The rise of online shopping

Consumers tastes increasingly seem to favor online offers. Will the Polish e-commerce market see even greener pastures? by Mark Ordon It is a known and accepted fact that Polish consumers quickly managed to embrace the benefits of shopping online. From electronics to kitchen appliances, books to orange juice, every imaginable commodity now seems readily available at the virtual shopping mall only a few clicks away. Yet as you pass through Polish cities and towns, traditional brick-and-mortar shops still seem to attract swarms of visitors. But what is the real condition of the country’s e-commerce sector when you filter out the superficial impressions? Still room for more Recently, Poland’s Deputy Economy Minister Dariusz Bogdan presented data during a meeting of the Committee for the National Economy at the Polish Senate which suggests that the Polish e-commerce industry doubled in size over the past six years, generating sales of PLN 21.5 billion in 2012. This translates to 3.8 percent of the entire retail market in Poland for that year. The figures themselves stem from a report prepared by Deloitte, “A wave of digital change: Trends in digital E-nnovation 2013,” which additionally confirms that the e-market share in Poland has been growing. Deloitte partner Dariusz Kraszewski points out that in 2010, retail sales online made up only 2.5 percent of the entire market, meaning that e-commerce in Poland is growing more dynamically than domestic trade altogether. Meanwhile, a study prepared by Sklepy24.pl also suggests that the e-commerce market could reach a value of over PLN 30 billion in 2014. Yet the question appears, how much further up can it go? Compared to the largest e-commerce market in Europe – the United Kingdom – Poland still has a long road ahead. While the Polish e-business sector is valued at around £3 billion, its British counterpart is worth £39 billion, according to data prepared by RetailMeNot, owner of Vouchercodes.co.uk. The study, which sampled 8 European countries, places Poland at the bottom of the list in terms of total sales, yet shows the highest growth dynamic, at 22 percent. Paweł Klimiuk, corporate communication director at Allegro Group, confirms this trend. “The entire digital market is developing very quickly, but e-commerce, especially in Central and Eastern Europe, is where the real growth will be,” he said. As the leading player on the Polish market with the popular Allegro.pl service, Allegro Group is currently concentrating its efforts on that particular region with its wide portfolio of online services, adds an Allegro Group public relations spokesperson. Out with PCs, in with bottled water? The same report by Sklepy24.pl also shows that the growth is not evenly spread over the entire e-commerce sector and that signs of consolidation are showing. For example, Piotr Jarosz, publisher of Sklepy24.pl, says the number of internet shops will increase, but by about 7 percent (compared to double-digit growth in the past). What is more surprising, he adds, is that in many areas the number of shops will drop. E-shops selling PCs are seeing harder times, while services offering food over the web are growing in popularity. Indeed, a recent study drawn up by Gemius for e-Commerce Polska does confirm that trend. Around one in four internet users in Poland admit doing their grocery shopping online. In that group there are more women (26 percent) than men (23 percent), mostly possessing a higher education (29 percent) who rate their financial situation as mid-level. The surge here is impressive, said Mateusz Gordon, e-commerce expert for Gemius. He sees this increasing popularity as an opportunity for Polish e-businesses, as well as a challenge in terms of timely delivery of fresh products. But since online food shoppers in Poland spend an average of PLN 70 per transaction, the effort definitely makes it worthwhile. The most often mentioned e-grocery services by those surveyed are Alma24.pl, Etesco.pl and E-piotripawel.pl, as well as other spin-offs of existing brick-and-mortar supermarkets. The end of traditional stores? The question looms whether the current boom in e-commerce will make the classic brick-and-mortar shop a thing of the past. The study by RetailMeNot shows rather bluntly that sales growth in conventional stores is much lower than in online retail in each of the surveyed countries. In Poland, while online sales grew by 22.6 percent, brick-and-mortar shops noted a mere 3.4 percent, which, by the way, is the highest level seen in the sampling. So, will the vast glass-and-metal shopping galleries throughout the country become ghost towns? They probably won’t disappear, but they will have to change, at least according to Dominika Jędrak, head of consulting and market research at Colliers International. In an interview for Propertynews.pl, Jędrak feels that shopping malls will certainly not disappear from the landscape, but the growing significance of e-commerce will definitely change their mode of operation. The future of the brick-and-mortar shop is on the borderline of traditional shopping and e-commerce. She explains that “shopping malls will turn into showrooms and recreation centers, where visitors can spend some quality time and virtually test and touch a given product. After a customer makes a choice and pays (with a smartphone for example), the merchandise is then shipped to a specified address.” To survive, conventional stores will have to shift their approach away from the direct sales model to more of a customer advisor approach helping customers make the right choices before they order online. One of the key players in the Polish e-commerce market, Merlin.pl, is making a rather innovative move from the virtual to the physical, so to speak. Since the online seller was acquired by Poznań-based Czerwona Torebka last year, a number of pick-up points have been opened in cities across Poland where Merlin.pl customers can have their goods shipped free of charge. The idea has proven to be quite popular and the company therefore has plans to open a total of 60 locations by the end of this year. According to a Newseria Biznes conversation with Jakub Radkow-ski, advisor to Merlin.pl, the new locations will be developed into showrooms of a sort, where customers will not only pick up but also order more merchandise and enjoy a coffee while they are at it. No to e-sales? Yet with all the positive hype surrounding e-commerce in Poland, there are a number of businesses in the country which are shying away from selling their products online. One such example is the Swedish hardware chain, Jula. Although competitors like Leroy Merlin or PSB Mrówka are developing their online presence, the company is simply not interested in pursuing that channel. “We do not intend to extend our services into the web,” says Jula manager Daniel Adamiuk, who explains that doing so would require the expansion of customer service departments to handle orders, shipping, as well as post-sales support. With the company’s policy of keeping prices as low as possible, offsetting the cost of such an investment would be extremely difficult. Despite the growing potential of food and beverage sales online, discount retailer Biedronka has no plans of pursuing the opportunity. Alfred Kubczak, director of corporate relations at owner Jeronimo Martins Polska, suggests that Polish customers buy food online because of the lack of time. Given the choice, most people prefer to come to the store and actually touch what they are buying. In addition, those skeptical to e-commerce often point to the fact that the price advantage of online purchases has diminished over the past few years and differences between conventional stores and e-shops have pretty much leveled off. Today the only real advantage of e-shops is the convenience factor, they claim. Nonetheless, the numbers confirming the dynamic growth of the e-commerce market in Poland speak for themselves overwhelmingly. As we, as a society, are becoming increasingly more internet-dependent for several daily tasks: e-mails, instant messaging, banking or entertainment just to name a few, with tablets and smartphones easily accessible, it just seems natural that between responding to an e-mail or checking the weather, we will run through our grocery list, order what we need and have it delivered to our doorstep.