Why Expand to Hungary?

Hungary has a great number of potential customers and a smaller number of online shops. The number of active eshops is 3 times lower than in Slovakia and up to 10 times lower than in the Czech Republic. Online sales in Hungary today represent only a fraction of retail activity. Looking towards the future, this is an attractive segment full of new opportunities. Geographical location, developed logistics network and acceptable input costs, classifies expansion into Hungary as a popular choice after success on the domestic or Czech market.

The country has almost 10 million inhabitants and stretches along our southern border. It borders seven countries. The value of GDP in 2020 was at $150 billion, representing 0.14% of the world economy. It is expected that by the end of 2021 the GDP will grow and reach 176.30 billion dollars. Hungary is a member of the EU, the Schengen area, the UN, NATO and the OECD. The domestic currency is the Hungarian forint. The Hungarian e-commerce market has the advantage of low competition and the best years are still ahead. 

What is the Hungarian e-commerce market like?

Hungary is the 53rd largest e-commerce market, which is growing every year. The pandemic has significantly affected the world of e-commerce and has changed the shopping behaviour of the Hungarian population as well. The most successful segment is fashion. This is followed by electronics sales, grocery and personal care, toys and hobby stores, with furniture sales rounding out the rankings. 

The most successful online shop in Hungary is emag.hu, which mainly focuses on the sale of electronics. The company's total revenue in 2020 was $200 million and saw more than 107 percent year-over-year growth. The second largest player in the market is alza.hu with revenues of $75 million and tesco.hu with $75 million.

Buying behaviour and concerns

Hungarian e-commerce will continue to grow in the coming years. Statista Digital Market forecasts a growth of 18%. More and more people are preferring to buy online rather than visit a store in person. As many as 8 out of 10 Hungarians aged between 18 and 79 have bought something online. Moreover, Hungarians are no longer tied to domestic stores alone and ever more customers are actively seeking out foreign brands. An important factor taken into account by the Hungarian customer when shopping online is the price of the product and shipping. A large number of customers can be influenced in their purchase by the amount of postage. And up to half of them are also influenced by the time duration of delivery. Another important factor in the successful expansion into Hungary is the quality localization of the shop. 

An unconvincing translation or misrepresented data can inspire distrust, and this may have an impact on your store's conversions. Customers put great store in reviews and recommendations, otherwise they are distrustful of the store.

The biggest concern of Hungarian customers is related to “after care.” They assume that once the order has been shipped, they will not be able to contact the dealer to arrange additional service if needed. The next most common problem is fearing the leakage of personal data or data from entered payment cards or the fear of difficulties regarding the delivery of goods. Customers expect problems with the delivery of goods to the correct address, loss or even damage during transit. Buyers are also worried about its quality, whether it will correspond with the seller's data, and so they end up backing away from the purchase. Concern for the originality of the product, especially in the case of expensive brands, also placed in the ranking. Online shops should target their marketing on the Hungarian market precisely to strengthen trust in the areas that represent the most common reasons for withdrawal from the purchase of goods. Customer support in Hungarian can play a key role in expansion into Hungary and promptly resolve any customer issues either before or after the order is placed.

Payment preferences

It's important to adapt to customer behaviour and offer them the options they are used to. This also applies to the method of payment for the goods. For a long time, cash payments have been significantly more prevalent in Hungary. Recent statistics suggest that this trend is gradually changing. Payment by card has equalled payment upon delivery (29%) and this figure is very likely to continue to grow. Close behind is payment by card at the collection point (28%). Despite this, e-payments lag well behind the EU average. Other payment methods reached below 10%.

Social networks

Hungary has well-established internet coverage. More than 88% of the country's total population has access to it, which represents approximately 8 million inhabitants. More than 7 million also use a social networking site, with almost 95% using a connection from their mobile phone. The most popular social networks include Facebook, followed by Instagram and Snapchat. The second most visited website in the country, after Google, is YouTube.

Logistics

The price of goods is not the only factor that determines whether customers will buy from you. In addition to the right location, it's also the speed and price of shipping. It should not only be easy to shop, but also to return unsuitable or damaged goods. The local collection point in Hungary will help you to speed up the returns process and by providing a local address you increase the credibility of your online shop.

The Hungarian market offers a good size and location within the European Union. Thanks to this, it is able to provide enough qualified employees in various fields. In addition, the country has quality logistics facilities. Since a large part of the orders come from larger cities, the delivery is fast and the costs are slightly lower.

Hungary is one of the countries with the simplest parcel delivery system in the world. The majority of the population lives in urban areas, which suggests that the country's infrastructure will continue to develop. Hungary has logistics centres spread evenly across the country and well connected to one other. Most are located near the border and around the capital of Budapest. Hungary has 5 major shipping service providers – DPD, GLS, Express One, MPL and Sprinter. 

E-commerce in Hungary still has large growth margins compared to other markets to the west. This presents a challenge for entrepreneurs who are considering entering the Hungarian market to take advantage of the country's good potential along with a less costly form of expansion.