European markets are often referred to as one entity, with analysts sometimes ignoring that the individual countries that make up the European continent are starkly different in their economic makeup. This is the case for e-commerce too, with countries in Western Europe showing more maturity in e-commerce markets than countries lying towards the east.

The 2017 European E-commerce Report found that while the UK, Denmark and Germany showed e-commerce take-up of 87%, 84% and 82% respectively, Bulgaria, Macedonia and Romania showed the lowest percentage of consumers using e-commerce services. Understanding this difference is key to understanding how the overall European market is catching up with countries such as the US and China. In essence, while Western European markets are reflecting a mature e-commerce market, based on take-up, countries in the formerly communist Europe have been the laggards dragging down European statistics.

Western and Eastern European markets also differ in the types of online fraud they are subject to, in part because the two audiences simply buy different products. It is important to deploy e-commerce fraud protection which takes into account the different markets, with chargeback protection particularly useful when dealing with country markets which are significantly different to your own.

Why Eastern Europe Is Different

It can be argued that the difference is largely a product of history. Communism collapsed in 1989, which left Eastern European economies with a large task of reformation ahead. Economies cannot transition from central-government control to market economies in an instant, and by the time the internet and e-commerce started taking off in the US and Western Europe in the mid-1990s, Eastern European economies were still in relatively early stages of evolution into market economies.

There was simply less wealth in the hands of private individuals, due to long-term state control, and less of an entrepreneurial spirit. For this reason, Eastern European countries did not engage with e-commerce at the same speed as their Western European counterparts. As a result, when bundling together all European countries in e-commerce statistics, at first glance it seems as if European e-commerce simply lagged behind the statistics from the rest of the world when in fact it is Eastern Europe that affected statistics.

Eastern Europe That Is Catching Up

Hidden in grouped European statistics is the fact that Eastern European markets are finally catching up with their Western European counterparts. The same 2017 European E-commerce report found that growth in Romania alone was 38% year on year. Growth at that rate can only occur in a market that is not yet mature and as a result, there is likely to be many years of solid growth and indeed catching up for Eastern European markets – and therefore for the sum total of European e-commerce.

It is easy to speculate why Eastern European markets are showing such solid growth, bringing overall European statistics closer to that of the likes of US and China. First, an immature market simply has room for large growth spurts, by definition, whereas mature markets grow more slowly. Furthermore, over time Eastern European markets are bound to shake off the shackles of centrally planned markets, bringing along more private wealth and the ability to spend plus a growing desire to operate in a capitalistic fashion.

How Merchants Should Adapt To Emerging Markets

Clearly, Eastern European countries offer more room for revenue growth than mature Western European markets, but it is important that merchants understand that Eastern European markets are not a carbon copy of their Western counterparts, minus the wealth. Among the many differences, there is this standout example: the festive season in Eastern Europe.

Countries in Western Europe celebrate Christmas and exchange gifts on the 25th of December, with retailers responding accordingly both before and after this date. In contrast, many Eastern European countries celebrate an event called Novy God instead. Novy God is basically a mix between Christmas and New Year and is celebrated on January 1st. So, in Russia, Belarus, Latvia and other countries, that is the the day on which people exchange gifts.

Clearly e-commerce operations that focus on the 25th of December as a gift-giving day risk losing out on the Eastern European market. It is best to grab a foothold in a market while it is maturing, rather than attempting to do so when a market is already mature. So, e-commerce operations should focus on getting important points – such as a country’s annual gift-giving day – right when they try to capture the market.

Fraud Is Part & Parcel Of The Eastern European Emergence

Fraud is also an important aspect around which merchants should adapt as they try to capture Eastern European markets. Interestingly, it is not necessarily the fraud trends that are different between West and East. The FICO European Fraud survey for 2016 shows that the countries showing the biggest increases in fraud were Sweden, Poland, the UK, Russia, and Norway. So, it’s clearly a mixed picture.

It is the characteristics of fraud the merchants should be most aware of. Here it helps to deploy a fraud protection measure which is intelligent enough to counter fraudulent behavior regardless of the source of the fraud, or the methods involved. Machine learning is helpful here, and so is the reputation of a fraud protection provider which has the background and experience to prevent all types of fraud.

The takeaway for merchants should be that there is an opportunity to enjoy staking out a foothold in the emerging part of European e-commerce markets – Eastern Europe. At the same time, merchants should be mindful of the different cultures in Eastern Europe, the different spending habits and of course the different fraud risks