10 percent of online stores to go bankrupt in 2009

 “Most entrepreneurs believe that online businesses require smaller investments. I think that more than 10 percent of the local online stores will exit the market, given some 5-7 percent of them have already gone bankrupt,” the President of Fit Distribution, Marius Ghenea, told Business Standard. Fit Distribution administers the PcFun and ElectroFun online stores.

Mugur Frunzetti, the General Manager of the Grifon Group, administrator of MarketOnline.ro is more pessimistic, as he estimates some 10-15 percent of online store will close.

Consulting company Roland Berger Strategy Consultants Romania’s Managing Partner, Codrut Pascu, said a boom was registered on the online trade market, which is to be followed by a period of consolidation. “In order to resist on a market whose barriers are minor, one must either be the first to come up with a concept, make significant investments in marketing and advertising to become a brand, or have a sustainable competitive edge,” Pascu said.

According to players in the field, some 1,500 online stores are operating in Romania, of which 300 are specialized in IT products. The latter make up some 75-80 of the local e-commerce value, estimated at €275 million.

The initial investment for a medium-sized store can exceed €100,000, while additional investments can be up to €10,000 per month.

“At the end of this year, most online stores will post losses. A classic store can have operating profit after four to six months, but it takes at least 18 months to two years for an online store. Most online stores have not reached that age,” Ghenea said. He added that many stores will close in the first quarter of 2009 as they will not make their Q4 2008 sales targets. “Everyone is now waiting for the fourth quarter,” he said.