Entering the Polish market, Amazon was supposed to shake the foundations of its competitors' platforms. However, Allegro remains the most popular marketplace, but the American giant is hot on its heels. Amazon Prime price hikes in Europe raise the question: will the rival of the local giant increase its advantage over the company founded by Jeff Bezos?
Many market researchers claim that despite the price hikes in Europe and across the ocean, Amazon will establish a monopoly on the global e-commerce sector. Let's recall: the concern raised prices for the Amazon Prime service in France (by 43%), Italy (40%), Spain (39%), Germany (30%), and the United Kingdom (20%). The price of the package in Poland is still competitive – £10 per year.
– Amazon's price increase is not surprising; it was somewhat forced by inflation. The specter of price hikes in Europe appeared already six months ago, when the concern decided to raise prices across the ocean. Whether the hikes will also reach Poland is not settled, but we can expect it. The attractive price of £10 per year for the premium package along with a whole set of benefits, such as free and fast delivery, access to games and movie streaming via Prime Video, or promotions on Kindle readers, were part of the concern's strategy aimed at gaining a new market. And indeed – it proved effective. Amazon is still gaining strength – explains Tomasz Cincio, CEO of Droplo, a global platform for e-commerce entrepreneurs.
The market success of the American colossus is also noted by Sascha Stockem, CEO of the technology company Nethansa, which develops a tool allowing the automation of sales on the Amazon and Kaufland.de marketplaces in European markets.
– Amazon in Poland seems to be developing at least well. From our data, which we base on a review of the 200 best sellers on Amazon, it appears that the Polish market has already overtaken the Netherlands and Sweden in terms of sales volume. Thus, it is already Amazon's sixth European market after Germany, France, Italy, Spain, and the United Kingdom – emphasizes Sascha Stockem. – On Amazon.pl, we observe increases in orders from sellers who trade in food, dietary supplements, pet supplies, and in the hobby category. So one thing is certain. Amazon, having even more detailed data, does not intend to stop nibbling at its Polish competitor, and in the near future we can expect another round of the battle for the customer from the Vistula – adds the CEO of Nethansa.
Market observations, however, show that Allegro still remains a clear industry leader. Recalling Mediapanel Gemius data, the proportions of e-commerce site users range from 15% for Amazon Prime to 37% for AliExpress and as much as 88% in favor of the Polish giant. It is worth noting that almost half of Amazon buyers made only one purchase in the last six months, and the number of Amazon Prime Video users in Poland dropped from just under 2 million in April this year to 1.8 million in May.
– Did the concern shake the foundations of the Polish e-commerce site, and should local trade fear the American giant? Well, no. On sites like Allegro, many Poles can find everything they need, from luxury goods to collectibles or niche items from the secondary market, which is currently experiencing a true boom. Amazon's sales services in Poland are mainly used by a select group of customers who have had prior dealings with it, as well as movie buffs tempted by the low price, who can cheaply expand their virtual film collection – explains Tomasz Cincio, CEO of Droplo.
Battle of Strategies and Loyalty Programs
Battle of Strategies and Loyalty Programs
Battle for the Customer: Amazon vs. Allegro in Numbers
To strengthen their positions, both concerns are vigorously developing marketing strategies. One of the Polish e-commerce platform's responses to the advances of the American competitor was the introduction of the One Fulfillment by Allegro service. How does it work? The logistics center being built, A2 Warsaw Park, is to offer a rich shopping offer from various sellers, all stored by Allegro and ready for shipment from one place. As a result, users who choose products from different sellers will not have to pay for separate shipments. This is a copy of Amazon's strategy.
The platforms are fiercely fighting for customers using loyalty programs – Amazon Prime and Allegro Smart. For example, the Smart package, at the same price that Amazon currently offers, enables free delivery for a full year, and although the offer is subject to a minimum purchase amount, it still tempts buyers. Both consumers and sellers can also take advantage of the Monety program. Thanks to it, customers earn "coins" by choosing products highlighted among other results. Super Seller badges allow companies to mark their offers with a symbol of trust. In addition, the seller has the option to purchase graphic ads on the Allegro website, as well as place them on Facebook and Google. The portal is very well positioned for search engines, so a company that takes advantage of this option has a chance to reach many potential recipients with its assortment.
– Unlike the American platform, Allegro meets the requirements of most users. It seems suitable for both a wholesaler and an individual seller. Another important aspect of Allegro is the ability to bid on goods sold there. For example, charity auctions often use this solution. The fact that Allegro is available only in one country, and starting operations in another can be difficult, is, however, a disadvantage for some sellers. Allegro will therefore be the best choice for business owners who decide to sell their products in Poland – notes Tomasz Cincio, CEO of Droplo.
Free delivery and movies and series on Prime Video, access to public books via Prime Reading, Prime Music or Prime Gaming, and special offers attract Amazon users. The program offered by Amazon Prime focuses not only on the commercial aspect, which undoubtedly distinguishes the service. Sellers, in turn, gain access to sponsored products that are displayed on search results pages and product pages. It is also possible to take advantage of brand promotion by placing one's own logo.
– Allegro is not indifferent to the competition's actions and introduces its own loyalty packages. Promotions and a wide range of delivery methods still ensure the concern an unrivaled place in the e-commerce market – says Tomasz Cincio, CEO of Droplo. – In the event of potential price increases, Amazon's position may fall even further, although the global nature of the American giant may suggest that the company has a long-term plan of action on the Polish market, which we will learn about in the coming months. This does not let the Polish hegemon sleep peacefully – adds Cincio.
Price Hikes in Poland: Expansion Strategy or Risks?
Price Hikes in Poland: Expansion Strategy or Risks?
Nethansa CEO Sascha Stockem believes that the price hikes in the US resulted, among other things, from the fact that Amazon has over 150 million users there, almost four times the population of Poland. The package of added values in Prime is definitely larger there than in Poland, so it can dictate a higher price. It does not have to fight for a single customer because it is already their first choice and the market leader.
– Amazon is in no hurry with price hikes in Poland because it knows it is dealing with a solid rival that is rooted in our market, and gaining trust must take time. Nervous moves are not advisable, and Amazon has something the Polish rival does not – huge cash surpluses. It can therefore even conduct a price war for a few years not only in Poland but also, for example, in the Netherlands, where subscription costs are also not high. The price increase in many countries excluding Poland means that the giant's authorities believe they have not yet finished the acquisition period, i.e., they have not yet gained the target number of buyers and sellers using the platform – explains Sascha Stockem.
Summary
Amazon, although growing dynamically in Poland and already the concern's sixth European market, still remains in the shadow of Allegro, which maintains an 88% share among e-commerce users. The Polish platform responds to foreign competition with the One Fulfillment by Allegro program and the Smart package, while Amazon attracts customers with Prime Video and free delivery. Experts, like Tomasz Cincio, emphasize that Allegro knows the local customer better, but Amazon's global financial resources allow it to wage a long price war. The key will be whether the American giant decides to raise prices in Poland, risking loss of trust.
