“Allegro’s Expansion into Czech Republic: Will Low Prices Win Over Customers?”

Allegro is considered a giant brand in Poland, it is among the ten largest markets in the world in terms of total attendance. It works on the same principle as the American giant Amazon. In practice, this means that other sellers also sell through Allegra’s website and channels, from whose transactions the Polish company takes a commission.

“I think that Allegro or other marketplaces will gain market shares more gradually. Recently, it seems that we are entering the era of the marketplace, Kaufland recently entered the Czech Republic, now Allegro, Alza, Heureka have their marketplaces,” comments the arrival of the Polish giant Matěj Kapošváry from the company Shopsys, which creates large custom-made e-shops. “If I were to compare it to poker, the foreign players Kaufland and Allegro have shown their cards, Alza and Heureka are on the move,” says David Cikánek from the company Expando, which helps bring Czech traders to foreign markets.

Low prices as an attraction

Allegro wants to act in several directions, i.e. to enable Czech and Polish traders to reach the new market, as well as Czech and Polish customers to buy goods from them. “Allegro will try to attract customers with a wide offer and low prices, as their banner on the newly launched website allegro.cz shows with the slogan 10x more products and better prices than at any e-shop in the Czech Republic,” estimates the strategy of the Polish company Kapošváry . “Low prices may be something that will attract customers at the moment, but in the longer term I think the overall customer experience will be key, where Allegro as a marketplace will have a harder time,” he adds.

On its website, Allegro offers a number of services to improve the user experience, such as the Allegro Smart loyalty program or the purchase of goods with deferred payment.

However, Cikánek points out that the offer of the Czech Allegra mutation is still limited. “Currently, a large part of the offer is Mall.cz, and then I would guess a few selected Polish sellers. Similar to the launch of Kaufland, it will take time,” he says. “In any case, the clouds of Polish, cheaper, sellers can make quite a difference with part of the market, on the other hand, I don’t believe that only price will win, see Aliexpress, anyone can buy cheap Chinese goods and some customers do, but that alone is not enough,” he believes with.

Competition from within

At the same time, the existence of Allegro should not mean the demise of CZC and Mallu, which have a strong position in the Czech Republic and are among the largest online stores on the market with sales of several billion. At the same time, however, Allegro advertises that the new marketplace “Allegro is your new bigger, bigger Mall.cz.” The question is how the double-track will pay off for the Polish company, since getting Czech customers to the Polish marketplace’s website will require significant marketing costs.

Large Czech e-shops, including Mall and CZC, will be the biggest challenge for Allegro. “As the Czech Republic avoided foreign markets for a long time, extremely strong and high-quality specials managed to grow here. Specialized retailers can better adapt to the needs of the customer in a specific segment, they can adjust the entire shopping journey according to the given assortment,” Kapošváry explains the reasons why e-shops such as Alza or Notino play a leading role in the Czech Republic.

As Kapošváry points out, it can be a risk for sellers to enter such a large marketplace, as is shown in some cases on Amazon. “I know that many sellers don’t want to sell on marketplaces out of principle – they want the customer to really be theirs, to build a relationship with their brand,” says an expert from Shopsys. “There’s also a concern about what Amazon is doing – by having access to sales data across segments, it’s very easy for them to close off a subcategory to a third-party seller and replace it with their own private seller,” he says.

Allegro is listed on the Warsaw Stock Exchange, since the subscription of shares in 2020, the value of Allegro shares has fallen by 58 percent. Allegro posted sales of 33 billion crowns in Poland last year, a year-on-year increase of 24 percent. Profit before interest and taxes was 11.5 billion crowns. At the end of 2021, the Polish group bought the Mall Group for around 20 billion, last year the Allegro management admitted that the value of the Czech e-shops fell by half compared to the purchase price.