E-commerce digest - Long term investment, growing market

E-commerce digest

Long term investment, growing market

E-commerce and e-government are basically nonexistent in Romania. The low purchasing power of the Romanian population, extremely limited PC ownership, high Internet access costs, and difficult national economic situation all remain obstacles. Nonetheless, there has been rapid recent growth in the number of Internet hosts and mobile telephony subscribers.[1]

Phenomenal growth projections for the near future.[2]

Forecasts for the growth of electronic commerce by professional researchers are extremely optimistic. [3]

Internet usage has increased significantly in recent years, reaching 16% of the total population at the end of 2003. Although there are a number of very popular virtual shops, only 4% of Internet users buy online, according to a study released by the Ministry of IT&C in 2003. Until recently, the payment of goods purchased from Romanian websites was carried out off-line. A number of banks now offer virtual stores solutions for fast and

secure e-trades using the 3D Secure solution.

According to an Economist Intelligence Unit 60-country survey, Romania ranks 43rd in its readiness for e-commerce and its potential for ICT integration in the e-business economy. With a total score of 5.2, Romania is ahead of Russia, but behind Poland, Hungary, the Czech Republic, Slovakia, and Bulgaria. [5]

High return on capital

E-Commerce online retail options enhance consumer choice and access to products. They also allow businesses to reduce costs associated with physical infrastructure and to augment their marketing outreach and public relations via a dynamic communications channel. Moreover, networked businesses are likely to explore new business models, including dynamic business partnerships and radical market restructuring.

Business-to-business e-commerce seems to have a better future. Although very few companies offer their goods and services through the Internet, there are encouraging signs that new companies will adopt e-commerce in the near future. Romanian businesses would benefit from the employment of global B2B e-commerce systems which promise to enhance their ordering and procuring processes. [7]

In terms of e-industries, an Arthur Andersen study which evaluated e-business efficiency using six broad categories (including web sites, sales and marketing performances, demand and processing as well as permanent technical/customer service) identified brokerage and insurance as Romanias most and least efficient e-businesses respectively.[8]

Simple industry / predictable

Internet and other new communications resources however have also shady aspects from abuse for criminal acts to negative reach for customers.

IT, telecommunications, financial institutions, retailers and governments are driving towards a future where they will conduct transactions electronically.

The emergence of business-to-business electronic commerce has persuaded many corporations to invest in Internet-based value chains that link suppliers and customers. These trading networks have in many cases substantially reduced the administrative cost of doing business at the same time as delivering efficiencies such as speedier time to market, faster reaction to changing markets and lower inventories.[11]

Romania has adopted a set of regulations on e-commerce, mostly relying on the European Union regulations in the field.

Main advantages for the customer are time (the buyer can surf through many e-shops in a relative short time) and freedom to choose (also referring to the customer). Main advantages for the companies offering e-commerce solutions are the growth in communication speed, lower costs and a stronger bond between suppliers and customers (through a web-site the customers can be informed faster about the newest products on the offer)

Market leadership is achievable

Transnational businesses operating in Romania feeding local ICT market with demand. Non-ICT Romanian business sector not fully aware of value of ICTs, e-commerce/e business.[14]

Low number of online shops in Romania, online banking is at a low level

The e-business market in Romania is a content provider market, rather than a functional alternative to the traditional way of completing transactions. Although there are around 8,000 registered domains, there are only a few companies that offer B2C transactions. A rough estimate shows that in Romania there are around 50 companies offering e-commerce in some form (other estimates mention around 100), but the vast majority of businesses still rely on paper transactions. [16]

Scalable business / margin

E-commerce gives small and medium-sized enterprises (SMEs) the ability to access international markets that used to be difficult to enter due to high transaction costs and other market access barriers

In spite of little Internet legislation and low Internet penetration, virtual companies are springing up in Romania, offering new products and solutions which allow firms to manage their entire activity on the web, either in b2b or b2c activities. For example, companies such as Oltchim and Paneuro Targu Mures implement Oracle applications, Tamisa Trading performs transactions with pharmaceuticals distribution on the web, and Omnilogic accepts orders via the Internet. [18]

The Romanian e-commerce market in the year 2001 is estimated to be close to 2 million.