Opportunities of Ukrainian Market for distance selling business

Julia Pavlenko Chief Executive Officer

Ukrainian Direct Marketing Association

Special for

“Trade mission in Ukraine: 360њ over distance selling market potential”

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Ukraine is a country of contrasts

With the average official wage - 2700 UAH. (About 260 €), the country is experiencing growth in demand for cars, travel and sports services.

Assuming that Ukrainians spend for food products more than 50% of revenue:

For the 6 months of 2012 was a record number of imported clothing and footwear - $ 700 million (Data: Delovaya Stoliza)

In 2011, on the cosmetics and perfumery was spent $2.4 billion (in 2012 the market is expected to increase by at least 10%) (data: Euromonitor)

In 2012, the consumer electronics market in Ukraine is approximately 5.5-6 billion UAN. The share of online sales is 12%. (Data: AIN.UA according to major retailers)

In 2011, in Ukraine has been sold to the final use of the approximately 8.3 million mobile phones and smartphones, which is 9% more than in 2010. (Data: GfK Ukraine).

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The market volume of distance selling

Data from Ukrainian Direct Marketing Association

Market E-commerce & Mail order in 2012 will amount to 1.4 billion euro.

The dynamics of the market: growth in 2011/2010 amounted to – more than 30%

Catalogue Sales, mln euro

Catalogue Sales of textile, clothes, footwear, mln euro

Forecast for 2012

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Players of distance selling market

In the ranking of Bigmir.net were registered more than 7 thousand online stores, but only 10 of them this year achieved a turnover of more than $1 million per month.

International Mail Order in Ukraine

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Success factors of distance selling in Ukraine

1. Large distances and retail unsaturation

2. Availability of infrastructure:- Logistics;- Contact centers;- Lettershop & fullfilment;- Payment system.

3. Favorable mentality of consumption.

4. Effective channels of consumer recruitment and developed media market

5. Distance management of business processes (without opening a representative office)

With the right choice of commodity groups, marketing strategy and responsiveness to consumer demand you can build a successful business.

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Logistic market

Market volume of inside postal logistics in Ukraine in 2010-2011 in physical and money terms

Letters(mln. units)

Growth rate, %

Parcels(mln. units)

Growth rate, %

Total (mln. euro)

Growth rate, %

2010 2011 2010 2011 2010 2011

** Mail within Ukraine 400,12 451,01 12,7% 42,68 48,33 13,2% 186,14 228,1 22,5

International mail 14,33 14,53 1,4% 2,98 2,98 0% 35,88 37,34 4

Total: 414,45 465,54 12,3% 45,66 51,31 12,37% 222,02 265,44 19,5

Letters Parcels TotalGrowth rate, %

mln. units mln. euro mln. units mln. euro mln. euro

2010 2011 2010 2011 2010 2011 2010 2011 2010 2011

Ukrposhta 290,45 299,67 49,78 54,35 16,75 17,99 27,6 31,69 77,38 86,04 11,1

Private companies 109,67 151,344 38,15 52,45 25,93 30,34 63,12 82,17 101,27 142,06 40,3

Total: 400,12 451,01 87,93 106,8 42,68 48,33 90,72 113,86 178,65 228,1 27,7

Market volume of postal logistics in Ukraine in 2011 (letters and parcels) € 265 million with international deliveries (228 million without)

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Shares of logistic market operators in 2010

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Market of contact centers

Number of outsourcing contact centers (2011):   121 (growth rate 2011/2010 - 53%);

Average cost of one minute for client: 0,14 euro without VAT (inc. all monthly costs)

Market volume: $30,5 mln (2010); forecast for growth rate- +25-30%;

Market leaders for yearly turnover: 7 major contact centers (together 55% of whole market)

The share of catalogue selling in OCC: 6%.

Total number of CC in Ukraine: not less than 900

Number of people employed: not more than 23 000

Number of operators: not more than 27 000 operators

Total number of personnel: not more than 33 000 people

* OCC – outsourcing contact centers

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Lettershop&fullfilment market

Market – supply saturation, the existing volume of imported equipment in Ukraine is not used to full capacity.

Many companies have expensive equipment, but popular is the use of manual labor.

Today, the main players in the market lettershop in Ukraine are::

•Multipost•Powerprint •Centrodruk•Frankopak•OS-Direct •All Ukrainian Postal Service

Types of receiving payments

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Total amount for transaction % of total amount

Up to 500 UAN inc.4,0

500-1000 UAN2,0

More than 1000 UAN 1,2

Cash on delivery in hand or courier 95-97 % of goods

Bank transactionPOS terminal 3-5 % E-payment

Rate on transfer via cash on delivery Ukrposhata:

Types of receiving payments for goods

UADM

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Thank you for attention!

Julia Pavlenko

Chief Executive Officer

Ukrainian Direct Marketing Association

pavlenko@uadm.com.ua

All about distance selling in Ukraine http://distanceselling-ua.com/