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Exploring the Impact of the War in Ukraine on eCommerce: A Comprehensive Research

Digital Marketing
April 18, 2023
15 min
Content

The horrifying news about the invasion of Russia into Ukraine on February 24, 2022, has spread around the world. Numerous terrorist attacks, the occupation of Ukrainian territories, thousands of launched missiles against infrastructural and civilian objects, power outages, and even a complete blackout—this is not a complete list of problems that business in Ukraine in 2022.

Nevertheless, Ukrainian eCommerce showed an extraordinary case of running business under war. Business in Ukraine demonstrated how to survive and continue to develop in the conditions of a full-scale war. We’ve already posted several articles on how local companies adapt to such challenging circumstances. In this report, our Strategy department experts combined the key indicators to demonstrate how eCommerce changed from January 2022 to February 2023 in 6 different categories. 

Let’s view the dynamics based on weighted average indicators in each of the categories. 

Food and Beverages

Despite the active redirection of customers to the online segment, the situation in the Ukrainian eCommerce food and beverages category was rather challenging in autumn. Advertising budgets and revenue dropped compared to summer because of the autumn blackouts and electricity shortage. While companies started investing larger budgets in January 2023, the number of customers remained the same as during the summer. The average receipt has been increasing in dollar equivalent since January 2023, which is attributed to the growth of the dollar exchange rate.

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Consumer Electronics 

Let’s view the consequences of the Ukraine war for the consumer electronics industry.  Ukrainian advertisers are returning to the market, which increases the CRR (Cost Revenue Ratio). In February 2023, it exceeded the 2021 figures. However, the number of customers in the category does not exceed 80% compared to 2021. 

The revenue of Ukraine businesses has increased because the average receipt in this consumer electronics industry is high, as many customers purchase valuable goods for military or volunteer needs. We assume that the number of customers in the category will not increase until the war ends or moves into a less active phase. 

It is important to note that from January to February 2023, retailers achieved such income with lower advertising budgets for paid traffic channels than in the previous period. The income from this category has increased and is on par with the figures from January 2022. We hypothesize that the increase was due to a decrease in mass missile attacks on the energy network and a series of holidays. 

We see that Ukrainians are returning to their usual behavior patterns. For example, in February 2023, they were searching for gift items appropriate for Saint Valentine’s Day.

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Clothing and Footwear

In February 2023, advertising costs for clothing and footwear companies increased by 30% compared to February 2022. Comparing January and February 2023, players in this market increased their advertising budgets by 100%. However, even with such growth, revenue in this category only increased by 12% in February 2023 compared to January 2023.

Starting from June 2022, the Ukrainian clothing and footwear eCommerce niche has returned to its usual seasonality. In February 2023, the conversion rate tends to decrease. Even though the traffic is increasing, Ukrainians are probably waiting for discounts or haven't decided yet.

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Products for Children

The products for children eCommerce in Ukraine demonstrates stable growth dynamics of revenue since December 2022. The increase in advertising budgets correlates with an increase in revenue, unlike many other industries. However, we see that the number of users does not exceed the 70% threshold compared to the previous year.

Ukrainians have not spent their household income or savings on children's goods. Since December, the growth in income in this category is not related to an increase in the number of sales, but to an increase in the average receipt.

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Products for Pets

Due to the stabilization of the electricity supply situation, all Ukrainian eCommerce companies selling pet products started actively increasing their advertising budgets to retain their existing online customers. As a result of the increase in advertising budgets and the number of participants in the auction, the cost per user has also increased.

Starting from January 2023, there’s a 40% increase in revenue compared to last year. Such a rapid revenue growth was influenced by a 20% increase in the average receipt in February 2023. A great fact about the pet product industry development is that the average receipt exceeded the pre-war level in February 2023.

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Cosmetics, Personal Care, and Household Goods

From January 2023, we see that the development of eCommerce cosmetics, personal care, and household goods started to show revenue growth again. There is a significant dependence on this growth due to increased advertising budgets. Analyzing the data for 2022, we can say that the situation in the industry is quite unstable. This is due to the product range, difficulties in logistics, and the rising prices of well-known brands.

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Summary

In conclusion, the full-scale war in Ukraine has presented significant challenges for businesses across the country during 2022. The impact of Ukraine war deals with economic instability, disrupted supply chains, and created security concerns for companies operating in Ukraine. Even though Ukrainian eCommerce adapted to some extent to a new reality in the summer, they faced new challenges of electricity shortage and blackouts. As a result, we see a considerable drop in advertising budgets and revenues generated. Nevertheless, at the beginning of 2023, industries demonstrate positive tendencies. Some of them managed to reach the pre-war period. 

As the war continues, it is clear that businesses in Ukraine will need to remain vigilant and adaptable to succeed in the face of ongoing challenges. However, the courage, flexibility, creativity, and sensitivity that Ukrainian eCommerce has already shown to the whole world are worth respect. Hence, foreign companies shouldn’t be afraid doing business in Ukraine, in spite that eCommerce is running business under war. 

Written by
Olesia Holovko

Team Lead of Content for promodo.com

Content marketing manager at Promodo with 7+ years of writing.

When creating valuable business content, I always seek fresh data, interesting facts, the expertise of professionals, and meaningful insights to bring relevant ideas to the audience. I believe that good content can enrich the experience of marketers, empower business owners to make data-driven decisions, and enhance companies in growth.

Published:
April 18, 2023
Updated:
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