Ecommerce in Cyprus: Wide Open for Business

Ecommerce in Cyprus: Wide Open for Business

Known for its outrageous predictions, Danish investment bank Saxo Bank prophesied that Amazon would in 2021 ‘buy’ Cyprus and move its headquarters to the Mediterranean island.

Although preposterous, Saxo Bank’s predictions are designed to make investors think out of the box. Wild and cheeky, the bank’s forecasts are always based on economic sea changes occurring at the time.

In the case of Cyprus, the ecommerce market which had been hovering at the bottom of the European Union’s barometer suddenly sprang to life in 2020.

It was, of course, the Covid-19 pandemic that shook Cypriots out of their reluctance to shop online. With so many stores forced to close and with tight lockdown rules restricting movement, they gave ecommerce a try—and found it simpler and more secure than they had believed.

In other words, they liked it—very much—as the following statistics show.

From a low of less than €300m in 2019, revenue in the Cyprus ecommerce market is projected to reach €881.40m in 2022 according to Statista. The explosion in online shopping will continue, it predicts, with revenue projected to grow at an annual rate (CAGR) of 14.6 percent to €1,327.00m by 2025.

How Shopping Behavior has been Flipped

According to Mordor Intelligence, the change in shopping behavior has been so dramatic that digital shopping has become the most preferred way of buying goods in Cyprus.

And it is not the food sector that is leading the transformation as might be expected, but fashion, which, according to Statista, is projected to record online sales of €279m in 2022. This sector encompasses apparel, footwear, and accessories.

The second largest ecommerce sector in Cyprus is electronics (€227m) followed by furniture (€106m), toys and hobbies (€105.5m), and only then by food (€106m). This sector includes grocery shopping and the fast-food delivery business.

Foreign Players are Stealing the Show

Rather sobering news for Cypriot retailers, however, is that the ecommerce market is dominated by international players such as Amazon, eBay, Walmart, and Asos. Although Bazaraki is up there with the leaders, other Cypriot companies are lagging.

On the brighter side, Mordor Intelligence reports that many local companies are increasing their ecommerce presence by expanding into new markets and tying up new contracts.

And with the sector expanding at a CAGR of about 14 percent annually, there is plenty of room for local entrepreneurs to expand and for new players to enter the field.

Why Cyprus is Enjoying an Ecommerce Surge

Although the pandemic sparked the stampede toward online shopping in Cyprus, other factors are ensuring that the trend is expanding exponentially.

These include the following:

  • A rapid increase in Internet penetration in Cyprus, with 91 percent of the population now connected.
  • A significant push by the government for the digital development of state departments. To this end, it signed a memorandum of understanding with Greece in April 2022 for collaboration on digital development.
  • The Cyprus Telecommunications Authority (CYTA) has connected to the global digital ecosystem through the ARSINOE undersea optical fiber cable.
  • A low corporate tax rate of 12.5 percent, among the lowest in Europe, that is as attractive to large multinationals as it is to local start-ups.

Will Amazon ever Shift its HQ to Cyprus?

This scenario is highly unlikely since in the US alone Amazon employs some 1.1 million people – more than the entire population of Cyprus.

But the Saxo Bank prediction did serve to highlight one important factor: the ecommerce sector in Cyprus is wide open for business.

By The Editors of Headliner Cyprus

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