, analyze and map the country to gain an advantage. The most common items include various types of food or medical devices or even tickets for cultural events.
The first recommended move is checking the competition on Google using localized phrases. Monitor the product portfolio of your competition, website appearance, responsiveness, shipping methods, shipping fees, payment methods, social networks, etc. Monitor the price, variants and availability of products.
“It is recommended to do mystery shopping. Your local competition is doing it as well.” – Tomas Vrtik, CEO Expandeco
How to start effectively? Consult CEE expansion experts
To ensure a seamless transition, successful market penetration and match brand strategy with target market and product awareness, enlisting the expertise of top local professionals such as Expandeco is crucial. Your expansion will be all the more efficient and economical, financial resources will be properly allocated without unnecessary losses and you will easily avoid potential pitfalls and lengthy processes.
Expansion specialist Tomas Vrtik from Expandeco mentions several important specifics that characterize the CEE region:
“Quality customer service that responds well to customer requirements is very important. Most questions generally concern ambiguous product descriptions and low-quality product photos. If the descriptions on the e-shop are unclear, poorly translated or difficult to find, customer service is overburdened and therefore financially inefficient.
On the other hand, most customers do not hesitate to increase the value of the order by additional goods if they are motivated by the possibility of free shipping or free returns, which of course can bring certain disadvantages to the merchant. However, it is worth motivating customers to fill out a satisfaction questionnaire by offering an extra offer or a discount on their next purchase.”
The most important services to have covered
Expandeco breaks down expansion-related boundaries and offers comprehensive services for the complete localization of online shops so that they work like at home in all CEE markets. Due to many years of experience, they have identified and cover the five most important services which, among others, increase the credibility of local customers, competitiveness and affects the rate of positive evaluations:
Customer support and local call centres helps you build a solid brand trust with experienced specialists who can serve your customers in their mother tongue. Local call center agents are familiar with the cultural nuances and preferences of their country, allowing for more effective interactions and problem resolution, comply with local regulations and provide efficient and cost-effective customer support, ultimately contributing to the overall success of the expansion strategy.
Reverse logistics and collection points for returning goods is a service that truly saves a lot of money. An existing infrastructure without the need for additional investment brings extremely fast and affordable reverse logistics management to online shops. Collaborating with experts familiar with CEE’s regulatory landscape ensures that your business adheres to local requirements. This minimizes the risk of legal issues and establishes your brand as one that operates in accordance with local norms. Reverse logistics can thus become your strong competitive edge.
Translation and localization is one of the key factors. The most important and, at the same time, the most costly part is undoubtedly translations. Take them seriously, as they are the first thing a customer will come into contact with. Why is localization so important?
- Gain a competitive advantage
- Market share
- Google search
- Faster growth
- Higher conversion rate
- And last but not least, credibility
Local phone numbers inspire extreme credibility and creates a sense of trust. It’s a relatively simple yet effective step that can significantly contribute to the success of your business expansion efforts. In addition, including a familiar phone number in advertising materials, websites and promotional content can increase the effectiveness of marketing campaigns.
Market research helps to get a better sense of competition, so you can take advantage of your competitors’ weaknesses or be inspired by their strengths. Expandeco highly recommends to have a custom research of the target market carried out prior to expansion. You will gain decision-making confidence, important market knowledge and a basis for developing a marketing and sales strategy.
CEE market is full of opportunities
Central and Eastern Europe is an attractive region that has hidden potential for online shopping. Its quick-tempered people are price hunters, they prefer to shop in their native language and like to verify the credibility of an online shop, especially through personal communication.
If you decide to expand to CEE, it’s crucial to follow trends and news in e-commerce, stay informed and obtain information from interesting and relevant sources. Identify which data is essential for you, which indicators about the country/market are crucial for you. Stay up to date following relevant market survey tools and don’t hesitate to use the advantages of trusted local agencies.
About the author
Tomas Vrtik, CEO of Expandeco, has helped hundreds of e-shops successfully find business opportunities beyond borders with his 70-member international team.
Thanks to his extensive international experience, he brings efficient cost optimization for reverse logistics, thorough market analysis, quality localization, and professional and reliable customer support to entrepreneurs.
Tomas is a consistently positive-minded expansion expert who enjoys providing advice based on his nearly 10 years of experience, predominantly in the e-commerce markets of Central and Eastern Europe.