Reforming e-commerce

By Maria Kowalewska

With e-commerce's bustling development worldwide, local Internet entrepreneurs are still looking to the World Wide Web for new business opportunities. Despite the burst of the dotcom bubble and what experts call a very limited market, the country's business-to-consumer sector is finally mature enough to go through a process of reorganization in the hopes of better satisfying online shoppers' needs.

During the last six months the number of Internet stores in the country has fallen by 90, to 660. According to analysts at Internet market research firm I-Metria, the decrease has been caused by an increasingly rational mood in the e-commerce sector. Even though the number of online stores has fallen quite drastically during the last six months, I-Metria doesn't believe that the trend will continue at such a pace.

Franciszek Migaszewski, I-Metria research department director, believes there are two reasons behind the rapid decline of Internet stores in the country. First, from the economic point of view, the market is reordering itself, he said.

"The weaker stores are disappearing, while the stronger ones do not want to expand any further," he said.

Additionally, Internet stores have made a lot of mistakes in terms of merchandise presentation, Migaszewski said, noting that some do not know the basics of Internet trade and do not provide their potential clients with prices for items.

The second reason for a sharp fall in online stores is structural, he said, adding that Internet sales will move towards linking an idea or an inspiration with a sale.

Other industry experts agree that the latest e-commerce trend entails moving away from individual, traditional online stores and towards the concept of integrated e-commerce portals that would offer, for instance, travel information and an online air-ticket reservation system.

"The Internet is moving in the direction of joining two functions: that of providing information and a shopping opportunity," said Mirosława Puczko, a board member of the country's largest online bookstore, Merlin.pl.

Puczko said that the concept itself is not entirely new as the process already occurred when world's greatest online stores also became information portals.

But according to the latest Taylor Nelson Sofres Interactive data, Internet entrepreneurs may find it difficult to win over more shoppers. Many still shun online shopping, fearing dishonest stores may cheat them. Experts believe such fears are highly rational.

"Most Poles are not concerned about transaction safety because they still pay for their Internet purchases in the traditional way - at the post office," said Migaszewski of I-Metria. "It is therefore understandable that they are more concerned about the actual purchase and whether they really do receive what they have ordered."

Despite the seeming sales stagnation and customer hesitation, new concepts and new Internet retail outlets continue to emerge. One of them is E. Leclerc's online grocery store. During its yearlong operations, the majority of clients have become regulars, according to hypermarket representatives. The regular online shoppers, together with one-time clients, place several thousand orders monthly, or approximately 100 orders a day.

"We are able to compete with smaller online grocery shopping services because we have an entire hypermarket infrastructure and stock," said Krzysztof Gajewski, director of the French hypermarket's local operations.

Most online retailers still rely heavily on advertising. But experts have criticized the Internet advertising market as ineffective.

E. Leclerc says that its recent radio ad campaign has helped it to increase its online client base but others are more hesitant to advertise. Although Merlin's Puczko said that management realizes that a refusal to take part in Internet banner and other media advertising means that the retailer may not have reached all its potential clients, she believes that excessive advertising has its setbacks.

"We do not want to over-advertise, as we think that it is more important to have the capacity to carry out our orders in a satisfactory manner rather than attracting too many clients to handle through advertising," she said.

Industry insiders believe the sector is unlikely to witness a new boom and will continue to reshape itself until online retailers gain a better understanding of their clients' needs.

"This sector's problem is that it did not meet its fundamental requirements. Internet shopping in practice is neither easier nor cheaper," Migaszewski said. "The quality difference is not enough to get clients to stop going out shopping."

It is also believed the market will continue to grow with Internet user numbers. However, the growth will occur very slowly and it will not attract any big players due to its limited size, experts said.

"The turnover of Polish Internet transactions is equal to the turnover of a single large offline company," said one market analyst, who emphasized that the country's e-commerce market still has a long way to go. "This is neither a large nor an easy market."