Valer Pinderi – Chairman of the Executive Board – Albanian E-Commerce Association
What key trends do you currently observe in the local eCommerce market, and how do you see them evolving in the next few years?
In the last two years, the eCommerce industry in Albania has started to consolidate, with structured companies emerging in the sector. Until now, the market was dominated by small companies or individuals engaging in eCommerce. Large retail companies invested in eCommerce, but they failed to understand it and eventually gave up. During the pandemic, many companies ventured into eCommerce, but by 2023, only a few continued. Small companies or individuals still handle most of the package deliveries in Albania, but in the past two years, stable companies have grown, leading to the exit of smaller players and individuals from the market.
The already structured and stable companies have expanded, and the smaller ones have left the industry due to a lack of standards and strategy. This trend is expected to continue for the next five years, until the market is dominated by a few major players, as is the case in other European markets.
A similar trend has occurred in the logistics sector. There’s been a move to consolidate, forming larger companies, while several smaller companies have ceased operations for the same reasons as small retail companies. They require more orders to leverage economies of scale for more efficient processes.
This evolution clearly indicates that, over the next five years, the role of structured and stable retail companies in Albania’s eCommerce will increase. This marks the beginning of the sector’s standardization, paving the way for steady growth in the future. Customers will benefit from better services due to the consolidation and growth of a few companies, initiating a spiral of growth for the industry. Although still in its early stages of development and relatively young, the market is now shaping a landscape that is poised for growth.
Albania experienced a 3.6% growth in 2023 and is forecasted to have a 3.3% growth in 2024, which is significantly higher than the European average. Additionally, inflation was low at around 4%, compared to other European countries, bolstered by the strong local currency, the Lek. This is attributed to the high growth in tourism and diaspora investments in the country.
However, the major challenge for local companies remains emigration, which is substantial and has led to a labor shortage. While more people are returning compared to previous years, they still do not offset those leaving the country.
How does your organization perceive the role of eCommerce in contributing to the economic development of the local region?
E-commerce, now with our association’s involvement, is playing a role for the first time in the government and in regional collaboration. Our association has contributed to developing the Action Plan with the government for e-commerce. This action plan is now in its final stages, with the involvement of all stakeholders, and we plan to make it public this year.
Last year, our association worked with a working group created by the Ministry of Finance, which includes different sectors of the economy. This group comprises entities such as the Bank of Albania, the Albanian Investment Development Agency, Post of Albania, the Customs Directorate, the Tax Authority, the Albanian Bank Association, the Consumer Rights Directorate, AKEP, etc. All these players are united in developing this action plan. The progress has been significant, and with our insistence, it will be published and implementation will begin this year.
Additionally, our association has been under the support of GIZ and the European Union, as part of a regional initiative to create the Balkan E-commerce Alliance. This alliance focuses on increasing trade among the Western Balkan countries. This initiative has progressed well and was finalized at the end of the year with a cooperation agreement between e-commerce associations from Serbia, Bosnia and Herzegovina, North Macedonia, and Albania.
These associations signed an agreement to collaborate and give structure to this initiative with the aim of increasing trade and synchronizing efforts with each other.
Can you point out any regional characteristics in terms of payments, logistics, customer behavior, shopping habits, etc?
A regional characteristic of the market is the high use of social networks and cash payments. In our market and other Western Balkan countries, the use of social networks is prevalent, and sales through them without a bank transaction also dominate the market. This trend seems to be declining, yet it still dominates the entire market.
The majority of orders, over 70%, are made through social networks, but it must be emphasized that there is a high level of informality, making it difficult to provide an exact figure.
This market characteristic gives power to social networks and individuals, but at the same time, it makes things more chaotic. Individuals increasingly see social networks as an opportunity for growth, so the number of people doing this full time is noticeably increasing each year.
Another characteristic in Albania is the fact that in 2024, the law for open banking will come into force, giving weight to electronic money companies. This has led to the establishment of over five electronic money companies in the last two years, with two of them starting to experience significant growth and expansion in the market. Specifically, Paysera is increasingly being used for low-cost bank transfers, as well as for receiving funds from remittances. Meanwhile, POK is beginning to offer innovative services in online electronic payments. These two companies are not the only ones, and it seems the market is starting to accept alternative payment methods.
How do you analyze and assess the competitive landscape in the eCommerce industry?
We analyze both official data and unofficial movements. Since Albania is a small country, these are not difficult to identify. We also reference reports published by our partners.
The primary official data comes from the Bank of Albania and concerns credit card usage for online payments. Meanwhile, cash transactions are measured by the transport company monitoring authority, which has mechanisms to compel transport companies to publish every package they send, including those with the cash on delivery option.
Additionally, using data from our members is a crucial element that enables us to understand trends and the percentages of change. Our association includes the largest postal services, electronic money companies, and some of the largest online retail companies in the Albanian market.
These data clearly show that the market has seen a significant increase of around 20%. We are awaiting last quarter’s figures to finalize the exact number, but the forecast is for the entire online market to grow by 20%. Meanwhile, the greatest growth is seen in sectors with electronic payments. According to the central bank, credit card usage has doubled in the last two years, and in 2023 there was another increase of 45%. Individuals are using credit cards much more, yet overall, their usage is still lower than in Europe, placing Albania among the last in terms of electronic money usage.
How do organizations approach innovation in eCommerce, and what role does technology play in the picture?
Being a small market, investment in advanced technology and costly systems is limited in Albania. The revenues generated by companies in Albania are small, and consequently, their investments are modest. This situation leads them to focus more on innovations that are not expensive. Such innovations are widely used in Albania, and it seems that adaptation to them is very rapid.
The adoption of TikTok and live streaming by companies and individuals has been swift. Nearly all companies in our association have started using ChatGPT in their work. The use of Canva is almost universal in every business of the association, and other similar online services also see high usage.
Now, many companies have begun using Chat Bots and are considering AI as a good direction to offset the shortage of labor.
However, significant investments in technology and innovation by larger companies are still at low levels.
What rating from 1 to 10 do you give to the local logistic companies and their role in delivery efficiency and customer satisfaction?
Transport companies have been improving their services year after year. Now, they are rated around 7 for their standards and quality in customer relations.
They have shown constant progress, and package monitoring systems are improving each year. However, there are still deficiencies, primarily due to a lack of labor in parcel distribution roles. Additionally, the low number of parcels does not allow them to implement costly but highly efficient automation systems suitable for large volumes. Now, as companies consolidate and the larger ones grow while the smaller ones disappear, there is a trend towards automation and raising standards.
In the context of increased interest in cross-border sales, how well prepared are the logistics companies from your country?
The context of cross-border commerce remains problematic for Balkan companies. Despite short distances, bureaucracy and the imposition of taxes on parcels over 20 euros make them uncompetitive and unattractive for businesses and individuals.
A growing trend is evident among companies that import products from outside the Balkans. They clear customs in bulk and then distribute the packages locally. This method currently appears to be a better alternative for bringing in products, as it is fast and effective for businesses.
Personally, through my company Aladini, I am working to have consolidated a formula by 2024 that will allow me to operate throughout the Western Balkans and privately resolve the logistical issues posed by customs between states. Although the trend is towards the removal of these customs barriers and the countries joining Europe, we are aiming to achieve this beforehand to be well-positioned and ready when it happens.
How do eCommerce businesses leverage data analytics to make informed business decisions?
Businesses in Albania still have very little data and a minimal volume of numbers to focus on in-depth analysis. This area remains largely unexplored in Albania, causing companies to fall behind the global trend and miss out on the advantages these analyses could offer.
Companies offering these services are almost non-existent, and business leaders do not understand their potential.
However, as with any other market that has undergone this process, this will change. The first companies that enter this area to offer it as a service will benefit considerably. Also, the first companies that start to make data analysis a principle in their decision-making will soon begin to stand out from the rest.
How does your organization facilitate cross-border eCommerce activities, especially for local businesses looking to expand globally?
We have currently established strong partnerships with our counterparts in the Western Balkans. Now, with the creation of the Balkan E-commerce Alliance, we are forming working groups focused specifically on this matter.
Our organization, despite having a small number of companies interested in this issue, has been able to provide personalized support for them. With our knowledge, connections, and numerous partners, we have treated each interested company individually, tailoring to their needs and introducing them to key players who can assist them.
We are always open to requests from companies interested in entering the Albanian market and are witnessing a growing interest in our market. In 2023, we supported several dozen companies with contacts and access to our market, and this year, we expect to assist hundreds.
Our principle is to help develop the market in every possible way, and facilitating foreign companies that want to understand and invest in the Albanian market is one of the most productive ways to do this. Therefore, I personally, and all members of our association, are open to anyone who contacts us.
Can you share key eCommerce or digital marketing events a foreign business person should visit in your country?
In Albania, there are currently few events being organized, but the trend seems to be rapidly increasing. In May, we are partners in ‘Digital Strategy,’ an event created by one of our association’s members, focusing on digital marketing. The event is expected to attract many foreign attendees, primarily from Italy.
Another event anticipated in October is INNFestival, a joint event organized by us and association members, focusing on innovative companies and technology trends.
Another event, now in its second year, is Future2Tech, for which we are partners. The dates of the event are not yet finalized, but it is expected to be in November or October.
We are also in the final stages of organizing the ‘Affiliate Marketing’ event, the first of its kind for affiliate marketing in Albania. Details are expected to be released soon, but the set date is in June, and the first year will primarily target local participants to gauge Albanians’ interest in this industry.
Which are the key companies and organizations in your region helping the ecosystem grow?
We have many partners who help us develop the market, including GIZ Albania, Risi Albania, and Swiss EP, which are international partners focusing on ecosystem support.
Meanwhile, Uplift, New Media, Wolf and Shark, Aladini, and Coolab are some of the private companies that organize events and meetings with a focus on ecosystem development
Are there any specific digital marketing strategies that have shown success in your market?
Influencer marketing is highly developed in Albania, where several companies have partnerships with almost all influencers in the country, making it very easy for interested companies to establish contact with them.
Additionally, going live on social networks is a strategy that always has a noticeable impact when implemented by a company, although few companies have consistency in conducting this activity.
Content marketing is also very productive in the country and has made a significant impact on the companies that have utilized it.
Are there any cultural or regional nuances that should be considered in brand messaging?
It seems that the Albanian market readily accepts different cultures, and foreign companies find it easy to adapt. However, local elements and their adoption have an increased impact on marketing in Albania.
The market welcomes foreign companies that bring innovation and an added element to the Albanian market. There is no prejudice or reluctance towards foreign companies in Albania. The risk lies in the swift positioning that consumers give to these companies. If they fall short of expectations, it becomes difficult for them to change this perception later on.
The only companies that might face slightly higher sensitivity are Serbian companies, due to the strained relations with Kosovo. These companies require more collaboration with local partners to gain the trust of associates. If Serbian companies do not enter with strong local partners and fail to adapt, they may face critical difficulties in market expansion. For other nationalities, it is not a problem at all; in fact, it is a competitive advantage because Albanians welcome innovation and new companies that bring a fresh spirit to the country.
Data needed for the infographics:
Size of the eCommerce as % of GDP of the country: Approximately 3%
Internet usage: 83%
Number of people buying goods online: 52% of the population
Approximate number of eCommerce shops
Pure eCommerce shops approximately 200 but people or small companies that sells throw social media are more than 4000
Average size of shopping cart in Euro
36 Euro and the daily orders delivered in Albania are proximately 28.000 per day
Key market players:
www.klaudiofashion.com/home
www.zara.com
www.aladini.al
www.neptun.al
www.zeroabsolute.com/
www.bukinist.al
www.fga.al
www.megateksa.al
www.baboon.al