Similar flags, different countries
On Monday (6 September), Wiadomości Handlowe (Business News) broke the news of Shopee entering Poland. The article said that Shopee had already been calling Polish sellers to open shops on the Shopee platform. Consumers will get free shipping (regardless whether it is to the parcel box or directly to the doorstep). Sellers will pay no commission for six months, and receive vouchers to give to consumers. Shopee has also signed contracts with a few major logistics companies in Poland.
Parcel box by InPost
In Poland itself, commentators are skeptical whether Shopee can effectively challenge local champion Allegro. Neither Amazon nor AliExpress has managed to do that – and all platforms are impacted by the new EU tax rule on cross border ecommerce originated from sellers outside the EU.
Because of the pandemic, ecommerce has definitely grown in Poland – I can see it clearly from the way people around me spend for expenses.
At the moment, Allegro and AliExpress are the most popular platforms for buying new items, while second hand buying often takes place on OLX and Lithunian platform Vinted. Vinted is more popular with categories such as fashion, accessories and toys. eBay was popular in Poland for a while, but I hardly see anyone who still uses eBay these days.
Germany’s Zalando is also popular in the fashion category. Their key selling point in Poland is you can get branded items at the price point you can’t find in any physical stores. In addition to discounts, they are also emphasizing environment and sustainability. The sustainable items on Zalando are also very cheap, and we as users have no way to verify whether their supply chain is really environmentally friendly.
You can feel the image Zalando tries to portray
I think if it was not for the fact that the economy is pretty bad, people would pay more attention to brands and the environment. However, under the huge uncertainty by the pandemic and the recent inflation, people would prefer more discounted and low priced goods. Nobody will say it outloud, even the media – but this is how people behave.
Local champion Allegro
Founded in 1999, Allegro is very deep in the market and the primary choice for many friends in the country. Naspers once acquired it, before selling it to a few PE funds.
The company finally went IPO last year in Warsaw. It enjoyed a surge after the IPO, but the price has dropped back subsequently. Its current market capitalization is about 70 billion złoty (roughly US$18.4 billion).
Aside from the one time preferred interest cost of more than 700 million złoty, Allegro has largely been profitable since 2017. The current CEO François Nyuts is a long-time Amazon veteran.
Allegro runs a programme called Allegro Smart, where enrolled consumers can get five free-shippings if the spend per order exceeds 40 złoty (for parcel box option) or 80 złoty (for doorstep delivery option). When one has used up the five free-shippings, they can pay 40 złoty for a year or 8.99 złoty monthly to get unlimited free shipping.
Allegro has some requirements (reviews and years of selling etc.) for the sellers enrolled in the Smart programme, so the consumer experience is usually quite decent.
Amazon
Amazon started in Poland in 2014. The American Chamber of Commerce said it is the largest American employer in Poland: more than 18,000 people work for 9 fulfilment centres across the country.
However, for a long time, consumers in Poland were using a Polish language version of Amazon’s German site – many items and descriptions were translated.
The peculiar arrangement only ended in March this year with the launch of Amazon.pl. Perhaps this is because for such a big company as Amazon, Poland was a rather small market, compared to others in Western Europe and North America.
Prime video is now available in Poland, but I have not seen Prime logistics service available. Amazon seems to have reduced the free shipping requirement from 100 złoty to 40 złoty, maybe in response to the competition.
I think, like consumers everywhere, the Poles do like free shipping a lot.
Also, Amazon has not really been active with promotions and discounts, so many friends still prefer to shop on Allegro.
Mobile vs Desktop
Interestingly, if you look at Google Play store rankings, Allegro is not really ahead in the Shopping category – behind Chinese company SheIn and logistics provider InPost.
I think this is related to how many Poles started shopping online before mobile internet proliferated. Many friends around me like using laptops to browse Allegro and OLX.
In fact, Allegro app has tens of millions of downloads. Perhaps its low ranking is related to its limited marketing spend on mobile:
Also, many people first used Vinted on mobile, and subsequently just continued using it on mobile.
New cross border rule
Most mainstream ecommerce platforms in Poland run cross border. Momentum Works colleagues based in China told me that Allegro started onboarding Chinese sellers a long time ago. We have also seen a lot of cross border sellers on Allegro.
Even though we can’t search by nationality now, but if you come across a seller description like the following, you know it is from China:
Dane firmy
Guangzhou Hanou Electronic Commerce Co., Ltd
Shop A06, Room 441, No. 369 Huangpu Avenue West, Tianhe District
510000 Guangzhou
NIP: 91440101MA59EQ3G1A
I don’t know why for the same cross border goods Allegro is often much faster than Amazon in delivery. A friend of mine bought some items on Amazon, and only received them half a year later.
Therefore, new cross border platforms need to do more to gain users’ trust. On forums in Poland you often see questions of people asking whether they could trust Amazon or sellers on other platforms.
The new cross border policy is implemented by the Eu from July onwards. In the past, items below 22 Euros were not taxed, even many which went above that amount were not taxed to avoid congestion at customs.
However, if the new universal tax is rigorously enforced, many cross border items will lose their price competitiveness, subsequently impacting platform sales. Some of my friends have also reduced their shopping on Amazon.
However, even with the tax, many other cross border items are still competitive in price compared to their EU’s domestic equivalents.
It seems Shopee wants to challenge every major platform in Poland, but I think in the short term AliExpress will be impacted the most. Their initial categories and price levels are just too similar to each other.