e-commerce has come a long way in the Czech Republic over the last decade and by estimates there are now some 36,000 online stores here. Over the years, services have greatly improved, and Czechs have gotten used to spending more and more at e-shops.
“The early days in e-commerce in the Czech Republic basically boiled down to people who had good IT skills, had some idea about the potential or possibility of e-commerce, and basically who went ahead and launched their own website. The founder basically did everything himself – buying goods wholesale, making the site, selling the products, and so on. It was kind of pioneer days in the sector.”
People who got in early, did they have a sense of how big online sales would become?
“I think only some of them did. Ondřej Fryc, the founder of Mall.cz was someone who I think did realise that e-commerce would be something of a golden goose.”
What were some of the positives for entrepreneurs who went online, then or even today? I read recently that even now big players like amazon or e-bay don’t have the kind of traction in the Czech Republic that you see in other European countries…
“I think that Czech customers and the Czech market is very specific. If you take the web portal seznam.cz, Google didn’t kill it. And it’s very similar in e-commerce: Czech consumers are on the whole very conservative and they largely stick with Czech stores and Czech services.”
“Czech consumers and the Czech market are very specific. In a word: conservative.”
So they want to be served in Czech but they also perhaps have an affinity because if they deal with a Czech company, is that what you are saying?
“Well they certainly like Czech services and these are specific. Czechs are hard to sell to, it is a small market, there is a lot of competition, you have to have perfect customer service, and only Czech firms are usually able to meet most of the demands.”
Fairly recently amazon.de, which is for Germany, began offering their services in Czech on the webpage, perhaps also in other languages, but it seems in that respect they maybe got on the boat late…
“I don’t think it comes down to that. It’s just a translation in any case, but it is not the complex approach that many customers here want and many here want to avoid shipping from abroad or international warranties. They really like buying from Czech firms as opposed to foreign or international ones.”
Over the years there has been an evolution in the design and layout of websites and many new features, from more payment options to other services. Some introduced kind of gimmicks like an on-line customer chat service and so on. What were some dominant trends or ways in which websites changed?
“Some of the changes are considered innovations and others find them annoying. It is very hard to know in advance what customers will find beneficial but I can tell you that firms need to limit or exclude anything that customers find irritating. It isn’t long in any case before the owner gets a response from the market.
“The first big chances in e-commerce and its representation online were because of bigger offers: someone started by offering hundreds of items and as the business grew they began offering thousands. So you have to be able to change up and also get customers’ attention because you are also competing for the same customers with someone else.
“The biggest change in layouts has everything to do with your phone. E-commerce has come to phones and that was the thing that designers and IT people had to work out. The webpage has to look attractive on the big screen at the office but at the same time it also has to work equally well on a small screen.”
And of course, there are also kinds of devices – tablets, mini-tablets, laptops – and some people are probably online more than 12 hours a day…
“Online store webpages now have to work on different devices and work well. That is quite challenging to get right.”
“The golden rule in e-commerce is to never make a promise you can’t keep.”
Is there any kind of ‘golden rule’ in this area, now that the rules have been re-written?
“The golden rule is do what you promise. Or only promise what you can deliver. If you promise delivery next day, you have to meet that target. And that is an advantage for domestic firms.”
I read that there are some 36,000 e-shops in the Czech Republic. Is that an accurate number and is it a little… or a lot?
“It is an estimate. There is no clear or hard set definition for what an e-shop is. You can have an e-shop which sells only a few items or you can have a major retailer. So that’s the number of webpages but not all shops have the same weight. If we are talking about e-shops that are real companies focusing on a large part of the market or customer base, the number is more like 1,000 or 1,500. Which is still high.”
Searching on the web can take you to some very niche websites. Not long ago I had a professional magician as a guest and he referred me to two websites selling gear for both professional and amateur magicians which can’t be that big a market and is very specific. Maybe they sell a little, maybe they sell a lot. But I guess my question is to what degree do you see that kind of diversification of products as a positive and the flip-side: are there areas, such as children’s toys where we are seeing oversaturation?
“It’s a really interesting question. You have some really big e-shops which offer many goods but they aren’t able to offer everything and specifically to cover niche markets. So, if you are thinking about founding an e-shop, it’s good advice to focus on something that no one else can offer. If you open an e-shop for electronics, you are dead from the start. It is not possible to compete with the big players in those areas. As for oversaturation, electronics is it. If you can find a niche market, there is room there to succeed.”
One of the things which APEK provides is a seal of approval for your members, which means they meet existing legislation in a transparent way. What percentage of e-shops are members and on the flip-side are there still dodgy shops out there where one would do better to not provide a credit card number?
“If you want to make it in the world of e-commerce, find a niche not covered by the giant retailers. That is how you can succeed.”
“We have 500 members but this is a significant number with regards to the number of big shops out there. That seems small compared to the figure of 36,000 e-shops, but in terms of revenues, if we include Alza which is becoming a member than those members represent 80 – 85 percent of overall e-commerce turnover.
“As for online fraud, that can still happen the same way you can be pickpocketed on the street or be robbed. In the Czech Republic, however, most sites offer third-party security when it comes to making a payment, and customers have gotten a lot smarter about e-shopping. The moment a shop asks for your credit card number directly I would be worried unless I had used them before and knew, beyond a doubt, that they were trustworthy.”
How will e-commerce continue to impact stone-and-mortar shops? Because more and more customers as I see it, try or look up items at stores but order online from the cheapest seller, not necessarily the same brand store.
“Brick-and-mortar shops and online shops within five years will be one. Each store will be doing both and we will be talking about both simply as retail. That’s what I expect.”