Hungarian Online Retail Expands Rapidly
The Hungarian online retail market is now catching up with international peers. As Black Friday and the Christmas Holidays bring e-commerce to its annual peak, online retailers are readying themselves for the stampede.
Hungary’s online retail (e-tail) market has expanded by more than 150% in four years; an expansion that, although expected by pundits, was massively underestimated. The net turnover of webshops has leapt from EUR 0.8 billion (HUF 273 bln) in 2014 to EUR 2.1 bln (HUF 669 bln) in 2018, according to the most recent figures from eNET Internet Research and Consulting Ltd.
In 2018, Hungary’s online retail trade volume grew by 23%, eNet reports, based on the sales figures of more than 5,000 e-tailers. The share of online sales reached 7% of total retail sales, which corresponds to 13% growth compared to 2017.
“Online purchases are definitely growing in the Hungarian market. We have started to catch up to the international market. The distrust seems to be disappearing; customers order now not just from Hungarian webshops but also from abroad,” Zsuzsanna Stampel, senior marketing manager of online retailer mall.hu, tells the Budapest Business Journal.
“Thanks to the awareness of legal rights, better security systems and faster loading time of websites, and the easy orientation between the quality of the offers, customers don’t have to be a digital native any more to complete an online order,” Stampel adds.
The most recent figures of eNet reveal that almost 5.4 million Hungarians, a jaw-dropping 91% of adult internet users, shop online regularly. With this figure peaking, the proliferation of online shopping for food and household goods is expected to strongly contribute to raising the purchase intensity, which is the most essential factor in this scenario for the further expansion of the e-tail market.
But what is behind the increasing number of online shoppers? “In physical shops, there is more opportunity to shop impulsively. Customers spend their time to get to the product and get to the pay desk after. They can see several actions [sale offers] meanwhile. There is also no chance to check competitors’ prices,” Stampel explains.
“This is why shopping online is a more conscious and planned way of getting the product. You can surf multiple online stores and switch between them just in a second,” she adds.
One in four or five customers, approximately 1.2 million people, buy food and household goods online, a tendency that boosts the online turnover of FMCG products, making up one-sixth of Hungary’s total e-tail business volume.
Researcher eNet expects the dynamic growth of the past few years – 18% from 2015 to 2016, 35% from 2016 to 2017, and 27% from 2017 to 2018 – to continue, fueling further expansion and increasing the overall weight of the market.
“Probably this is the reason that a physical-only presence is not profitable anymore. The biggest players have already launched online shops or are planning to do so. The FMCG category is the great proof of that; no one can afford to lag behind in the market,” Stampel says.
As global retailers expand their reach and will now deliver their goods to Hungary, locals are opting to order from abroad in increasing numbers. In fact, half of all online shoppers now order goods from abroad: 3.1 million in 2018, up from 1.7 million in 2016.
Hungarian internet users may have spent EUR 1.2 bln-1.3 bln (HUF 400 bln-420 bln) in foreign webshops and online marketplaces in 2018, according to eNET’s estimates. This brings the overall value of e-tail transactions initiated in Hungary to more than EUR 3.1 billion (HUF 1 trillion) in 2018.
As Christmas increasingly sheds its religious roots and transforms into a capitalist and consumerist holiday, the commercial success of online stores is inevitable. At the end of 2018, Black Friday on its own generated almost HUF 78 bln (about EUR 247 million), while the total Christmas shopping period may have brought in HUF 323 bln (around EUR 1.023 bln) in trade volume according to eNET’s surveys conducted in December 2018 and January 2019.
“Tendencies in the season or on actual Black Friday saw electric categories in focus at the beginning: Video game consoles, TV sets, mobile phones and notebooks are the most popular categories, but major domestic appliances and small domestic appliances are also growing,” Stampel tells the BBJ.
“Of course, this trend continues because of the nature of electronic products, it doesn’t have to fit as clothes do. However, the non-electric segment has also started to grow. Shopping online is very comfortable, you don’t have to go anywhere, you can be just where you are and the product comes to you,” she adds.
At the same time, the fact that consumers have 14 days to send back products that they do not like, a return policy valid for any online store in the European Union, makes e-tail an ever more attractive way of spending money.
“The Christmas period is the main season of the year for commerce. The share of offline-online doesn’t tip over, but the quantity is outstanding. This is the peak of the non-electric segment, plus the toys category is exceptional,” Stampel says.
Online shopping is a great option to avoid the masses in the bricks and mortar stores and also to avoid unnecessary spending prompted by compulsive habits. Still, Stampel urges some caution.
“You have to calculate with the delivery timing, so it’s recommended to think ahead and catch the greatest offers in time.” At the end of the year, nobody wants to be left without a nicely wrapped gift under the tree.
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