The world now is about connectivity. In fact, this is one of the most characteristic features of the 21st century. The increasing number of different links (by road, by air, but above all digitally) is making people on all continents feel closer to each other. In the 1960s, Marshall McLuhan wrote that we would live in a “global village.” The last decade or so – with the rapid growth of low-cost air travel and social media – is an excellent indication of what this global village will look like. “Connectivity is the most revolutionary force in human history and the most durable long-term trend. Humanity’s usage of all available technology to build connectivity between cities, communities, and individuals is quite simply an anthropological fact,” says Parag Khanna, a specialist on globalization and author of the book “Connectography: Mapping the Future of Global Civilization.”
Connectivity is the most revolutionary force in human history and the most durable long-term trend. Humanity’s usage of all available technology to build connectivity between cities, communities, and individuals is quite simply an anthropological fact
Parag Khanna
The changes brought about by globalization, and the development of connectivity are forcing a reaction. Countries unable to meet the demands of the new connected era are condemning themselves to find themselves at the tail end of this modern race. To avoid being left out of it, the Central European countries created the Three Seas Initiative to support (among other things) the development of connectivity across the 12 states taking part in this program. One crucial element of this development is the development of the region’s digital capabilities. It is happening. This is best seen by the rate at which e-commerce is growing in Central Europe.
Vibrant e-commerce markets
“In 2021, retail e-commerce sales amounted to approximately 5.2 trillion U.S. dollars worldwide. This figure is forecast to grow by 56 percent over the next years, reaching about 8.1 trillion dollars by 2026,” wrote Stephanie Chevalier, an e-commerce research specialist of Statista, a company providing market and consumer data. The amounts are impressive. Even more so is the sustained high growth rate in the value of this market over many years. But neither can it be, as the number of internet users worldwide is consistently increasing. And as we spend more and more time online, we naturally move more and more of our life activities to it. This also includes shopping.
This trend is also evident in Central Europe. In CEE countries, 63% of the population uses the internet for shopping (data from 2022, the average for the whole EU is 68%). The most active online shoppers – above 70% – live in Czechia, Slovakia, Estonia, and Hungary. And these countries have the most vibrant e-commerce markets. New companies are being set up there, which are expanding their business thanks to the internet – not only in their country of origin but also abroad.
To be or not to be
One spectacular example of this development is Czech start-up Rohlik.cz. Established in 2014, the firm focuses on delivering groceries to users in 90 minutes. And it quickly achieved success. In 2020, it recorded a 101 percent increase in revenue. In 2021 Rohlik.cz gained so-called “unicorn” status, meaning its value was worth at least USD one billion. It has also started its expansion abroad, opening e-shops in Hungary and Austria, with further plans for expansion into Poland, Romania, and Germany to the list. The best example that you can win on e-business platforms even if you rely on close cooperation with “old business”: local butchers, fishmongers, bakers, and fruit and vegetable vendors. Rohlik.cz managed to achieve that.
There are more examples of spectacular success in e-commerce in Central Europe. Vinted, originally created as a Lithuanian online marketplace for buying and selling second-hand items, is a stellar example. The firm was established in 2008 and achieved global success, gaining a valuation of over USD 1 billion in 2019. And it is not even the biggest e-commerce firm in Lithuania. The leader of e-commerce in this country is Pigu.lt – the platform which enables its users to open their own internet shops. In 2021 it generated a revenue of USD 78.6 million. This company is closely followed by another Lithuanian e-commerce firm Senukai.lt, which sells electronic goods and do-it-yourself house-building elements. Its revenue in 2021 achieved a level of USD 68 million.
The growth of e-commerce translates into the economy as a whole. On average, 2.8% of GDP is created in the internet economy in the 12 Three Seas Initiative countries. Among the leaders of this group are Estonia (6.78% of GDP is created in the field of IT), Czechia (5.71%), and Poland (4.67%). And these three Central European countries are not far from European leaders in this field. Great Britain creates the biggest share of its economy in internet in Europe – 9.92%. The second is Denmark (7.29%). The third is Estonia. Fourth place goes to Greece (6.65%) and fifth to Czechia. Clearly, Central Europe is keeping up with – and even surpassing – countries with better economic performance in the “old economy” areas.
E-commerce looking for synergies
According to Eurostat, only 32% of online shoppers bought or ordered goods from sellers in other EU countries. The fact that the e-commerce market is still largely confined to national borders naturally gives an advantage to countries with a large internal market. It is no coincidence that the world’s e-commerce leaders are such large countries as China and the United States. Nor is surprising that in Europe, the largest e-commerce companies have been established in the UK, France, and Germany.
Central Europe is dominated by medium-sized and small countries – it is inevitably much harder for them to start operating on a larger scale. This makes it all the more important to recognize the success of companies that have been established, for example, in Lithuania, which has a population of less than 3 million. The geopolitical situation of Central Europe, the fact that it is made up of more than a dozen countries, a large part of them with a small area and population, makes it all the more necessary for all of them to cooperate, to look for synergies among themselves. If the modern world is about connectivity, then this connectivity is critical in the Three Seas (Adriatic, Baltic, Black).
Developing a model of practical cooperation has even become an issue of “to be or not to be” for them. And in the area of trade, this cooperation is the easiest to develop in relative terms. Therefore, the growth rate of e-commerce in Central Europe can be seen as a kind of litmus test for the quality of cooperation in the region.
