How do you assess the current state of the e-commerce industry in Poland? Have companies learned from the pandemic?
Arkadiusz Kawa, Director of the Institute, Lukasiewicz – Poznan Institute of Technology, Professor at the University of Logistics: The e-commerce sector has been developing very dynamically for several years. The pandemic period accelerated this development. During this time, many new businesses emerged, some of which, unfortunately, did not survive. E-commerce may seem easy on the surface, but it requires both capital investment and the creation of a competitive advantage. Polish e-commerce is no different from its foreign counterparts, and you can find most of the services and functions known in Western countries there. However, growth has slowed in recent weeks due to inflation and the war in Ukraine. Customers have limited purchases of non-essential products such as cosmetics, clothing, shoes and electronics.
What dangers do you see for the industry today?
Currently, the biggest problem is the above-mentioned inflation, which reduces the purchasing power of consumers. Of course, sales for key products will likely increase due to the traditional channel, as it is easier to find cheaper products online.
The dynamic development of e-commerce meant that we began to experience problems with limited resources. The big problem is the lack of people for operational work (mainly warehousing), which results in increased labor costs. Packaging materials and supplies (mainly in the door-to-door system) will also become more expensive due to rising labor and fuel costs. This will be combined with additional customer requirements in the form of faster and faster delivery (driven by the development of q-commerce) and an eco approach, i.e. the use of sustainable delivery and packaging.
The Polish market has become attractive for major international players. We have native Allegro, but also eBay, Amazon, AliExpress, JD.com and Shopee. What balance of forces will be created here?
The presence of companies such as eBay, Amazon, AliExpress, JD.com and Shopee in Poland proves the maturity and attractiveness of our e-commerce. However, it should be remembered that their development leads to great concentration. Last year, the 100 largest sales platforms accounted for 67% of global e-commerce. Therefore, pressure on them to increase their share in the Polish sector will be a big problem. The huge capital and great determination behind them can lead to problems in retaining customers for small online stores trying to operate independently. Some time ago, one of the markets was punished by the Italian Antimonopoly Office for abusing its dominant position in Italy. Interestingly, the lawsuit concerns not only e-commerce, but also logistics. The construction of new warehouses and the capture of the supply market by these agencies (for example, through the development of courier services, the installation of parcels) will be a major challenge for logistics companies, which have so far been important beneficiaries of e-mail development. trade.
Allegro is still dominant in Poland and will do his best to maintain his position. More recently, it has invested heavily in logistics – both courier delivery and delivery to collection points, and building a network of packing machines and offering execution services (warehousing logistics for online retailers).
The packaging, which has become a favorite delivery option, is also “tight” in the car market …
There have always been few local courier companies. There have been several consolidations over the years, and we now have seven such companies. The situation is different in packing machines. For many years there was only InPost, then Poczta Polska, SwipBox, an open network for DHL and DPD customers. The turning point was a pandemic period in which the popularity of cargo in these cars exploded. They were created by platforms (Allegro, AliExpress) and other agencies such as Orlen. In fact, there is a lot of competition here. Other players (such as Amazon) may want to enter the market. Currently, at least eight operators are fighting for new locations for their devices. As a result, many cars are placed next to each other, which has a negative impact on the aesthetics of the space and can limit its functionality. In addition, they may not always be fully utilized, which is important for the economy of such a project. This problem is felt not only by local residents, but also by the city authorities. An example is Wroclaw, where it was decided to regulate this issue and the first official regulation was applied in the country.
There has been some discussion for some time about open (agnostic) automatic shutdown networks. However, the owners of such networks are reluctant to allow others to use their infrastructure because they see them as part of a competitive advantage. In the case of the largest e-commerce players who have full control over shipments (for example, thanks to the execution service), a closed network helps them to dominate the market. Probably for this reason, both Amazon, Alibaba and Allegro are building their networks. In addition, this approach protects these companies from being seized by packaging operators by competitive market platforms.
There is no good trade without efficient logistics. What does this mean in practice today?
In addition to marketing and sales, logistics plays a key role in online store management. This allows not only to attract new customers (with the availability of goods, different delivery options and lower delivery costs), but also to retain existing customers (on time, in accordance with the order, without damage). If a few years ago efficient e-commerce logistics was a source of competitive advantage, today it is a necessary condition. The winners are those who implement new logistics solutions tailored to customer needs.
This is important because the specifics of traditional commerce are different from e-commerce. In the first, the seller sells the product “on the shelf”, and in the second – the promise to fulfill the order. It is the logistics that make this promise possible.
One of the key elements of logistics is delivery. Polish customers value convenience and choice more. For this reason, the so-called delivery away from home, especially the packing machines I have already discussed.
How will the Q-trade trend affect the development of urban logistics?
Ready-to-eat food delivery services developed rapidly during the pandemic. This was followed by food and so-called orders. It turned out that delivery on the same day is not enough. There are companies that deliver orders in 2 hours or even 15 minutes. They mainly refer to the products needed here and now. In recent months, there has been more and more talk about other products, such as shoes, clothing, electronics and pharmacy products. Moreover, not only are they being talked about, but some companies are already offering such deliveries. The question is, of course, do we really need an hourly delivery of shoes? Maybe not all, but there are customers waiting for it. Often these very fast deliveries are made directly from the seller to the customer, which is associated with higher prices and greater environmental impact. If the delivery takes at least two hours, it is possible to optimize the routes – during one trip, couriers collect and deliver parcels from several places, not transporting one parcel from one point to another. One way to increase the efficiency of fast delivery is to introduce a city call system in smaller geographical areas. However, for this you need a fairly large scale, micro-city centers (allowing reloading in selected areas of the city) and efficient IT solutions (dynamically planning routes and responding to changes, such as traffic jams, accidents, relocation). ).
Can Polish companies use technology? What else needs to be done in this area?
Polish companies can definitely use the technology. Some of these technologies have been developed in our country, for example, speech recognition technology.
You definitely need tools that allow you to analyze large amounts of information and present it in a simple way. Fortunately, there are more solutions that even small companies can afford. In the case of the fashion industry, we now have applications that make it easier to adjust shoes. It is still difficult to buy clothes that fit our figure. It is definitely worth investing in tools that automate work and processes and combine different sales channels and product delivery.
I hope to present the ePack project, which is most developed at the Lukasiewicz – Poznan Institute of Technology and two other Lukasiewicz institutes. Responds to packaging problems and, above all, the negative impact on the natural environment. ePack is a smart and reusable packaging with built-in sensors and packaging identification system. It is based on the concept of the physical Internet and allows resources to be shared with all participants in the e-commerce ecosystem who manage or transport goods. ePack is designed to protect goods, provide comprehensive shipping information, reduce packaging costs and minimize carbon footprint.