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Digest U A D M 3rd 2011


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Digest U A D M 3rd 2011

  1. 1. 3rd Issue JANUARY 2011 APRIL 2011 CROSS-BORDER DISTANCE SELLING IN UKRAINE: INFO DIGESTDear Colleagues, Traditionally I would like to present We also would like to remind you about up-coming interna- you the third issue of our information tional business forum Direct Marketing Days in Ukraine 2011. digest of distance selling possibilities Details you will find below. in Ukraine. We continue to inform you about Ukrainian market potential and If you have any questions, comments or additional information are sure the most actual data will help please do not hesitate to contact us via e-mail or our Hot Line you to take decision about developing +380 (44) 495 7885 your business in Ukraine. In this issue you will read about Euro- Valentin Kalashnik, pean investments to Ukraine, find out President of UADMwhere Ukrainians prefer to buy clothes and what share of theirincome is spent on food and beverages.eCoNoMIC NeWsINvestMeNt froM europe: Who gIves More?Starting year 2011 Ukrainian business could notice interesting So, after the last change of supreme governmental authoritiestrends happening in investments coming from Europe. (and foreign policy priorities accordingly) in Ukraine process of direct foreign investments redistribution in favor of EuropeanAccording to the recently published data of State Statistics counties taking “neutral” (Austria, Netherlands) or franklyServices following the results of 2010 growth of direct foreign friendly (Germany, France) position towards Russia (new maininvestments from countries of European Union in Ukrainian strategic partner of Ukraine) continues.economy made up 3 bln 616 mln USD (total investments are35 bln 255,2 mln USD) Source: investments made by each country the undisputedleader by reinvesting of Ukrainian capital is Cyprus (+909,3 mln CyprusUSD – up to 9 bln 914,6 mln). Three remaining prize places 9,915 bln USD gerMaNy 4,708 bln USDoccupy German (+475,3 mln USD – up to 4 bln 707,8 mln),Netherlands (+753,3 mln USD – up to 4 bln 707,8 mln) and austrIa NetherlaNDs 2,658 bln USDAustria (+53 mln USD - 2 bln 658,2 mln). Once could also note fraNCe 4,708 bln USDactivation of money flows from France. Taking fourth place 2,367 bln USD(2 bln 367,1 mln of direct investments) by the annual level ofits investments increase (+736,3 mln USD) this country is thesecond one after main leader.During the previous year the following countries decreased itsinvestments in Ukraine: Spain, Slovakia, Slovenia, Finland andCzech Republic. The main leader in investments run off becameGreat Britain. From January 2010 to January 2011 volume of itsinvestments decreased on +8,7 mln USD – up to 2 bln 298,8mln USD).
  2. 2. Cross-borDer DIstaNCe sellINg IN ukraINe: Info DIGEST April 2011the experts are CoNvINCeD:baNks profIt WIll CoNtINue groWINg According to the analytical terest revenue reached 9,1 bln UAH, that is 9 % higher than survey conducted by Foyil Se- within the same period last year. curities. Ukrainian banks have already accumulated enough Analytics note that net commission income from trading trans- money to repay expenses and actions also grew 13% and 18% accordingly comparing to the henceforth could continue in- same period last year. Deductions for credit costs coverage crease its profit. decreased 40% and made up 4,2 bln UAH. According to the data pro- “Development of bank sector is going on according to our ex- vided by National Bank of pectations. Great number of banks accumulated essential pro- Ukraine net profit of Ukrai- visions to cover credit loss in 2009-2010. Decrease of deduc- nian banks in January-Febru- tions in this sector is the main reason of its profitability growth. ary made up 205 mln UAH. Therefore till the end of year we expect further increase of Within first two months of banks income” said Analytics department head of Foyil Securi- the current year bank net in- ties Agshin Mirzazade.Source: finance.uaMarket NeWsWhere ukraINIaNs Dress up:Clothes froM boutIques vs WorN-DoWN-ClothesUkraine is listed as country where retailers are recommended Experts observe a different approach to shopping in our“to go immediately.” Experts estimate that if Europeans spend fashion-conscious people. Between two extremes - boutiquesonly 14 % of their budget on clothing and footwear in Ukraine and bazars niche occupied by so-called middle-price segmentthis figure reaches 22 %. stores appeared. Among clothes and footwear retailers Ukrai- nian buyer prefers such brands as Marks & Spencer, Zara, Ben-Portal found out which brands are pre- etton, Intertop, Plato, Monarch.ferred by Ukrainians and how much they spend to look stylishand follow fashion. In general recent economic crisis taught Ukrainians to save on clothes. Average sum of consumer receipt in Kiev as beforeAccording to the study of sociological group “Rating” [TV1] ranges from 1000 UAH to $1000 but now people buy moreoverwhelming majority of Ukrainians (84%) still continue to items on for this money. “Before people were buying 4-3 itemsdress at the bazars. One third of respondents buy clothes in for this amount and pay no attention to the price for they justsmall stores, 14% — in department stores and supermarkets, simply liked clothes and shoes. Now the buyers wait for dis-5% — in stores of branded clothes. Despite the absolute lead- counts and sales. They want to buy something 100-200 UAHership of bazars after the crisis Ukrainians began to pay more cheaper“ — shares her impressions Elena Tkachenko, a cashierattention to product quality. of a shopping center in Kiev.Source: finance.tochka.netukraINIaNs speND 51,5% of theIr INCoMe oN fooDAccording to the statistics Ukrainian people spend more than Only 3,2 % of income in Ukraine is spent on health serviceshalf of their income on food. people. It is less than amount of money being spent on poor habits.According to the official data in 2009 average Ukrainian spentabout 50,4% of their income on food and beverages and in According to the data provided by State Statistics Services total2010 this figure grew up 51,5%. average monthly expenses of one family made up 3308 UAH (3440 UAH for families living in urban areas and 3012 UAH forEvery 18th gryvnya was spent on wardrobe renewal, each families living in rural areas). Money distribution is very unbal-30th — on alcohol drinks and tobacco products and each anced. Income of 10% of the most wealthiest people are 5,425th — on transportation. Currently average Ukrainian spends times higher than income of 10% of the poorest ones. At thateach 11th gryvnya on housing and public utility services and in 20% of wealth population made up 37% of total expenses.near future this sum will grow.Source: 2
  3. 3. Cross-borDer DIstaNCe sellINg IN ukraINe: Info DIGEST April 2011INterNet NeWsINterNet peNetratIoN Is oN a rIsINg CurveStarting from 4th quarter of 2009 till 4th quarters of 2010 num- ternet access point. During 2010 this share increased 11 % andber of Ukrainian people having Internet access at home grew made up total of 77%.45%. At the end of year 2009 only 18% of Ukrainians had pos-sibility to use Internet at home. During 2010 percentage of During last few years one could also observe tendency of Inter-“connected” people grew 26%. net and mobile communication providers starting paying more attention to attracting consumers in middle and small towns.The highest growth rate was fixed in Northern region of As a result in 2010 share of those who considered their homeUkraine in cities with population 51-100 thousand inhabitants as main Internet access point grew in cities with population(100% and 129% accordingly). around 51-100 thousand inhabitants.Still there is great distinction of Internet availability in villages Communication in Internet shifts to social networks. and small towns and metropolitan cities. In last quarter of 2010only 12% of village people and 25% of people living in town In 2010 for the first time of such researches conduction one canup to 50 thousand population had access to Internet at home note tendency of decreasing of classic e-mail popularity. At thecompare to cities with population over 500 thousand people end of 2009 52% of Ukrainian Internet users were regularly usingwhere Internet penetration index reached 38%. e-mails for communication. However in 2010 its share decreased to 48%. At the same time popularity of social networks grewHome becomes a place of main Internet access. almost the same percentage. 31% of users were using social networks on regular basis in 2009 and in 2010 their share grewDuring the last year share of the people considering their up to 38%. Especially this tendencies took place among usershome place as their main point of Internet access grew. At the aged 16-19 (57% said they are active users of social networksend of 2009 66% of Internet users indicated home as main In- and only 48% considered e-mails on the first place).Source: gfk.uasoCIal NetWorks IN ukraINeExpert in social networks SarafannoeRadio has published TOP-20 rating of the most visited social networks in Ukraine.1. 2. 3. 4. 5. 6. 7. 2 36 11,1 4 31 6,5 7 4 >0,4 8 6 >0,4 10 93 7,7 11 82 6,3 19 294 11,58. 9. 10. 11. 12. 13. 14. 22 7 >0,4 24 2 >0,4 32 12 >0,4 48 1727 17,5 50 33 >0,4 67 140 >0,4 78 10186 97,615. 16. 17. 18. 19. 20. Place in Ukraine Place in world Ukrainian share 91 37 >0,4 98 998 7,5 105 1582 10 134 2051 9,5 168 1102 5,5 206 21135 55,6 3
  4. 4. Cross-borDer DIstaNCe sellINg IN ukraINe: Info DIGEST April 2011As you can see the most popular social network is Vkontakte. According to the Facebook age distribution statistics 50% ofUkrainians continue occupying first place in the world by Face- Ukrainian users arebook penetration growth rate. women and 50% — men.As of January 1st, 2011 total number of users registeredin Facebook stating Ukraine as their country of living was Newcomer in rating1 020 320 people. is so- cial network activelyAt the moment 2,25% of Ukrainians are registered in Face- wining popularity inbook. Ukraine occupies 68th place among countries world- Russia and Ukraine.wide by number of Facebook users.Source: sarafannoeradio.orguDMa speCIal For classic DM specialists this is not a secret but time to relax yet didn’t come! New communication tools are constantly ap- pearing. Nowadays success of the real professional is in the ability to combine strong basis with the new opportunities. DM Days will traditionally consist of separate informational flows: loyalty Day The message is always the same! Love your customer just like you love yourself :) Don’t send spam, don’t call without reason, don’t text at night, take care, protect and give him joy – and the customer won’t look for anyone else but you. But if youTraditionally for spring on May, 26 – 27 2011 Dialog Marketing have 5 customers and 10 account managers this is more or lessDays in Ukraine is going to take place. For 10 years now DM possible. But when we talk about thousands – there should beDays is the leading forum for experts in communications. This a system.time the event is planning on not only to keep up with its pacebut also engage a wider audience. What kind of a system? We will get to know!Rendering tribute to the revolutionary slogans but holding CoMMuNICatIoN strategy Dayevolutionary way as DM Days 2011 slogan simple but compre-hensive one was chosen. Down with monolog, up with dialog! Is direct marketing style business possible? Yes, moreover, it is impossible to run it in any other way!Reason is obvious. Brands that fail to communicate withtheir consumers are in the past. Of course none forbids to While many marketing people were leading towards personalbring your ideas by mass communication but if you want to communications, these tools have already come to take heard (meaning: bought, ordered, recommended) bare ATL weapon does not provide desired results. How to changespeaking is not enough. Listening, hearing and communicat- your strategy – hear, discuss, are important. 4
  5. 5. Cross-borDer DIstaNCe sellINg IN ukraINe: Info DIGEST April 2011 DM tools Day 5. E-merchandising: how to sell more and better via online catalogueIs mobile and social media marketing among the DM tools?Experienced DM specialists have no doubt about that. As they 6. Loyalty programs for the distance selling customersimply personalized communication. But does one understandthe specific features of these instruments? Practice of applica- 7. Mobile marketing as an instrument of distance selling com-tion? Skills of effective application? Unfortunately, very often panythis is not the case. Let us correct the situation! 8. Social networks – new opportunities of customers engage- CoMpeteNCe Day ment for distance selling companiesKnowing WHAT to do we can pass on to WHO and HOW. 9. Organization of effective service at a distance selling com-Literally – which competences and character features should panymodern marketing manager have? Does he or she have to besmart, good-looking? Should he or she take the lead of every- It’s already a tradition that the national post offices of Europe-thing and everyone, be able to enjoy life and be always ready an countries take part with presentations. The representativesto create? And the main thing – how to fit everything into 24 of the national postal services cover the subject of distancehours… selling strategies, development strategies and entering the in- ternational market. Thus, last year the program included the DIreCt hIt Day speeches of the Hungarian Post and Swiss Post delegates. In 2011 the Austrian Post and the Ukrainian monopolist Ukrpoch-Practice, practice and practice! Implemented ideas, proven ta have agreed to make presentations at the conference.results. Source of ideas. Pride in the colleagues and envy ofcompetitors – all this at the public defense of the season 2010- The Ukrpochta representatives will speak about the existing2011 best projects according to the competent jury. services and projects, special services for distance selling com- panies and other information, which cannot be found on the МО Day internet. Conference participants will have an opportunity to ask questions.Pace of distance selling development and rising turnovers ofthis market imply confidence in its prosperity in near future. Of The presentation will consist of the following parts:course there are still more obstacles to overcome and moreissues to solve. 1. Introduction about distance selling market by UkrpochtaThe conference will initiate the discussion 2. Ukrpochta as the major operator of the postal logistics inof the following key points: Ukraine, advantages of its infrastructure1. Catalogue mail order customer: who is that? Psychology of 3. Existing and potential services for distance selling companies the distance purchase and the ways of effective application of the collected data 4. Consignment mechanism for distance selling2. E-customers engagement and retention 5. Safety of the information the company passes to the Ukrpochta3. Responsibility of the distance selling companies to the cus- tomer Please not hesitate to contact us or DM Days organizing com- mittee in you have any questions.4. Online catalogue as an important distribution channel for traditional catalogue companiesOrganizing committee: +38 044 490-90-88;; 5
  6. 6. Cross-borDer DIstaNCe sellINg IN ukraINe: Info DIGEST April 2011prospeCts of ukraINIaN DIstaNCe traDe opINIoN Igor suboW Igor subow Difference is in level of market development. In Russia about 20 Euro is spent annually on a distance selling per capita, in Head of Mail Order, ROSAN, Ukraine this figure is only 10 EURO. There are two reasons Ukraine for this: Russian distance selling market began growing rapidly 4–5 years before Ukrainian. World big players such as Quelle, Chairman of postal logistic OTTO, Yves Rocher, La Redoute entered Russian market with committee at NAMO, Russia great investments about 4–5 years ago. All these companies already opened their representative offices and currently are operating using direct import scheme. Most of the European Please describe in a few words dis- distance companies present in Ukraine operate using postal tance selling market in Ukraine? consignment and have no representatives in Ukraine. Young, dynamic, perspective. What is level of Internet penetration in Ukraine nowadays?What is the main difference between distance selling market Today coverage of broadband Internet is up to 25 %–30 %. Butin Germany and Ukraine from your point of view? spreading of Internet service grows every year on 20–25 %. While mobile Internet, which covers all the territory of theGerman market has long history and high level of maturity while country, became more and more popular. Young people will-Ukrainian market has just begun its development 5–7 years ago. ingly use Internet for searching and ordering necessary prod-On average annually 370 EURO is spent on distance selling per ucts at affordable prices.capita in Germany, in Ukraine this figure is only 10 EURO. ThoughGerman market is growing up to 4 % per a year, the constant Which key trends do you see in the development of distancegrowth of the Ukrainian market is more than 30% per year. selling market in Ukraine?What is the reason of such a rapid growth of Distance Selling In the next 5 years, distance selling market will show the mostmarket in Ukraine? dynamic growth — not less than 30 % in a year. Due to growth of internet penetration, more consumers will use this channel to or-Most of Ukrainians are looking for products and services of der the goods. The number of distance selling users, the numberEuropean standards of quality. At the same time the supply of orders per year and the average order value will grow.of such products and services is bounded in Ukraine today.Therefore distance selling gives Ukrainian consumers a unique Why should European distance selling company start its activ-opportunity to get a wide range of goods of a high quality at ity in Ukraine?affordable prices. This allows them to spend personal budgetin more effective way. First of all, I would like to mention the following points:Are there any limiting factors if distance selling growth? 1. Rapid growing consumer marketUkrainian market is very young therefore lots of consumersdo not always trust buying products offered via distance way. 2. The consumers want to have the wide range of goodsPeople want to touch and see products. The majority of the at affordable pricesconsumers contact call-centers before making an order bycatalog or Internet to verify the proposal seriousness. That’s 3. Rapid growth of internet penetrationwhy professional call-centres play an important role in devel-opment of distance selling in Ukraine. 4. Possibility to enter the Ukrainian market using consignment (minimum risks, lack of investments)What do you think are the similarity and the difference be-tween Ukrainian and Russian distance selling markets? 5. Low percentage of returned itemsSimilarity of both markets is first of all in mentality, language 6. There is necessary infrastructure for distance selling (call-and rapid growth of distance selling — about 30 % every year. centers, fulfillment, and logistics). In next digest you will find: Please feel free to write us at if you want to decline or recommend digest to your colleagues. © UADM, 2011 6