Challenges Faced by Hungarian E-commerce Retailers Amidst Rising Competition
A comprehensive analysis of the barriers for Hungarian web stores in the competitive e-commerce landscape.
Research by G7 has identified several factors contributing to the challenges faced by Hungarian-owned e-commerce retailers, which are struggling to compete with foreign counterparts.
A study from PwC revealed that the total e-commerce turnover in Hungary reached HUF 1,920 billion, with approximately HUF 1,600 billion generated by Hungarian and EU players, while Hungarian consumers made around HUF 330 billion in purchases from non-EU sources, prominently from platforms like China's Temu.
The analysis highlights that a significant portion of the HUF 1,600 billion total domestic/EU turnover now originates from foreign-owned entities.
For example, the latest rankings for 2023 are led by Romanian-based eMag, Czech retailer Alza, and another Czech company, kifli.hu.
Only five Hungarian-owned online stores made it to the top 15. Moreover, Hungarian retailers have yet to make significant inroads into the Czech and Slovak markets, with the regional dynamic reversed.
The GKID survey conducted in 2023 indicated that among the 15 most recognized e-commerce retailers by Hungarian consumers, nine do not currently operate in Hungary.
These include major firms like Temu, Bonprix, and Shein.
A deeper analysis of the underlying causes reveals that Hungarian businesses are exhibiting caution and are reluctant to expand into foreign markets or enter larger marketplaces.
Compounding this hesitancy are the operational requirements they must comply with, as well as the comparatively high Hungarian VAT rates.
Although foreign sellers can register for lower VAT rates in other jurisdictions for cross-border sales, they still face the so-called "retail tax" and local business taxes, along with sometimes cumbersome administrative processes.
In December, regulations highlighted that any platform operator exceeding annual revenues of HUF 500 million would be subject to taxation, impacting both Hungarian retailers like Pepita.hu and foreign retailers with local branches, such as eMAG.hu and Alza.hu.
Furthermore, this could extend to large platforms like Temu, Shein, Amazon, and eBay, which currently do not hold Hungarian tax numbers, as their operations chiefly consist of delivering packages to Hungary.
The anticipated "Temu tax," set to be implemented in 2025, has been discussed as potentially placing Hungarian businesses at a competitive disadvantage against larger foreign platforms, contrasting its intended purpose of level taxation.
A study from PwC revealed that the total e-commerce turnover in Hungary reached HUF 1,920 billion, with approximately HUF 1,600 billion generated by Hungarian and EU players, while Hungarian consumers made around HUF 330 billion in purchases from non-EU sources, prominently from platforms like China's Temu.
The analysis highlights that a significant portion of the HUF 1,600 billion total domestic/EU turnover now originates from foreign-owned entities.
For example, the latest rankings for 2023 are led by Romanian-based eMag, Czech retailer Alza, and another Czech company, kifli.hu.
Only five Hungarian-owned online stores made it to the top 15. Moreover, Hungarian retailers have yet to make significant inroads into the Czech and Slovak markets, with the regional dynamic reversed.
The GKID survey conducted in 2023 indicated that among the 15 most recognized e-commerce retailers by Hungarian consumers, nine do not currently operate in Hungary.
These include major firms like Temu, Bonprix, and Shein.
A deeper analysis of the underlying causes reveals that Hungarian businesses are exhibiting caution and are reluctant to expand into foreign markets or enter larger marketplaces.
Compounding this hesitancy are the operational requirements they must comply with, as well as the comparatively high Hungarian VAT rates.
Although foreign sellers can register for lower VAT rates in other jurisdictions for cross-border sales, they still face the so-called "retail tax" and local business taxes, along with sometimes cumbersome administrative processes.
In December, regulations highlighted that any platform operator exceeding annual revenues of HUF 500 million would be subject to taxation, impacting both Hungarian retailers like Pepita.hu and foreign retailers with local branches, such as eMAG.hu and Alza.hu.
Furthermore, this could extend to large platforms like Temu, Shein, Amazon, and eBay, which currently do not hold Hungarian tax numbers, as their operations chiefly consist of delivering packages to Hungary.
The anticipated "Temu tax," set to be implemented in 2025, has been discussed as potentially placing Hungarian businesses at a competitive disadvantage against larger foreign platforms, contrasting its intended purpose of level taxation.
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