E-commerce has gained significant popularity among Serbian citizens as a preferred method for purchasing goods and services. With the increasing number of internet users in the country, the e-commerce market is projected to experience a Compound Annual Growth Rate (CAGR) of 22.3% during the forecast period from 2022 to 2027.  The number of internet users in Serbia is undoubtedly increasing day by day. This is not surprising given the fact that owning a smartphone today is almost mandatory and that the former obstacles to its use, both financial and technical, are almost gone. As for the e-commerce and online sales, it used to be a novelty only a decade ago in Serbia. In 2021, approximately 70 percent of population purchased at least one product online. That figure increased, particularly due to previous social distancing measures, lockdowns, and other pandemic-specific factors. While the internet is widely available in Serbia, it still lags developed countries in Western Europe. Although Serbia is a leading country in the Western Balkan region in terms of online shoppers, it falls far behind Western European nations, where over 80% of the population engages in online shopping.

According to Statista, the volume of the e-commerce market in Serbia amounted to 710.7 million US dollars in 2022. It went a little bit down as it fell by 10% as compared to 2021. However, it had been constantly growing in the previous five years.

According to experts, the e-commerce sector will increase by 34.5% to 955.7 million in 2023. The annual growth over the next five years will make up at least 14.65%, and the market is expected to reach a turnover of 1.65 billion dollars by 2027.

According to the Statistic Bureau of Serbia, the e-commerce market accounted for about 3.3 million customers in 2020. The experts predict the growth in the number of online users to 4.36 million people by 2027.

56.7% of the total number of Serbian users are expected to become e-commerce sector customers by the end of 2023. This figure is expected to rise to 62.5% by 2027.  The most-used payment methods are credit cards and PayPal. However, many consumers still prefer to use direct bank transfers for paying their online orders. In central and eastern Europe (including Serbia) e-shoppers prefer to pay cash on delivery.

Legal & Regulatory

The legal framework for e-commerce in Serbia has significantly improved. The Law on Electronic Documents, Electronic Identification, and Trusted Services in Electronic Business was adopted in November 2017. The Law introduced new trusted services (qualified electronic delivery, qualified electronic storage, qualified electronic seal) and upgrade of existing ones (cloud-based qualified electronic signature).

The amendments of the Law on Postal Service enacted in 2019, introduced new obligations for postal service providers to identify senders and receivers of packages. This aids the fight against illegal online traders and will help in engendering trust in e-commerce and lowering user resistance.

In 2019, the Ministry of Trade, Tourism and Telecommunications (MTTT) enacted a new Law on Trade and amendments to the Law on E-commerce, regulating online business-to-consumer sales in detail, precisely defining web-shops and e-commerce platforms, enabling innovative pricing models, identifying e-commerce business models (like drop-shipping), recognizing initiatives for raise of trust in e-commerce (e-commerce trust-mark programs), clearly defining legal obligations of e-traders, introducing more efficient instruments for market inspection and deal better with illegal electronic commerce and further and better facilitate electronic commerce in Serbia (such as through “mystery shoppers”), etc.

For more information, please visit non-profit resource Global Digital Policy Alert.

Consumer Behavior

At the very beginning of the pandemic, online sales skyrocketed. For 2020-2021, online food delivery increased by approximately 200 percent, textiles by nearly 100 percent and computers and technical appliances by 50 percent, as reported by the Ministry of Commerce, Tourism, and Telecommunications.  The most popular products purchased online are clothing and sporting goods (28.5 percent); electronic equipment (25.3 percent); toys (20.4 percent); mass media (17.94 percent ); furniture (12.44 percent ); and food (9.12 percent).  Compared to the global online shopping preferences, where most online consumers buy books, movies, and video games (60 percent ), in Serbia most users buy clothing and sports products (28.5  percent).

Experts anticipate a substantial increase in the e-commerce sector, projecting it to reach 955.7 million dollars in 2023, representing a growth rate of 34.5 percent. Over the subsequent five years, an annual growth rate of at least 14.65 percent is expected, leading the market to achieve a turnover of 1.65 billion dollars by 2027.

According to the last published data (2021), the biggest player in the Serbian e-commerce market is Gigatron.rs. The online store had a revenue of US$44 million in 2021.  It is followed by Tehnomanija.rs with US$40 million revenue and Zara.com with US$20 million revenue.  Together the top three stores account for 20 percent of Serbia’s online revenue. Serbia’s market expansion is expected to grow over the next few years, as indicated by the Statista Digital Market Outlook. The Minister of Foreign and Internal Trade confirmed that both the Ministry of Trade and the Serbian E-Commerce Association are dedicated to combating the shadow economy in the online sphere. Their primary focus is on enhancing the legal framework to ensure fair competition within the e-commerce sector. This effort aims to increase customer trust in electronic commerce.

The Minister highlighted that the European Union’s e-commerce regulations are expected to undergo positive changes in the near future. Subsequently, Serbian companies will be encouraged to expand their operations into the EU’s e-commerce market. Additionally, the government is actively working on promoting cashless transactions within the country.

To tackle illegal trade, the Serbian government employs various measures, including monitoring social media platforms and utilizing specialized software. In 2022, authorities monitored 48,000 ads linked to illegal trade, and approximately 80,000 ads on social media advertising counterfeit products were ordered to be removed from different online platforms. Over the past year, the Ministry of Internal Affairs reported confiscating over 800,000 items of various products, leading to significant damage to the shadow economy. These efforts demonstrate the government’s commitment to curbing illegal activities and promoting a fair and secure e-commerce environment.

Intellectual Property Rights

While Serbia is not yet an EU member, it is a member of the World Intellectual Property Organization (WIPO) and has some effective enforcement instruments in the field of IPR protection.

The Serbian Customs Administration inspects packages arriving from foreign online retailers and holds IPR-infringing goods. To protect consumers from fake drugs sold over the internet, the government has prohibited the online sale of medications that are available only by prescription in Serbia. 

Following implementation of the EU General Data Protection Regulation (GDPR), Serbia enacted a new Data Protection Law (DP Law) in November 2018 with its’ applicability postponed for 21 August 2019. The law significantly expands the existing right of individuals to receive information about the processing of and access to their personal data.  However, a significant number of challenges remain, including regulation of video surveillance, biometric data processing, and human resources data processing, leaving significant room for arbitrary decisions by the Commissioner for Data Protection.

The law applies not only to the processing of data by Serbian controllers and processors, but also by the those based outside of Serbia whose processing activities relate to Serbian data subjects within Serbia. As a result, under the DP Law, entities that process personal data must have a data protection officer (DPO) to ensure compliance and to communicate with the Serbian Data Protection Authority (DPA) and data subjects on all data-protection matters.

The DPO provisions are not being fully implemented yet because of a lack of trained personnel, even in the Government of Serbia. Similar to the GDPR, the DPO obligation applies if:

• The processing is carried out by a public authority (with the exception of a court performing its judiciary authorizations); or
• The core activities of the controller/processor require the regular and systematic monitoring of data subjects on a large scale, or the large-scale processing of special categories of personal data (e.g., health data, trade union memberships, criminal convictions/offenses).

The DPO may be employed or engaged under a service contract, but in any case, must have expert knowledge of data privacy as well as the company’s processes. A group of companies may appoint a single DPO, provided that he/she is equally accessible by each company. Controllers and processors are required to ensure the DPO’s independence in the performance of his tasks.

Digital Marketing & Social Media

By the end of 2023, the Social Media Advertising market is projected to reach a total ad spending of US$57.96 million. Over the period from 2023 to 2027, the market is expected to grow at an annual growth rate of 4.29%, leading to a projected market volume of US$68.57 million by 2027.

In January 2023, the number of social media users in Serbia reached 5.01 million, accounting for approximately 69.8 percent of the overall population. Social media users in Serbia increased by 390 thousand (+8.5 percent) between 2021 and 2022 thanks to Facebook, Instagram, and YouTube, which are the leading social networks. Younger Facebook users use the platform as a source of information, while older users tend to use it for personal or other communication. Twitter is used mostly by politicians and journalists. LinkedIn is the fifth most popular social media platform, largely used by businesspeople.