Romania's Growing Internet Use Boosts E-Commerce

Article | 16 Apr 2012

Despite the growing number of Internet users over 2006-2011, there is still room for
expansion as Romania ranks near last in Eastern Europe in terms of Internet
penetration, at 43.2% of the population in 2011, ahead of only Belarus and Georgia.
However, a 2011 uptick in annual consumer spending on telecoms equipment is likely
to shift shopping habits towards online payments and e-commerce, providing
opportunities for businesses in Internet marketing and retail.

Romanias Consumer Expenditure on Telecoms Equipment and Services: 20062011

US$ million
Source: Euromonitor International from national statistics/Eurostat/UN/OECD
The introduction of Wi-Fi, 3G and more affordable services owing to increased
competition have been factors in increasing Internet access among Romanian
consumers. Internet users surged by 73.6% over 2006-2011, driving opportunities for
businesses in the country's burgeoning online retailing and advertising sectors;

However, income and computer literacy disparities between the cities and the
countryside hold back growth in Internet access, with 45.1% of the countrys total
population living in underserved rural areas in 2011. Distrust of non-cash payments and
fear of Internet fraud also remains a barrier to many Romanians in committing to online
transactions.

Implications
Growing Internet usage among a younger, professional demographic bodes well for
Internet retailing, although Romania still has the lowest Internet use rates within the
EU:
Online shopping in Romania is in its early stages but has started to see steady
growth as Internet users have started to better grasp the benefits of e-commerce.

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The steady emergence of group buying websites offering deals and discounts, which
often use social networking sites like Facebook to promote products, is set to spur ecommerce development;
There remains a deep-rooted mistrust of cashless transactions amongst Romanians,
especially the country's older population, resulting in continued demand for new
products to help facilitate and secure online payments, which can attract more
consumers to sellsumer and online retail sites. According to Visa Romania, total online
transactions made using cards issued in Romania amounted to ?800 million in 2011;

Online retail in Romania is being driven by the younger, more tech-savvy

demographic, with online businesses likely to find more success targeting this
consumer group. Internet retailing was worth RON1.1 billion (US$400 million) in 2011,
up 7.9% in real terms over the previous year, with consumer electronics and video
games hardware accounting for a dominant 29.0% of sector worth;

Younger users have also generated greater traffic in social media and networking
sites, which in turn has driven Romanian online marketing and advertising initiatives.
Online adspend reached RON85.0 million (US$27.9 million) in 2011, a 23.6% increase in
real terms on the previous year;

However, disparities in incomes and telecoms infrastructure between rural and urban
regions mean there is a digital divide in the country. According to the Romanian
National Statistics Office, households in cities earned an average gross income that
was 16.5% more in 2011 than those in rural areas, partly explaining why Romania had
the third-lowest Internet user penetration rate in Eastern Europe in 2011, at 43.2% of
the population;

Nonetheless, the country's communications sector saw a strong rebound in 2011 on

the back of weak years following the global economic downturn of 2008-2009, with
annual consumer expenditure on telecoms equipment rising by 10.5% in real terms. The
sales of smartphones have especially been strong, suggesting their web-enabled
capability will be a boost to Internet-dependent segments.

Prospects
More than half of all Romanians did not use the Internet in 2011, according to EU
statistics. In response, the Romanian government has pledged to meet its EUmandated commitment to provide full national coverage with Internet connections
faster than 30Mbps/s. This entails considerable infrastructural investments by telecom
operators as well as the introduction of a host of new technologies in 2012 and
beyond;

Internet users in Romania are set to rise by 38.7% over 2012-2020, above the
Eastern European average of 24.8%. However, broadband Internet subscriptions are
expected to grow by only 11.5% over the same period, compared to the Eastern
European average of 76.0%. Most Romanians will likely connect to the Internet via
their web-enabled handheld devices going forward, providing strong opportunities in
mobile-commerce;

Internet Users, Internet and Broadband Subscribers, and PCs in Use in Romania:
2012-2020

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Million
Source: Euromonitor International from International Telecommunications
Union/OECD/national statistics
Note: 2012-2020 is forecast data
By 2020, Romania's rural population is set to fall to 41.9% of the total population as
more Romanians move to urban areas. This, coupled with improved nationwide
information and communications technology coverage and education, will likely narrow
the digital divide between the city and the countryside, allowing more consumers
access to online services.

For further information please contact An Hodgson, Technology, Communications and

Media Manager at An.Hodgson@euromonitor.com

Euromonitor International 2015

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