Research:
February – May 2022

What’s happening with Ukrainian eCommerce during the War?

Purpose and method of research

It has almost been more than four months since Russia invaded Ukraine in February. Domestic businesses suffer from considerable losses that already exaggerate those that the pandemic caused. It’s currently difficult to assess the damage extent and its long-term effect because the war continues. However, we can and need to make some conclusions now.We have used all the tools available to understand the effect of the war on Ukrainian eCommerce.
We have also requested secondary information from research companies.

Who can benefit from this research?

⬤  Business owners who are looking for promising development opportunities;
⬤  
Marketers who restart their businesses in new realities.

Which Regions Demonstrate Growing Demand

MIGRATION DIRECTIONS OF UKRAINIANS DURING THE FULL-SCALE WAR IN UKRAINE

Survey period: April 12, 2022

THE CUSTOMERS HAVE MOVED. IT REDISTRIBUTED THE DEMAND IN UKRAINE NOT ONLY BY GEO BUT ALSO BY GENDER

˃ 7 million

Ukrainians crossed the state border. The majority of which were women with children and the elderly (60+).

˃ 6.5 million

Ukrainians moved to safer regions. The share of men aged from 18 to 60 is significantly higher in this group.

Lviv, Ivano-Frankivsk, and Cherkasy regions became the most popular destinations for internal migration. However, since April, due to the cessation of hostilities in several directions, some of the displaced persons began to return home or move to large cities. This also refers to the Kyiv region.According to UN dataas of June 13th, 2022

How the Consumer Portrait and Behavior Changed

83% OF CONSUMERS ARE NOW UKRAINIANS AGED FROM 18 TO 44 WITH AN INCREASED SHARE OF MEN AMONG THEM.

Source: SimilarWeb Report. A selection from the TOP-100 Ukrainian eCommerce sites in March 2022

FACEBOOK DATA ALSO CONFIRM THE TREND

61.64%

Women

37.65%

Men

FACEBOOK, March 2021

51.97%

Women

44.39%

Men

FACEBOOK, March 2022

Facebook target audience in March 2022

PEOPLE CAN'T ALWAYS FIND THE GOODS THEY NEED WHEN MOVING TO A NEW LOCATION. AS A RESULT, THE NUMBER OF ONLINE ORDERS IS GROWING.

82.7%

Sessions were lost by online stores on the day of the Russian invasion.

However, we did see a slight traffic increase that same week. What is more, in the middle of March, the trend changed to a positive one, and we observed a noticeable increase in sessions because of three factors:

Ukrainians recovered from the first shock;       
Logistics resumed;
The active resettlement phase finished.

A part of Ukrainians who moved to safer places faced the lack of their usual brands in offline stores and chose from what was available. Some gave up on premium brands and were saving. And the rest acted contrary to the strict hierarchy of needs and switched to Ukrainian brands to support society. This gave the green light to eCommerce

Evgenia Blyznyuk

Founder and Director of Gradus Research

PATTERNS OF GOODS CHOICE DURING THE WAR

Survey date: April 1, 2022

How Key Indicators Changed In Different eCommerce Niches


We visualized the dynamics based on weighted average indicators in each category. We also took the first week of February as the benchmark of the pre-war situation.

PRODUCTS. DYNAMICS OF CATEGORY RESTORATION

PRODUCTS. ANALYTICAL CONCLUSIONS

In the first week of March, the advertising budget and income "reached the bottom" for all businesses in the category. In March, the level of profitability was only 7-8% of the first week of February.

Online demand demonstrated a slight increase from week to week. Due to the change in the usual life of Ukrainians because they started to buy more products offline. Besides, online customers studied offers and prices. Therefore, it makes sense for the industry participants to increase their advertising budgets, but not drastically following the testing mode.

At the beginning of April, all companies of the product niche started launching advertising and slightly increased their budget week by week.

At the end of May, the number of customers reached 50% of the benchmark, while the advertising budget of brands was only 15% of February. The cost of attracting customers decreased by 15-20% because considerably fewer advertisers participated in the auction.

Currently, advertising budgets should be launched in Lviv and Western Ukraine. The number of customers in the front-line regions, namely Odesa, Kharkiv, and Mykolaiv, is not likely to increase until the end of active hostilities.

MEDICINE. DYNAMICS OF CATEGORY RESTORATION

MEDICINE. ANALYTICAL CONCLUSIONS

As of the first week of May, the number of customers reached 50% of the pre-war level.

The majority of businesses launched advertising in April.

During the period of active hostilities, the dietary supplements demand rate fell several times compared to the high pre-war demand rate. Instead, medicine for people with chronic diseases and sedatives turned out to be at the top of purchases.

The medicine category does not demonstrate sufficient online enhancement. Once the need for different types of healthcare goods occurs, the customers usually satisfy their needs in brick-and-mortar stores. However, the demand increased significantly in the Lviv region.

At the end of May, the number of customers reached approximately 40% of the benchmark in February. The budget for advertising on Google fell sharply during the last two weeks of May and averaged 9% of the amount in February.

The average receipt remained at the same level as in February.

CLOTHING AND FOOTWEAR. DYNAMICS OF CATEGORY RESTORATION

CLOTHING AND FOOTWEAR. ANALYTICAL CONCLUSIONS

The category shows the highest recovery dynamic according to the number of online customers, which is caused by movements and seasonal change.

At the end of April-early May, the advertising budget effectiveness reached the February level, but the budgets were about 30% lower compared to the pre-war metrics.

The average receipt remained at the same level as it used to be in the pre-war period. CRR (Cost Revenue Ratio) may eventually reach the pre-war level as well.

Currently, advertising budgets can be implemented in Lviv and Western regions. The number of customers in the frontline regions (Odesa, Kharkiv, Mykolaiv) is not likely to increase until the end of active hostilities, so we do not recommend increasing budgets in these areas.

GOODS FOR CHILDREN. DYNAMICS OF CATEGORY RESTORATION

Goods for Children. Analytical Conclusions

The industry demonstrated smooth revenue growth week-over-week, while ad budgets remained stable at 12% of February’s level.

The traffic rate was 40% of the pre-war level. The revenue reached 52% with the rising trend line.

By the end of May, the average check increased by 12% compared to February. It almost had no decline during the war period.

Increasing marketing budgets may cause further revenue growth, but the hypothesis needs to be tested.

PET PRODUCTS DYNAMICS OF CATEGORY RESTORATION

GOODS FOR PETS. ANALYTICAL CONCLUSIONS

The category shows the highest recovery dynamic according to the number of online customers, which is caused by movements and seasonal change.

Pet products were within the categories that recovered online the fastest: by the end of May, the number of customers and revenue almost returned to the indicators of the first week of February (benchmark). Revenue was at a level of 85% and customers reached 95% while advertising budgets averaged only 26% of pre-war levels.

During the war, the average receipt increased by 10%. There were two large boosts in the first weeks of March and April. This was caused by the desire to stock up the necessary goods, in case of their absence in warehouses in some regions. By the end of May, the situation leveled off and almost reached the pre-war indicators.

COSMETICS, HYGIENE, AND HOUSEHOLD GOODS. DYNAMICS OF CATEGORY RESTORATION

COSMETICS, HYGIENIC, AND HOUSEHOLD GOODS. ANALYTICAL CONCLUSIONS

The category demonstrated almost complete stagnation from March to the end of April and extra growth in May.

In late May-early June, the number of customers grew compared to the first week of February, while profitability reached 80% of the pre-war period. The advertising budgets averaged 50% of the benchmark. Ukrainians adapted to the new conditions and returned to the routine of self-care.

The average receipt increased by 80% on average, and the CRR enhanced by 30%, compared to the pre-war period. Customers began to update and enrich the set of familiar tools in the category.

This category is currently the most effective in terms of marketing budgets. The demand redistributed more to the online sector than offline sales.

ELECTRONICS AND HOUSEHOLD APPLIANCES. DYNAMICS OF CATEGORY RESTORATION

ELECTRONICS AND HOME APPLIANCES. ANALYTICAL CONCLUSIONS

At the end of May, the niche generated 65% of the traffic of the pre-war period.

Since mid-April, players in the category steadily increased their advertising budgets every week, which allowed them to gain 25% of February's rate by the end of May.

The average receipt increased significantly – 30% on average. The demand for different types of goods in this category varied from period to period. The volunteer initiatives and the transfer of a large number of IT professionals affected the trends. In addition, the arrangement of living places and the need for basic appliances also played a role in May

Dnipropetrovsk oblast is the only region that maintained its pre-war income and traffic indicators. Lviv and the Western regions demonstrated an enhancement from 10% before the war to 40% now, according to the income and traffic criteria. The demand has still not equaled the pre-war level in Kyiv and the Kyiv region. It is recovering slowly.

INCOME DYNAMICS IN DIFFERENT NICHES

INCOME DYNAMICS IN DIFFERENT NICHES. ANALYTICAL CONCLUSIONS

As of the end of May, only two categories recovered compared to the pre-war period according to the income criterion, namely pet products and cosmetics (+household and hygiene products). The electronics and household appliances category had some jumps, although it is due to the growth of the average receipt.

The categories Products, Medicines and Clothing, and Footwear recover the worst in terms of income.

Products for Children have a growing trend, which is most likely related to the change of seasons and the need to update items as a child grows. Also, the category is a priority in the distribution of the family budget.

TOP Sales Categories


Data for April 2022. Relevant for regions where active hostilities continue

TOP-7 CATEGORIES OF PURCHASE DURING THE WAR

Key Findings That Businesses Need To Pay Attention To

Despite the conflict, life goes on. The demand still exists, although it has changed. You should expand the assortment with products that are most in-demand now. Brand loyalty is very low because people buy what is available.

Some regions demonstrate the demand fall, while others grow. The population migration caused the redistribution of the marketing budget to the regions where the Ukrainians moved.

The categories that cover basic needs such as food products, cigarettes, medicines, shoes and clothes, hygienic and household products, and products for animals, maintain the growth dynamics.

 Ukrainians make purchasing decisions faster if the goods are available and delivery time is short. The winner is the one who ensures availability and effective logistics.

 In mid-March, the market started to recover. Well-known and recognized brands recover faster and retain customers. Besides, stores that resumed advertising campaigns also show beneficial recovery results. Firms that are currently Shopping or in the first lines of Google search generate new businesses.

 People are now sensitive to the brand's position concerning the war: tell what your business is doing to support the country.

 With the end of active hostilities in Kyiv, people are returning home, and demand in the capital is growing. In the Western regions, demand will maintain high as long as active military operations continue in the East.

What’s Next?

The war will end, sooner or later. The recovery will begin, and according to all experts, building materials, household goods, appliances, and electronics will be in high demand. These are large goods that require specific logistics. You need to think about this in advance.Online stores that turn out to be in the top search results and ensure the availability of goods in different price categories, including the low cost and average price levels, will collect the "cream". Customers will be more sensitive to prices than ever. This is one reason why the assortment must necessarily contain a low-cost goods segment.

We find insights that help businesses make effective decisions! If you need an in-depth analysis of your category or need to develop a development strategy, contact our Research and Development team.
R&D@promodo.com