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Written by Anna Kopel and Michael Kahn
WARSAW/PRAGUE (Reuters) – Amazon and Tem are taking different strategies to take on Polish online market leader Allegro. US e-commerce giant Allegro is leaning into video, and fashion-focused Chinese companies are relying on low prices to win customers.
The two retailers see opportunity across Central and Eastern Europe’s largest economy and the region, where they are tapping into more mature Western markets as incomes rise and more shoppers go online. Higher growth rates are expected.
Amazon plans to add more original Polish programming to the five it launched on its Prime Video service starting in 2023, Rocco Breuniger, country manager for Germany, Austria, Switzerland and expansion markets, told Reuters told.
“We’ve seen a good response with Prime Video, and we’re going to build on that,” he said. “We will invest in Prime Video and local productions within the region.”
Amazon’s documentary about soccer player Robert Lewandowski has become Poland’s most-watched title ever.
Amazon Prime, which includes video streaming among other services, costs 49 PLN per year in Poland. Most subscribers in Poland take advantage of video benefits, and the company believes this is the key to attracting and retaining users, Breuniger said.
Amazon, whose Alexa voice assistant software was developed at its technology center in the Polish city of Gdańsk, also plans further investments across the region, including in logistics.
“We see great growth potential in CEE,” Breuniger said.
room for growth
Industry groups EuroCommerce and E-Commerce Europe recently valued the overall European online market at 900 billion euros ($975 billion), of which 67% is in Western Europe.
Central and Eastern European countries account for only 8% and 2% of total sales, respectively, leaving plenty of room for growth.
Online marketplace sales in Poland, used by approximately 40 million people, are dominated by Allegro, which was founded in 1999 and listed on the Warsaw Stock Exchange in 2020.
Amazon entered the Polish market in 2021.
China’s Temu, owned by PDD Holdings, followed suit in 2023, quickly taking market share with low-priced fashion goods, overtaking Amazon and making the discounter a global e-commerce behemoth.
“We have received encouraging feedback from consumers in the Central and Eastern Europe region,” Tem said in a statement.
According to PBI data cited by Mediapanel Gemius Polska and news agency PAP Biznes, Amazon had around 5.9 million users in Poland as of February, far behind Allegro’s 18.2 million and Temu’s 13.7 million. is taking.
DM mBank analyst Pawel Špigiel said Allegro’s loyal customer base and wide range of services make it difficult to displace the market leader, but Amazon’s ability to grow slowly and TEM’s ability to compete on price have the potential. He said that it has become a serious threat.
“As Temu’s success around the world has proven, the e-commerce market is very dynamic, so Allegro definitely cannot rest easy,” Spigiel said.
“Amazon’s strategy is different from that of Chinese companies, and always has been,” he added. “Amazon has a very long-term trench warfare strategy.”
close to customers
Chief Financial Officer John Eastich told Reuters that Allegro’s proximity to customers has kept it a leading position in Poland, and that Allegro plans to expand its flagship brand to the neighboring Czech Republic in 2023 and Slovakia this year. He said it helped him advance.
After acquiring Mall.CZ, the company, which operates in six countries, plans to launch the Allegro brand in Croatia, Hungary and Slovenia in 2024.
“Our strength, especially in places like the Czech Republic and Slovakia, is that we are a neighboring market to Poland,” Eastick said. “What Polish sellers offer doesn’t exactly match the tastes of those countries, but it’s pretty close.”
But competition from deep-pocketed Amazon could be a burden. Trigon analyst Dominik Niszcz said Allegro’s adjusted EBITDA loss from its international operations in 2024 could exceed PLN500 million, depending on fourth-quarter costs related to entering the Hungarian market. I predict that.
Another challenge for the region is inflation, which is among the highest in the European Union, and consumers are being asked to control their spending more tightly.
Poland’s annual inflation rate peaked at 18.4% in February 2023 and has since fallen to 1.9%, but analysts expect the government to abolish the zero value-added tax rate on food and unfreeze energy prices. We expect inflation to rise again due to the possibility of
Some analysts also point to Poland’s relatively low household savings rate, saying that the recovery in private consumption could be slower if households choose to rebuild their savings cushions first. Allegro’s Eastik is also recognized as a risk.
“The recovery (in consumption) seems to be a little slower than economists expected, so we’re being cautious from that perspective,” Eastick said.
Still, he added, “we are well positioned to benefit from the move back to discretionary spending this year.”
(1 dollar = 0.9230 euro)
(Writing by Michael Kahn; Additional reporting by Anna Pulcznicka in Gdańsk and Karol Badohar in Warsaw; Editing by Katherine Evans)
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