Allegro Business, a marketplace for companies, invades Poland and thinks abroad.  Billions are at stake

Thanks to the accelerating digitization, there is more and more talk about not only consumer online purchases, but also corporate purchases. According to data from Santander Bank Polska, that in 2014-20 The domestic B2B e-commerce market doubled in value – to PLN 447 billion, and then gained even more dynamics. Listed on the Warsaw Stock Exchange, Allegro, the largest online player in Poland with about 14 million buyers, benefits, for example, which in February 2021 launched a separate platform for business clients – to a large extent already present on its website.

There are more and more companies in Allegro Business

Immediately after the launch of Allegro Business, every fourth company in Poland made purchases on the platform, and a year later every third, now half of the 2.6 million active companies. On a weekly basis, the number of buyers is up 30% year over year. – up to more than 80,000

“Last year, we focused on buyers. The increase in the number of offers was several percent – with the net price to about PLN 150 million, including various B2B jobs to PLN 205 million. It is important for us to marginalize a certain negative trend. Quarter The fourth is the harvest time of e-commerce, so the number of buyers after that drops dramatically. More than 90,000 people bought in Allegro Business during the week companies, and in recent weeks 83-85 thousand, so the drop is insignificant – says Piotr Truszkowski, President Allegro’s B2B division.

The company wants to attract more customers, which is why it is considering a loyalty program. He argues that, contrary to appearances, he can win in a difficult economic situation, due, among other things, to: to make sure that the price of a particular product on Allegro is lower than anywhere else.

A business customer attaches more importance to expenses than an individual customer. The financing programs we offer jointly with PragmaGO play an important role during the economic downturn, especially for small business owners. Sellers have a renewable limit of 150,000 at their disposal. PLN so that they can sell more and pay off debts from the profit or take an advance payment for future sales. On the other hand, we offer buyers a deferred payment of up to 30 days free of charge, with the option to extend the deadline for another month, and even distribute it in installments or convert it into a rental, says Piotr Truszkowski.

Quality, not quantity:

Allegro, whose corporate sector is headed by Piotr Truszkowski, believes in the need to retain new clients who have recently been looking for better conditions. He explains that companies make decisions for much longer than consumers, but that changing habits is more permanent. The company would rather work on maintaining and increasing the quality of its customer base than expanding it at any cost, because acquiring a new B2B customer costs up to five times as much as retaining an existing one.

New tool for larger customers

The dynamics of growth in business trading on Allegro is higher than on the consumer platform, and the average transaction value is 2 times higher. The listed company expects a slowdown in the pace of acquisition of corporate clients, including due to the higher base. He admits that while it would be nice to have all the companies at home, he sees the ceiling lower. Its main goal now is to increase awareness of the Allegro Business brand in terms of priority (Brand No. 1).

– Work is already bearing fruit – at the beginning of last year our estimate among respondents was 14 percent, at the end it was already 22 percent. This year we want to continue our growth, which should convince increasingly large companies. It’s nice to have many small companies on the platform, but we also want to grow larger companies with at least 50 employees. The task is more difficult than getting consumers onto the platform, says Piotr Truszkowski, because it requires convincing corporate decision-makers of a different purchase than they are used to.

We increase the convenience of making corporate purchases and save entrepreneurs time and money. Sellers are verified by us, and buyers can easily compare several offers in one place and take advantage of many conveniences, including free delivery in the Smart! And the operation is easy thanks, for example, to the integration with the internal systems.

Peter Troshkovsky

Head of the B2B sector at Allegro

New tool, Allegro Office, to help attract larger clients. Its assumptions are similar to a family account on a consumer platform.

– We noticed that purchases for one NIP are made from several accounts, which means, for example, that an employee buys office equipment himself and is only supposed to bring an invoice. So we will enable a better division of tasks and maintain greater control over purchases by automating invoicing. Companies will be able to specify the permissions of individuals to approve purchases, and the rest will be able to add the products they need to the basket, the manager explains.

Internal tests are coming to an end. The product in the so-called MVP version is likely to appear on the market in the second quarter. At first it will be free, because Allegro wants to collect customer feedback in order to improve it and expand its functionality.

e-commerce giant

36.6One billion Polish zlotys

This is the GMV (Gradual Sales Value) of the Allegro Group after three quarters of last year…

1.5One billion Polish zlotys

…and this is the EBITDA rate.

Multi-billion dollar prospects not only in Poland

Allegro cites data according to it The value of the Polish B2B e-commerce market in 2022 is more than PLN 650 billion, and by 2025 it expects to increase by almost 40%. – at an average annual rate of 10-11 percent. And he asserts that this means that the potential of this channel is greater than that of B2C e-commerce, which is expected to grow at a high, but single-digit rate.

– We follow the global trend of markets entering corporate procurement. However, the game is about non-strategic purchases, the so-called long tail, with a relatively lower value and spread over many suppliers, which is 20-30 percent. entire purchases,” explains Piotr Truszkowski.

However, Allegro is not limited to Poland. Thanks to the group acquired in 2022, Mall is already operating in the Czech Republic, Slovakia, Hungary and Croatia. In this half year, he will introduce the details of the platform’s international consumer expansion, and in the aftermath, prepare for the development of the overseas B2B platform. The first step was the name change in February – from Allegro Biznes to Business. We have to wait for the next, because the company this year focused entirely on Poland in this sector.

– Trade between companies from the region is already underway and on a large scale, so there is no need to build the market from scratch. We are simply offering them a new channel, collecting a lot of offers in one place and ensuring the safety of transactions on favorable terms. We are analyzing the markets served by our group – the mall is also B2B and we don’t plan to change that – and this year we want to define an expansion model that is in line with the overall corporate strategy. The individual markets in the region that we can appear in individually are smaller in scale, but their specificity is similar to the Polish market, so we see the potential to use the existing customer base. However, it is too early to make predictions, says the head of the B2B sector at Allegro.

It confirms that the main B2B sales channel in Europe continues to be salespeople, used by more than half of companies, and used by 8 percent. Of e-commerce companies ranked fourth. Against this background, Poland performs 11 percent better, but still lags behind such regional markets as Slovenia (14 percent), the Czech Republic (19 percent), and Lithuania (21 percent)..

In the eye of the analytics

Great opportunity for Allegro

Paul Szpiegel

Analyst at BM mBank

Allegro has a huge business opportunity ahead of it. Following in the footsteps of Amazon, which already stated in 2020 that the global business-to-business e-commerce market is worth $15 trillion, which is more than five times the value of B2C, and the coronavirus pandemic has accelerated digitization. If in 2022 the value of the Polish market is PLN 650 billion, and Allegro is fighting for 20-30 percent of it, then we are talking about PLN 130-195 billion. GMV Allegro is currently worth about PLN 50 billion, so the outlook is good.

The Allegro business is still at an early stage, so it’s hard to assess until the company reports results. I’m optimistic about the plan. Allegro is a well-known brand to the vast majority of Poles, eg corporate decision-makers, and its success is built on its association with the lowest price, which can be favorable especially in times of cooler economic conditions. However, in B2B, not only the price is important, but also the example of long-term relationships and the credibility of business partners. Therefore, the company is now focusing on high-quality service, providing important functionality to business customers and building awareness of the new platform. I’d be surprised if companies aren’t at least very interested in the Allegro Business test. However, it is likely that large contractors will start with small orders in order not to abandon their existing partners.

Overseas, Allegro is still making a much-needed transformation of Malla’s business from a 1P model to a 3P model, i.e. from direct-to-market sales. Before leaving the country with a B2B platform, it must first be successful in this channel in Poland and in B2C in foreign markets.

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