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The Russia-Ukraine Conflict Plays HAVOC with eCommerce

How does the Russia-Ukraine Conflict Impacts eCommerce - Tech Cloud Ltd

The Russia-Ukraine Conflict Plays HAVOC with eCommerce

This goes without saying, “A war costs not only human lives but increases suffering.” Over the years, human civilization has witnessed many wars and suffered miserably.

Currently, the world is witnessing the conflict between Russia and Ukraine — a humanitarian catastrophe that caught Ukraine in limbo as Russia declared a military operation in Ukraine on February 24, 2022. 

Therefore, Ukraine fell into the biggest crisis in modern history as the ongoing war bombed all the pillars of the country on which it stands.

Of all those pillars, the most crucial and complex one — the economy of this country is feeling the heat of this war. Theoretically, an economy of a country primarily stands on four factors, i.e., land, labor, capital, and enterprise. On this ground, many enterprises contribute to the country’s economy, which represents that country’s economic strength.

What kind of enterprise encourages a country’s economy?

Perhaps, in your mind, you uttered ‘e-commerce,’ also known as ‘e-business.’

Yes, you are right.

The eCommerce businesses from the war-affected country Ukraine felt the sting directly and indirectly.

Let’s find out the size of the eCommerce industry in Ukraine, what the war caused and how the existing eCommerce businesses are eyeing recovery.

So, what is the size of Ukraine’s Ecommerce Business?

Size of Ukraines Ecommerce Business - Tech Cloud Ltd

The recent Russia-Ukraine conflict has convinced Ukrainians that the current situation is far more disastrous than the Covid-19 pandemic impact.  

To be precise, Ukraine plunged into a crisis Europe has not seen since WW2. 

Therefore, the Ukrainians were living an unrest life there, which led them to flee from their country.

UNHCR published a statistic stating that over 9.1 million Ukrainians have fled as of July 12, 2022, following that over 6.5 million people were displaced within their country since the invasion as of April 24, 2022.

Consequently, all kinds of businesses plummeted, and the e-commerce industry is no exception.

According to a study, the e-commerce market grew by 41% % in 2020, reaching $4 billion, approximately 2.6% of Ukraine’s GDP. 

The growth rate indicates the trend of eCommerce and its role in contributing to the country’s economy.

Aligned with such growth, Euromonitor International’s market share of e-commerce in Ukraine in 2020 reached 8% of retail (+45% year-to-year). 

The speed of e-commerce growth in Ukraine is one of the highest among Central and Eastern European countries.

The overall eCommerce business in Ukraine was very promising prior to the Russia-Ukraine conflict. 

How much was Ukrainian E-commerce Affected?

Fluctuation of eCommerce Sales in Ukraine - Tech Cloud Ltd

No civilization means no business, and no business means a sluggish economy.

At present, the eCommerce industry is booming in many countries across the globe, and Ukraine was one of those countries. 

However, the ongoing conflict has demolished this industry to the ground. 

When estimating the overall loss of this industry, a report shows that Ukrainian eCommerce lost 83% of sessions in one day.

Losing such a significant percentage of the eCommerce industry is no small talk.

Here is a glimpse of the impacts of the war in Ukraine

  • Due to globalization, each country is connected with one another, from human lives to businesses– particularly the supply chain. The interruption in the supply chain led the eCommerce industry to tumble drastically. 
  • Closure of factories led to shortages of production and, eventually, an interval in demand and supply.
  • The overall mobility and freight cost have sky-rocketed, obstructing any eCommerce business from even running minimum operation. 
  • The potentiality of a long-term cyber-attack on eCommerce is high, which means there will be constant breaches. 
  • Obstruction of import-export causing disturbance in regular trading activities across the globe.

Apart from the impacts mentioned above, the most significant implication is that the uncertainty remains in all Ukraine’s areas.

In addition, the future of the Ukrainian eCommerce business is uncertain as of now which is discouraging any stakeholders to continue or start a business.

Fluctuation of February eCommerce Sales in Ukraine - Tech Cloud Ltd

How Are Ukrainian Ecommerce Businesses Surviving?

Of course, the loss of each eCommerce business due to the Russia-Ukraine war is irreversible. However, many businesses have taken the necessary measures to keep their business running.

For instance, it is noticeable that the majority of the Ukrainian eCommerce businesses have relocated their business to neighboring countries, including but not limited to Poland, based on the business nature, flexibility, and viability.

Once the Ukrainian stakeholders decided upon the location, they shifted their businesses and started outsourcing multiple services that are associated with powering and running a business.

Yes, outsourcing.

In plain words, outsourcing refers to a kind of business practice that includes hiring a third-party company to handle projects, get delegated tasks completed, manage operations and facilitate according to business needs. 

E-commerce businesses have many associated needs, primarily a sleek and user-oriented website, up-to-date and appealing product images and descriptions, branding and marketing, and so on.

Before we continue on how the Ukrainian eCommerce businesses are surviving through outsourcing vital services, let’s take a look at why they need to outsource and not depend on the local workforce.

BigCommerce office in Kyiv, Ukraine

Why are Ukrainian Ecommerce Businesses Opting for Outsourcing?

Most Ukrainians have shifted to their neighboring country without taking their belongings with them.

In such an instance, they want to start over their lives in that country and are thinking of rebuilding the eCommerce business there.

So they need products and the associated factors to be taken care of.

When stakeholders prepare to rebuild their business, maintaining dedicated teams for each task would be a luxury and hassling for that business.

  • Manage Remotely without Hassle

What if it is possible to hire a team of professionals at an affordable cost?

Many agencies across the globe offer a wide range of digital services to facilitate businesses’ growth and achieve their goal.

However, the overall pricing and hassle of finding the right agency with the right services an eCommerce business needs to grow and deal with them might become troublesome.

  • Cost-Effective

Another important factor that has led the stakeholders to outsource is to get professional services without spending much.

Of course, a dedicated team with a number of experienced members would accelerate the CTC (cost to the company) overall.

Besides, there are additional costs associated with managing a dedicated team.

To get rid of this kind of expensive burden, those eCommerce businesses are outsourcing possible services.

  • Professionalism & Market Experience

Hiring an agency for business support tends to be professional because those agencies employ experienced human resources.

Plus, the combination of hands-on market experience is also another important factor.

An agency that has decent experience in catering to local and global clients with reasonable charges is reliable for outsourcing because they will stay committed and user-oriented throughout the business.

Ukrainian businesses moving abroad - Tech Cloud Ltd

What are the services Ukrainian eCommerce businesses outsourcing?

Running an eCommerce business may seem like an easy task, but it is not thanks to the relevant activities required to ensure maximum customer satisfaction.

Other than sourcing products, there are many important factors that need keen attention.

From taking product pictures to uploading those to updating information, it needs to be seamless.

As many Ukrainian eCommerce businesses are relocating to Poland, Hungary, or other countries, they need to ensure their products are appealing and customer-oriented.

For instance, taking pictures can be an easy task if you have the necessary equipment.

Let’s say you have those and took pictures.

If you have prior photography experience and expertise, there is a high chance those raw images need proper adjustment.

Here comes the role of an agency that offers eCommerce photo retouching services.   

Primarily, the idea of eCommerce solely depends on presenting a product image to customers and selling online.

Before purchasing a product, customers always strive to learn more about their desired product.

Customers rely on a product’s originality and detailed information from that product image as they can not touch it.

Therefore, a product image can make or break a sale.

To ensure a product stands out, its image MUST be excellent and appealing.

eCommerce Photo Editing Service - Tech Cloud Ltd.

Ecommerce image editing services are the best way to complement a product image and create a great customer impression.

As discussed above, maintaining an in-house team takes time, effort, and cost. In contrast, outsourcing would minimize your hassle while you get the best output.

From our experience, we have seen Ukraine-born eCommerce businesses seek and hire agencies for the services mentioned earlier.

Through outsourcing these required services, many Ukrainian eCommerce businesses are recovering and the stakeholders are also looking forward to choosing this way.

How is the Russia-Ukraine conflict disrupting global eCommerce?

It should not be presumed that the loss of Ukrainian eCommerce has nothing to do with the global economy. 

The reason why ‘should’ is used in the previous paragraph is because the crisis in Ukraine on the world economy is already visible. Massive losses are inevitable, and many business areas will be affected, including global eCommerce.

Many economists and stakeholders opined that the impact of the Russia-Ukraine conflict has already begun to affect the global eCommerce business. 

Let’s take a look at the ways that the ongoing conflict is affecting the global eCommerce business.

  • Supply Chain Disruption

As many as  300,000 companies based in America are directly and indirectly dependent on Russia or Ukraine for the goods supply chain.

For instance, many companies across the globe import fuel, oil, wheat, cereals, gems, cultured pearls, precious metals, copper, iron, and wood as their source materials.

However, those companies are expecting significant delays in receiving their desired orders and products from Russia or Ukraine.

  • Halt of Mobility

Because of this unrest, two of the largest freight companies terminated their operation temporarily in the region.

This kind of suspension halted both inbound and outbound shipments in Ukraine leading those businesses to stand still.

  • Payment Obstruction

Ecommerce businesses mostly depend on online payment.

Ukrainian eCommerce businesses are disconnected from receiving payments online as Visa and Mastercard dropped their network in Russia and Ukraine.

Therefore, making e-commerce purchases has become a huge obstacle for users around the world. This circumstance is affecting the global economy eventually as there are interruptions in cash flow.

  •  Shift in Consumer Purchase Behavior

There has been a massive shift in consumer purchase behavior across the globe.

Not because of the ever-changing world and its situation but the overall scenario of Russia-Ukraine has injected a fear of inflation.

Hence, the global eCommerce businesses are seeing less interest in overall purchases and also growing demand for daily essentials.

Final Words

Because of the ongoing conflict between Russia and Ukraine, the eCommerce businesses hailing from Ukraine are going through an unprecedented situation. At present, the future is getting bleak for those businesses.

Therefore, the eCommerce businesses from Ukraine are relocating to other countries to survive and eventually revive.

While many organizations are thriving to support those businesses, Tech Cloud Ltd. supports Ukraine businesses and constantly offers the best possible services at an affordable price.

Let’s work together to make your business resilient and thrive.

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