Ahoj portal shifts to e-commerce
Ahoj.pl, one of this year's Polish-language portal start-ups, will shift its focus to e-commerce this week when it adds to its main page an auction site that its parent company acquired earlier this year.
The company will integrate the auction site Inter-aukcja (http://www.ia.pl) into Ahoj.pl as Aukcja.ahoj.pl, said Jeff Grady, the chief executive officer and co-founder of The Mother.Ship Poland, the media company that owns Ahoj.pl. The auction site is one of 18 Polish Web sites that The Mother.Ship acquired in 2000. Ahoj.pl redesigned the Ia.pl auction site that currently offers between 400 and 500 items mostly computer hardware and digital electronic equipment. Ahoj.pl will increase the number of offerings once the site has been added to its platform.
The move marks a shift in The Mother.Ship's strategy from building up original content on Ahoj.pl to developing its e-commerce business in the hope that the company will turn a profit within two years, Grady said. So far, Ahoj.pl has been dependent on advertising sales, but with its e-commerce offerings Grady expects the company to eventually derive its revenue from an even balance of ad money and earnings from e-commerce. He declined to say how much the company derives from ad sales.
Grady, who is also the chairman of New World Publishing, the company that owns the Business Journal, said he hopes that Ahoj.pl will gain a 6-7% profit margin from its e-commerce activities. Ahoj.pl will generate revenue either by acting as a middleman and selling goods for other businesses or by buying items itself and selling them to online buyers.
In two weeks, Ahoj.pl will add another e-commerce feature called Ahoj Tours, Grady said, which will sell airline tickets and unusual tour packages for adventure travel. This will include mountain climbing and rafting trips as well as gastronomic travel packages, including culinary lessons at cooking schools and wine-tasting holidays. Next year, he said, Ahoj.pl will consider selling mutual funds and insurance products online.
Buyers of online items will deal directly with Ahoj.pl and pay for their purchases by credit card, bank transfer or at the post office. As soon as Ahoj.pl receives payment, customers will receive their purchases within three days, Grady said.
The expansion is part of The Mother.Ship's original plans to spend zl. 80 million-zl. 100 million ($17.4 million-$22 million) on the development of Ahoj.pl, following the site's launch in May. Until now, Ahoj.pl has emphasized the development of its own content from its 45 contributing journalists who are part of its 150 employees.
Dariusz Augustyn, the business development director and country manager of Red-Stars.com Poland, an internet incubator that provides capital and technological know-how to online start-ups, said the likely reason for Ahoj.pl's shift was that it was facing a cash crunch, with its finances being eaten up by the salaries of the growing staff and other operational expenses related to building the site's original content. While the idea of financing a start-up portal was in vogue with private investors a year ago, he said, it has now fallen out of fashion since backers expect to see their online investment projects break even in two years.
Augustyn said The Mother.Ship's business plan for e-commerce was very challenging and called it "a desperate move to (get) bigger revenue." In order for the company to meet its financial objectives and turn a profit in 24 months, Ahoj.pl would have to decrease its operating costs if it plans to keep providing original content alongside its e-commerce activities, he said. But for Ahoj.pl to retain all staffers who supply content while trying to run a profitable e-commerce business would be "science fiction," he added.
Despite Poland's nascent e-commerce industry, Grady said online buying in the country is about to take off. He said that new Internet service providers offering low prices and quality service as well as the falling prices of computers would encourage people to go online.
"The (e-commerce) market will be driven by value finding interesting things at a very good value, not by convenience, which is typically happening in the West," Grady said. "People tend to buy mostly for selection and convenience, so we're trying to give good selection and good value and better customer experience."
But Augustyn said that the company's plan was no different from any other e-commerce Web site, and that the average Internet user in Poland still does not have enough money to buy products online.
Based on The Mother.Ship's own estimates, Ahoj.pl has 17 million page views per month and is the fourth most popular portal in Poland, according to Grady. The start-up is funded by private investors and will likely receive additional funding by the end of the year from an institutional investor, he said, although he declined to name the entity since negotiations are ongoing.
