Slovak e-commerce recorded a drop for the first time in history
11. 01. 2023 | Adéla Berková
After three mega growth years, Slovak e-commerce has dropped by 13%. Although the decline in the growth rate was already expected, the result was mainly driven by consumer concerns. E-commerce is experiencing turbulent times and its development will increasingly correspond with the overall development of the Slovak economy. The regular summary of the development of Slovak e-commerce over the past year is brought to you by Heureka.sk shopping advisor and price comparison website.
The volume of online purchases in Slovakia in 2022 reached 1.810 billion euros. In the neighbouring Czech Republic, which has a higher standard of living, but energy prices have affected the population more significantly and earlier, the correction was at a similar level of 12%, but the growth of e-commerce in previous years was lower.
A correction was expected after two pandemic years of strong growth. "The e-commerce pandemic has paradoxically helped. The volume of online purchases has increased and at the same time the mix of products purchased has also changed significantly. The dominance of electronics has begun to be a history. The fastest growing categories were those that were virtually non-existent in e-commerce in the past," says Tomas Braverman, CEO of Heureka Group.
Despite the overall decline, some categories grew
The most significant growth of up to +4% was recorded by the Auto-moto category, which has already fought its way to the 3rd place in terms of shares in Slovak e-commerce. The Cosmetics and Health category also grew by +3%. Consumer concerns were most pronounced in the Sexual and Erotic Aids (-41%), Clothing and Fashion (-22%), Movies, Books, Games (-21%) and Furniture (-17%) categories.
The key category of Electronics posted a loss of -5%, but is still the largest category with a share of 19.4%. "Although the second largest category, White Goods, saw a drop of -8%, an interesting trend was the evolution of the average price of refrigerators, which climbed to a record high of €540 in the last quarter of 2022, up 25% on the long-term average price over 4 years. We assume that this is related to the search for sources of savings, with many consumers replacing their old appliances with more economical ones," says Tomas Braverman.
Top products of 2022
The uncertainty from the conflict in Ukraine has seen a meteoric rise in sales of products such as power generators and power banks. On the other hand, treadmills, kitchen robots and robotic vacuum cleaners are the flops of the year. Slovaks have thus confirmed that they are willing to give up products that make household care easier or bring them joy because of growing fears.
What are the expectations for e-commerce in 2023?
The beginning of the year will be really interesting. On the one hand, consumer concerns persist, but on the other hand, the sales are expected, as many retailers failed to sell all their Christmas goods. However, we anticipate a continued correction as uncertainty linked to rising energy prices and inflation persists. An improvement could come during the second quarter, once the heating season is over and Slovaks will know whether they have had to dip into their reserves and savings to cover increased costs. The further development of e-commerce will depend on the overall development of the economy and the unemployment rate, as e-commerce is now an integral part of the entire retail sector.
In terms of prices, we expect to see stronger growth as inflation starts to take full effect. The latter has not been that significant so far, as retailers have been selling older inventory that they have been buying months in advance. However, new orders will already show the price increases in full.
"Consumers will continue to avoid impulse purchases and think more about their purchases. However, this consumer behaviour is in line with the advantages of online shopping, which allows you to get a good overview of the offer and choose the best deal, or even wait for promotional prices," explains Tomas Braverman, adding that "for e-shops that have invested heavily in their growth in recent years and have set their business plans for 'pandemic numbers', this year could be a liquidation year. We expect further "market cleansing" and a decline in the number of e-shops, which already started in 2022. Those retailers who have effectively expanded their product range in line with consumer needs can benefit from the space available."