The e-commerce market in Ukraine has reached $4 billion

Soul Partners, Baker Tilly and Aequo, with the support of the USAID Competitive Economy Program in Ukraine, presented research on Ukrainian e-commerce market

The e-commerce market is one of the most dynamic in Ukraine, the market volume grew by 41% in 2020 and reached $4bln, which equals 8.8% of total retail trade. E-commerce in Ukraine has grown up almost three times in recent 5 years and it’s expected to double in the next 5 years.
The volume of e-exports in 2020 amounted to $450m, 33% of which were exported to the United States.

Electronics and apparel are the largest and most mature e-commerce sectors in Ukraine. Apparel e-commerce has grown with CAGR equal 26% since 2016 and reach $291m in 2020. E-commerce share in apparel retail in 2020 was approximate 6.8%. The average check equals $24-31.

The food e-commerce market in 2020 is estimated at $150m and cosmetics e-commerce volume is close to $87m. Medicines and food are relatively new categories in e-commerce with the greatest growth potential.

The largest marketplaces in Ukraine are Rozetka, Prom, Allo, Bigl and Epicentr, and the most popular monetization model is the sales commission. In 2020, most Ukrainian online customers prefer to use marketplaces for shopping – 63%. The remaining 37% relates to specialized platforms of e-commerce (online stores of household goods, cosmetics, apparel and kid’s toys).

The latest key trends in e-commerce are the following: transition from an online store to a marketplace, direct delivery and different additional services, including logistics and payment systems services. For the last 5 years there were several changes in the business models of key Ukrainian e-commerce players: Rozetka, Allo, Epicentr and Kasta have transformed from specialized online stores to marketplaces with a wide range of products.

Ukraine has the lowest annual volume of spends for e-commerce per individual in comparison with neighboring countries – only $104. Nevertheless, the Ukrainian e-commerce market had the highest growth rate in Central-Eastern Europe – 41%. TOP-3 countries by the growth rate of e-commerce also include Poland and the Czech Republic, 37% and 29% respectively.

Igor Verhogliad, Managing Partner, Soul Partners:
"Localization is one of the main features of Ukrainian e-commerce market. Most of e-platforms are designed exclusively for domestic consumers without possibility to export. The key e-export channel for Ukrainian producers are international e-platforms: Amazon, Etsy, Ebay. Ukrposhta is a leading delivery operator to abroad – responsible for c. 65% of e-export volume”.

Andriy Kaliushenko, Partner and Head of Advisory Practice at BakerTilly Ukraine:
"Prospects for the development of the e-export in Ukraine remain low. According to the results of the survey, more than 85% of respondents do not e-export goods. Nevertheless, majority of surveyed entrepreneurs have a high interest in the development of e-exports"

Anna Babych, partner and head of M&A practice at AEQUO:
"The issues of e-commerce has been given an unjustifiably small role in international free trade agreements. The main deterrent to the development of Ukrainian e-exports is non-recognition of Ukrainian certificates of conformity in the EU. Market implementation would also be helped by Ukraine's implementation of the Association Agreement and mutual recognition of electronic signatures with EU countries"

Background information

USAID Competitive Economy Program in Ukraine promotes a strong, multilateral, and transparent Ukrainian economy by supporting start-ups and small and medium-sized enterprises (SMEs) to increase their competitiveness in domestic and foreign markets. The main purpose of the program includes assistance in creating a better environment for business activities, support for new and innovative industries and enterprises, as well as promoting the development of exports and trade.

Soul Partners is an investment banking boutique that provides professional financial consultations to the businesses and investors. It specializes in investments attraction, support of M&A and equity-rising transactions and debt restructuring services.

Baker Tilly Ukraine - Ukrainian company providing audit, business consulting, independent evaluation and accounting services; independent member of the Baker Tilly International network.

AEQUO is one of the leading Ukrainian law firms that provides transaction support and dispute resolution services.