“Romania is the second largest digital commerce market in CEE after Poland, with Romanians spending on average ~500 euro per capita (~25% lower digital spending compared to peer countries). The COVID-19 pandemic accelerated the uptake of digital commerce significantly. It also led to a significant shift from pay-on-delivery to online card payments. We’ve experienced an increased volume of card transactions by over 60 percent from 2019 to 2021. Bucharest remains the national outlier, accounting for 45% of such transactions. Romania’s digital commerce penetration still needs to increase by more than half to reach today’s level of Digital Frontrunners (23%) and double to reach that of global leaders like the UK or China (~30%)”, says Ovidiu Tișler, Associate Partner McKinsey&Company Bucharest.
The usage of innovations delivering ultra-convenience (payments, omnichannel, fast delivery and returns, and data-driven individualization) could help Romania double its digital commerce market size, reaching 19.6 billion euros in 2030.
The report shows that the most significant categories for digital commerce in Romania are home goods and electronics (39% share of digital commerce), transportation services (31%), and apparel (14%). However, during the pandemic years, the fastest category growth was seen in groceries, which grew from EUR 123 million (2% share of digital commerce) in 2019 to EUR 389 million in 2021 (4% share of digital commerce).
The highest rate of digital usage is in entertainment, followed by travel.
Export as a contributor to the growth of digital commerce
Retail export sales for Digital Challengers via digital channels were worth more than EUR 12 billion in 2021, equivalent to approximately 10% of total domestic consumption.
Within the cluster, Romania and Czechia have the highest share of exports in total digital commerce sales of goods. This is mainly driven by two marketplaces from these countries that have a presence in other countries: eMag (operating in Hungary and Bulgaria) and Alza (operating in Germany, Austria, Slovakia, and Hungary.
“Romania stands out in the Digital Challengers cluster as the country with the largest share of exports in digital commerce (24 %, based on our analysis) and a positive trade balance. This is significantly due to eMAG’s operations in Bulgaria and Hungary. When services sold via digital commerce are included, the estimated total export market for Digital Challengers is around EUR 12 billion (goods and services combined). As a result, tapping into exporting digital services, such as gaming, media, aggregators and tourism, could help Romania further capture export value”, says Ovidiu Tișler, Associate Partner McKinsey&Company Bucharest.
More advanced digitization creates more economic resilience
While public sector digitization is progressing, CEE still lags behind Digital Frontrunners and the Big 5 European Countries on e-government penetration (59% vs. 63% vs. 81% of individuals). Romania’s e-government penetration is 15%, the lowest amongst all European countries.
The analysis shows that countries with higher digitization, on average, recorded less severe economic slowdown during the first waves of the COVID-19 pandemic: 2.3
The analysis shows that countries with higher digitization, on average, recorded less severe economic slowdown during the first waves of the COVID-19 pandemic: 2.3% GDP’s decrease for Digital Frontrunners compared to 3.9% decrease in GDP for Digital Challengers. By investing in digitizing enterprises and government, countries can better respond to crises and dampen the impact on their economies.
“One clear lesson from the pandemic is that digitization enables economic growth and provides resilience in times of crisis. Countries with a strong digital economy are more agile to adapt quickly to changes and new requirements and thus can capture the opportunities that arise,” adds Ovidiu Tișler.
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McKinsey & Company opened its first offices in Central and Eastern Europe in the early 1990s, soon after the momentous democratic changes that took place across the region. McKinsey played an active role in the region’s economic rebirth, working with leading business organizations, governments and nonprofit organizations. With offices in Bucharest, Budapest, Kyiv, Prague, Warsaw and Zagreb, we serve clients across a wide range of industries, including automotive, banking and insurance, retail, heavy industry, high tech, media and telecommunications.