There is a contradiction at the heart of the Bulgarian e-retail market. The vast majority of the population, 71%, is online, yet it is only around 20%, or one in five people who have already bought something online. This is a huge gap but also a huge opportunity.
This gap has been closing in the last five years, with the e-commerce market having grown between 21% and 35% each year in terms of revenue. In 2020 however, the jump was much smaller - around 9%, to 974 million euro, according to the annual Passport report by the Bulgarian E-Commerce Association (BEA). This is another contradiction - in a year when the pandemic forced everything move online, e-commerce didn't register anything resembling a boom.
The association expects the sector to pick up speed because of two things - a lot more people have already shopped online and retailers are a lot more online-focused and optimized for mass-scale e-commerce.
Interestingly enough, the most active region in the country is the least developed one - the Northwest, where 25% of all people have bought something online. The lowest percentage is in the Central North region, where only 14.5% have ever shopped through the internet.
And in 2019, there is a pretty clear winner in terms of categories - 76% of all shoppers bought clothes, while 35% bought toys and furniture. Only 16.9% ordered food and it won't be a surprise if this percentage goes up in the next report, given the circumstances.
Where's the problem
The e-commerce frenzy in 2020 showcased some of the problems that the industry has in Bulgaria - mainly in terms of transport and infrastructure. While Bulgaria has a number of big e-commerce companies, there are only two big enough delivery companies - Econt and Speedy. And in the last two months of 2020, it turned out that the volume of deliveries was too big for them to handle in time.
of consumers bought from Bulgarian e-stores, 42% from EU based ones and 19% - from outside the EU
The whole machine just wasn't ready for this rise in demand. The coronavirus spread, the surge in cases and the November lockdown made it impossible (or at the very least - undesirable) for customers to shop physically. At the same time, the Black Friday and Christmas season is usually when retailers make a large part of the yearly sales, so it was a perfect storm - and it all fell on the courier services. Urban legends in Sofia and in social media tell stories of hours-long queues on the sidewalk and around the block, unknown delays and delivery offices full of all kinds of stuff - from fridges to toys and books.
When a Capital Weekly reporter visited the new logistic center of Ozone.bg, the fourth biggest e-commerce retailer in Bulgaria, it was in the middle of the Christmas rush. The CEO and founder of the company, Ivo Djokov, commented that "95% of all deliveries are in time. The problem is in the other 5%", which were sometimes delayed for a week. The company was taking in 6000 orders every day, which means that thousands of customers did not receive in time what they bought - not because of the retailers, but because of the bottleneck in the infrastructure.
But it's a question of scale that should be possible to fix by next season, whether or not the coronavirus is still a factor by then. There are much bigger causes for optimism - retailers are getting better at the e-commerce game, and customers trust them a lot more than they used to five or ten years ago. Technology has made online shopping a lot more accessible for everyone, and digital marketing is working its magic through Facebook, YouTube and all of the internet.
Another reason to be optimistic is that there is no real concentration in the Bulgarian e-commerce market. Simply put, it is still no-Amazon land. The ten biggest e-commerce retailers in Bulgaria - eMag, Technopolis, RemixShop, Ozone.bg, SportDepot, Zora, Ardes, eBAG, IKEA and Decathlon - have a combined market share of 17.8%.
Last, but not least, in 2020 the e-commerce sector dealt with one of their biggest fears: overregulation and bureaucratic weight. The year started with protests because of the proposed N-18 amendment to the tax code, which would have put them in the same category as physical stores in using cash registers and limiting their options for payment by customers. For some of the retailers it would have been downright impossible to work, because the tax agency wanted them to use software solutions that were non-existent and completely theoretical.
The amendment was delayed time and time again, until it was declared dead by the new finance minister Kiril Ananiev. Then the coronavirus struck, and even though there was much hardship for everyone, the e-commerce industry kept on growing for obvious reasons. It is a small gain for such a year, but a whole new market awaits.
Top 10 online storesthey comprise 17.81% of the online retail market in Bulgaria according to the Bulgarian e-commerce association