IMRG e-Commerce Country Profile: Ukraine

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Executive Summary

In this country profile we provide you with information about our country Ukraine, a market of 45 million potential customers. We are sure that by learning more about our beautiful and interesting country you will consider that entering the Ukrainian market might be an opportunity for your company.

Ukraine is strategically located at the borders of the European Union. After the economic dip in 2009 our economy is doing well again. In 2010 our GDP grew with 4.2% and recent IMF forecasts indicate a growth in the next 5 years of around 4 to 4.5%. Traditional retail sales increased 7.6% in 2010 and the future is looking bright.

As to distance selling: Ukrainians came to know catalogues relatively recently, in the mid-1990’s when the first franchisers of large mail-order companies (OTTO and Quelle started to take orders in small shops. In 2005 Neckermann entered the market with its first main catalogue using consignment for parcels delivery. Thereafter every year new brands from Western and Eastern Europe have entered the market.

As to e-commerce, the country also has great potential: according to a recent study of Appleton Mayer,
B2C e-commerce in Ukraine is still in its infancy largely due to to the fact that Internet penetration has been slow to develop. Currently the level of internet penetration in Ukraine is around 35% or 15.3 million users. During the economic crisis of 2009 online sales did better than traditional retail.

The main characteristics of B2C e-commerce in Ukraine are:

* a forecasted annual growth of 50% in the next five years;
* an estimated market volume of around 500 million USD;
* huge potential due to many promising niches which are either fragmented or not (yet) filled in.

Now that the economy is improving the Ukrainian market with close to 46 million inhabitants shows great potential, especially for Western companies. Due to the present consignment regulations in place goods up to €200 can be imported to private persons without customs duties and VAT.

When entering a new market it is essential to be informed about the characteristics of that market, about
consumer behaviour, about legislation in place etc. It is essential to have a reliable partner who is able to guide you with his experience and know-how, both about the country and its characteristics as well as distance selling, direct marketing and e-commerce sectors.

Using this system of postal consignment and choosing OS-Direct and Rosan as your partners all business
activities to Ukraine, including customer recruiting and servicing, can be managed from your present
headquarters without having to have a physical presence in Ukraine.

We are looking forward to meet you and to discuss the opportunities to enter the Ukrainian market.