Bulgaria: eCommerce trends are changing

Janet Naidenova – Chairperson, Bulgarian 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?

Many more people are buying online and more retailers are selling online. The easy combination of online and offline shopping makes the whole process even more transparent and secure for consumers. Online shopping has a high level of security and gives more rights to consumers, such as returning the order within 14 days of receiving it without giving a reason, and being refunded in the way they were paid in 14 daily period, without questions from the merchant in case of exercising the right of refusal. A study by the Bulgarian E-commerce Association with a scope of 4,547,840 online orders for 2022 showed that in 8.63% of all online orders, buyers exercised their right to cancel within 14 days.

SMEs shift in digitalization and technology such as cloud services, SaaS to set up their own e-shops. It’s not difficult for retailers to get online, there are so many SaaS services available to them. The challenging part begins after the launch of the online store – online marketing, integrations, and analysis.

We see ‘direct-to-consumers’ e-commerce growth trend as well ‘subscription’ models in Bulgaria mainly in FMCG sector. Online sales are taking place in many ways, opening up bigger niches for brands to sell directly to consumers online. Companies, however, have to master e-commerce, logistics, and shipping, which also lead to fast, contactless shipping.

When it comes to online business, sustainability is something that most potential customers are looking for. When people realize the impact of their behavior on the environment and society, they tend to adopt ways to reduce it. A major factor driving green consumerism is the emergence of Millennials as a stable group of shoppers interested in environmentally friendly products. This demand for green products is driving e-commerce companies to adopt eco-friendly practices and ensure increase of e-commerce purchasing among Millennials.

In Bulgaria we see the growing importance of marketplaces. SMEs have their own website, e-shop and additionally to their own channels they use marketplaces.

The TOP 10 Bulgarian online stores collectively make up 19.10% of the volume of the entire B2C market in Bulgaria for 2022, which shows that the future of e-commerce is not in the many niche online stores, but in the large platforms.

How does your organization perceive the role of eCommerce in contributing to the economic development of the local region?

Currently, the ratio of the volume of B2C e-commerce in Bulgaria to the country’s gross domestic product /e-GDP/ is 2.14%. In Europe, the e-GDP parameter averages between 4% – 5%, in Eastern Europe e-GDP is 2.53%, in Greece 8.02%, in Romania 2.56%. In the last 4 years, the e-commerce market in Bulgaria has doubled and represents 11% of the e-commerce market in Eastern Europe in 2023.

Forecasts indicate that the Bulgarian online market in the next 3-5 years will have a huge potential for development and contribution to the economic development of the local East European Region.

Can you point out any regional characteristics in terms of payments, logistics, customer behavior, shopping habits, etc?

There is a change in e-commerce payment methods and this trend will continue. The share of cash on delivery payments is decreasing from 70% a year earlier to 60% in 2022, the share of card payments is increasing from 25% to 32%, the share of bank and mobile payments also increased from 5% to 8%. It is expected that the share of card payments and mobile payments in Bulgaria will continue to grow in the coming years. We see a new trend coming to the Bulgarian market: “Buy now, Pay later” and our expectations are this trend to grow.

With the entry of more players into the market and the installation of hundreds of lockers in convenient places close to consumers, we observe a trend among online shoppers to pick up their parcels not from courier offices, but from specially placed lockers on the streets.

The leading reasons for increase in e-commerce purchasing amongst consumers is the convenience of e-commerce. Consumers, many of whom were not online shoppers before the pandemic, are seeing the utility and convenience of e-commerce. Already more than 53% of online users in Bulgaria shop online and this percentage will continue growing. The convenience of e-commerce is the new loyalty.

How do you analyze and assess the competitive landscape in the eCommerce industry?

In the fast-paced world of ecommerce, staying ahead of the competition requires more than just a great product and an attractive website. A comprehensive understanding of competitors, both direct and indirect and the market landscape is essential for crafting strategies that set your ecommerce business apart.

eCommerce players must benchmark against competitors. Evaluate key performance indicators (KPIs) such as website traffic, conversion rates, average order value, and customer retention. By comparing these metrics with industry leaders and direct competitors, they can identify areas for improvement and set realistic performance goals.
Customer experience is a crucial differentiator in the ecommerce landscape. eCommerce businesses should analyze the user interface, website navigation, and overall customer journey of their competitors and identify pain points and areas where competitors excel. Based on this analysis website optimization efforts should be performed, ensuring a seamless and user-friendly experience that keeps customers coming back.

The ecommerce landscape is dynamic, with trends and innovations constantly shaping consumer behavior. Stay informed about industry trends, emerging technologies, and innovations adopted by your competitors. This proactive approach allows businesses to adapt quickly, integrate new technologies, and stay ahead of the curve in meeting evolving customer expectations.

By regularly evaluating the competitive landscape, benchmarking performance, and embracing a customer-centric approach, ecommerce businesses can not only survive but thrive in a dynamic and competitive digital marketplace. Staying ahead is not just about reacting to the present competition but strategically positioning yourself for success in the future.

How do organizations approach innovation in eCommerce, and what role does technology play in the picture?

Automation and artificial intelligence are at the heart of business development. Technology makes processes easier and enables businesses to expand. E-commerce industry players in Bulgaria focus on technologies as Artificial Intelligence (AI) and Machine Learning (ML). The benefits of using AI and ML in e-commerce are numerous, the most important being increasing customer satisfaction and profits. They are most commonly used in product recommendation tools, chatbots, predicting customer behavior for personalized content, and facilitating the sales process by making customers buy faster and more.

AI is also successfully applied for price optimization (dynamic prices). Price is one of the most important features when it comes to making an online purchase. If it is higher than that of competitors, consumers are more likely to buy the product from the competition. The Bulgarian company Dynamicpricing.ai automates the opening of competitive offers and optimizes prices based on: sales, stocks, product visits, delivery prices, returned products, logistics costs and more and is offered as a SaaS (Software as a Service) solution on a subscription basis, leading to more sales and increased profits for e-merchants.

AI is also successfully applied by Bulgarian company Releva for:

Full journey personalization to create personalized shopping experiences for every customer and touchpoint in their journey, whether it’s on the product page, checkout, email, SMS, push notifications, messenger apps, social media, or commerce search.
AI-driven retention to save time and increase retention rates with one-click reactivated subscription emails and automated post-purchase follow-up emails.
Predict users’ next purchases by using customer behavior tracking and the world’s most sophisticated artificial intelligence in order to help retailers evaluate the user’s intent to purchase 30 ms after a product view or search. On the next click, the user will see relevant products – no need to wait for purchase data.

The learning machines’ role will become more prominent in the world of data. Even today we see the megatrend that people expect timely, optimized, and expected machine communication that helps them achieve their objectives faster, better, cheaper, etc. In the digital commerce that is more striking than ever before.

Businesses and people will become much more productive with the help of tools like ChatGPT. More productive businesses and working people will achieve big results with little effort. We can see how ChatGPT will “talk to the user” specifying destination preferences such as what type of hotels they prefer, whether they have children and any other questions that would concern us when looking for a vacation spot. It then returns a list of individually selected destinations based on those preferences. We are about to see an avalanche of such examples.

What rating from 1 to 10 do you give to the local logistic companies and their role in delivery efficiency and customer satisfaction?

The role of Bulgarian logistic companies in delivery efficiency and customer satisfaction is significant for ecommerce business development and growth. They have many years’ experience and expertise in ecommerce delivery automating the whole process via integration with e-shops. Many of logistics companies (local and representatives of worldwide logistics companies) are members of Bulgarian E-commerce Association (BEA). We, at BEA give rating 10 (10 is the highest scale) to the local logistics companies.

In the context of increased interest in cross-border sales, how well prepared are the logistics companies from your country?

The cross-border sales are increasing each year enabling many online businesses to enter new markets across Europe and conquer other players. Cross-border shopping in Europe will continue to grow, which provides new opportunities for the Bulgarian business to sell in Europe to over 500,000,000 online buyers with an established online shopping culture. The Bulgarian online businesses are 100% compliant with the ecommerce regulations to enter the single European digital market due to harmonized legislation.

The logistics companies are their partners in turning orders into successful deliveries. There are local logistics companies tailoring their services to the business model of online stores by offering warehousing, e-fulfillment, courier services, cash on delivery, a contact person 24/7 and a local address for each country for returning and processing undelivered and / or cancelled shipments.

The Bulgarian logistics companies, specialized in cross-border delivery are reliable, offer different options for courier services to the same country, at a fair price for a domestic courier service from a local provider, enabling integration with eCommerce completely free, helping Bulgarian ecommerce companies to be competitive in cross-border sales.

How do eCommerce businesses leverage data analytics to make informed business decisions?

eCommerce businesses use data analytics to analyze their customer data including purchase history, search queries, and website interactions to gain valuable insights into what products their customers are interested in, their preferred payment methods, and the platforms they use to access the brand.

Business analytics enables decision-makers to base their choices on factual data and insights rather than intuition or assumptions. Analytics helps in accurate forecasting, risk assessment, and performance evaluation, leading to more precise decision-making.

Data analytics assist ecommerce companies in measuring how successful their marketing campaigns are, as well as improving decision-making, gaining more Omnichannel traction, and informing holistic marketing programs.

eCommerce businesses use advanced technologies like machine learning and data mining to collect and analyze customer data, like their actions, preferences, and feedback. By uncovering hidden patterns and predicting future behaviors, businesses can personalize the customer experience and improve overall satisfaction.

How does your organization facilitate cross-border eCommerce activities, especially for local businesses looking to expand globally?

Bulgarian E-commerce Association (BEA) have established partnership programs with Marketplaces and do trainings for Bulgarian businesses. Thanks to their growth programs local businesses go global. For example, there are 12 000 Bulgarian sellers on eBay.

BEA helps many companies to find right partners for fulfilment services, courier services and return along Europe.

BEA conducts webinars on VAT registration for one-stop service (OSS) and parallel one-stop service “Import” (IOSS) for Bulgarian companies.

Can you share key eCommerce or digital marketing events a foreign business person should visit in your country?

There are plenty of digital marketing events in Bulgaria through the whole year. We recommend the following events that give value and are deserved to be visit by foreign businesses in Bulgarian (in alphabetical order) :

Balkan Ecommerce Summit: 4^th – 5^th of April 2024 in Arena Sofia;
eCommerce and Retail Summit L 13^th of June 2024, Hotel Hilton, Sofia;
Online advertising Conference: 6^th of June 2024 in Sofia Tech Park;
SERP Conf. 2024 International: 18^th – 19^th of April 2024 in National Place of Culture, Sofia;
FESTIVAL: 30^th – 31^st of October 2024 in Sofia.

Which are the key companies and organizations in your region helping the ecosystem grow?

There are many organizations in Bulgaria helping ecosystem growth in the following aspects:

Bulgarian E-commerce Association (BEA) – Public Policy, Statements, Round tables, Data collection and analyses, Education Programs,Trust Mark audit and certificates for online shops etc.;

Funds of Funds – investing in more than 60 startups in e-commerce and organizing together with Sofia University “St. Kliment Ohridski”– “Best Youth Startup in Bulgaria 2024” Competition;

E-commerce Success Foundation – “E-commerce Success” Business Programs for Bulgarian businesses together with Sofia University “St. Kliment Ohridski” and members of BEA;

Sofia University “St. Kliment Ohridski”– Master Programs in e-commerce and m-business etc.

Among the key companies in Bulgaria helping the ecosystem growth are /in alphabetical order/: Ecommerce Academy and Nikola Ilchev, euShipments, GombaShop, Mediapost Hit Mail, Netpeak, Paysera, Seomax, Serpact, Shopiko, Stenik etc.

Are there any specific digital marketing strategies that have shown success in your market?

Digital marketing strategies could be different for different business models and their efficiency depends on the needs and goals. No digital marketing strategy will be effective if businesses don’t have a clear understanding of who buys their products & services, why they buy it, and where they buy it. They need to use data and demographics to create a robust profile of their audience and inform their tactics: presence on social media, content marketing efforts, email campaigns, paid advertising and search engine optimization (SEO). Analyzing the efficiency of each channel helps them identify effective marketing channels, refine their own strategies, and discover new opportunities for reaching and engaging their target audience.

Are there any cultural or regional nuances that should be considered in brand messaging?

Cross-cultural factors play a critical role in any global branding campaign but are given less consideration than necessary by many companies. On the surface, linguistic and visual aspects are the most apparent factors, but more subtle factors can play an equally important role in cross-cultural branding success. The brand messages should be localized in Bulgarian language for Bulgarian consumers and depending on the target group to express the same tone of voice.

Data needed for the infographics:

– Size of the eCommerce as % of GDP of the country;