Albania E-Commerce Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

In Albania, e-commerce is still in its infancy stage. Domestic retailers are increasingly adopting online shopping, and the number of Internet users has increased significantly in recent years, again boosted by COVID-19, but Albanian shoppers generally visit stores. Also, the use of electronic payments is rare. The market is expected to grow at a CAGR of 11.9% during the forecast period (2022 - 2027).

Key Highlights

• Albania is primarily a cash economy and is a major impediment to the development of faster e-commerce. Cross-border electronic shopping is still in its infancy due to low credit card usage, low purchasing power, and high shipping costs. In addition, many foreign online retailers do not ship to Albania or charge exorbitantly high shipping costs.
• According to the International Trade administration, e-commerce in Albania is offered by a limited number of domestic merchants. Credit card usage is increasing, but it is restricted except in large hotels, restaurants, and department stores. The use of mobile phones to pay for goods and services is underdeveloped but not widespread. Currently, mobile phone use is limited to mobile banking. Businesses primarily use it, but it is only used to pay for utilities in a limited pool of individual users.
• In Albania, digital trade seems to have entered a "golden" phase since few years. Businesses are seeing it as a manner to "disconnect" purchasers from the conventional approaches of acquiring, to insert the digital world, to provide the whole lot in actual time and quickly. It is visible as a reaction to the financial disaster to acquire services and products cost-free. Even legislation ,which has currently passed through changes, has "opened" the gates to those services.
• The government has implemented significant reforms to promote trade and encourage foreign direct investment, including administrative procedures, customs, business registration, licenses, tax payments, e-services, etc. However, significant challenges remain despite recent improvements, such as Albania's infrastructure, which requires further investment and development.
• The COVID-19 pandemic disrupted global trade, supply chains, and labor markets, curtailed consumption and investment, and slowed global economic activity. This significantly impacted the UNECE region, including the transitional countries. Border closures and partial or complete blockades have become new norms in many parts of the world. The transition economy in the UNECE region, which is the focus of attention here, has been hit hard by the recession caused by the pandemic. These economies are Albania, Armenia, Azerbaijan, and Belarus.

Key Market TrendsFashion and Consumer Electronics to boom in the country

• Albania benefits from some free trade agreements that enable unobstructed access to regional markets, including agreements with the EU. With a skilled and experienced workforce, Albania has been able to meet the high-quality standards of Europe, becoming one of the top 10 leather and shoe exports to Italy and successfully expanding its market share to other European countries
• . Based on market potential and following international market trends, launching e-commerce is considered one of the most profitable strategies to strengthen and expand its competitiveness and reach the global market.
• In Albania, e-commerce is in the developing stages. Its introduction and implementation by driving this industry will provide enterprises with superior visibility tools and business solutions. Also, it generates sales, increases exports, ensures sustainability, and improves employment opportunities.
• Consumer electronics retailers have made great strides in Albania over the last few years. The development consisted of implementing the physical location and chain concept. Current leading players in this industry present established physical channels. The in-store approach remains the most important sales channel and holds the largest market share in development. Considering competition with overseas online shops, retailers also thought it appropriate to invest in online shops, especially during the Covid-19 crisis.
• Today, all major consumer electronics retailers in the country have online stores that can move customers from physical stores to online stores and vice versa. All of these operations need to take into account technological evolution. As long as retailers provide a clear technical path, customers will find it easier to switch between online and physical stores.

Digital connectivity and Online payments on rise in the country

• Broad and relatively affordable access to essential internet services exists in many Albanian cities. However, Albania currently faces a few digital connectivity challenges, such as broadband coverage remains a problem for many rural communities. Private and public sector solutions need to be combined with closing these connectivity gaps. This leads to high effective costs for companies that require high-speed connections.
• E-commerce has the potential to provide Albanian companies with access to new markets, lower overhead costs, and the opportunity to expand at lower costs. Some of the things that are already embracing the online world are the tourism sector and business process outsourcing. Many Albanian hotels use eTourism to attract guests through online booking sites.
• According to the World Bank in April 2022, there was a strong recovery in Albania due to political stimulus and the resurgence of travel, construction, and mining activities. Private investment, consumption, and public spending drove growth. Further, the World Bank and other partners are working together to help the government address these challenges and implement the country's long-term vision. This leverages the digital market in the country.
• Financial inclusion and the use of digital financial services are essential for expanding e-commerce. E-commerce in markets where digital financial services are underdeveloped must rely on cash for delivery, increasing the risks and costs of e-commerce. Despite moderate financial inclusion in some countries such as Albania in the Europe region, increased connectivity and digitalization have accelerated e-commerce growth in recent years.
• Moreover, according to a survey conducted by a German news, there are about 1.40 million social media users in Albania, and the number is constantly growing. The winner here is Facebook. Advertising via this platform got about 1 million people regarding ad reach. The next place belongs to Instagram with 870 thousand users and Twitter has the lowest spread, with 91,000 users.
• Increase people`s confidence in the e-commerce business through industry codes of conduct, certifications, awareness campaigns, consumer protection frameworks, online dispute resolution mechanisms, and simplified e-commerce parcel return services. This will create a business environment suitable for the digital economy. Increasing accessibility to high-speed internet. While much of Albania is connected through a fiberoptic cable, the internet remains expensive and slow. It is expanding access to online payments. This includes providing all citizens with a simple payment account, debit card, and transparent fees. All these factors help the country to leverage the e-commerce market in the future.

Competitive Landscape

The Albania E-Commerce market is growing with the increased demand for internet and smartphone usage, along with crucial players innovating new solutions in the e-commerce market. New entrants in the market are also focusing on new technology-based innovations by offering more options to customers for online shopping and digital payments.

• April 2022 - Cart.com, a provider of e-commerce as a service (ECaaS), has partnered with Google Cloud to deliver comprehensive analytics to the 2,500 firms that use its platform. The company, which began as a global epidemic in 2020, intends to democratize online retail by providing small businesses with the same end-to-end capabilities as the world's largest online retailers. Its product suite integrates marketing, technology, and fulfillment capabilities into one interface with data automation built-in.

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• The market estimate (ME) sheet in Excel format
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