You can also listen to the interview in the audio version.
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After the rocket growth of e-commerce during the pandemic, when Czechs also bought things online that were previously only available in brick-and-mortar stores and companies therefore invested heavily in warehouse capacities, they are cautious this year. Everyone is talking about the cooling of e-commerce.
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“You can already recognize it a little. There are cases when e-shops report even a twenty or thirty percent drop. But it’s not a one-off, we’re talking about a trend. People are more nervous because of inflation, they are starting to save,” says Konstantin Margaretis, founder and CEO of Skladon, in the program Agenda SZ Byznys.
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The company Skladon provides Czech e-shops with everything they need for their business – storage, acceptance of orders, assembly of goods and delivery to the customer – the so-called fulfillment. The company is one of the fastest growing in our country. Last year, it increased its turnover by 157 percent and doubled its warehouse space.
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On the other hand, for some merchants, sales have increased by leaps and bounds in recent weeks, but these are seasonal purchases mainly related to travel. For example, interest in suitcases has increased by 52 percent in the last month alone, according to data from the company Shoptet, and the rankings of the most sought-after goods for this summer season are also dominated by things typical of holidays spent at home in the garden or at the cottage, for example swimming pools or ice cream makers. For those, sales went up by 84 percent.
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The jumper of the year is swimming pools, which went up in sales by 127 percent. “People no longer want to put off larger investments such as swimming pools, mainly because of inflation and the associated increase in prices. We see a tendency to buy more expensive things at ‘old prices’, this also applies to camping equipment, tents and the like,” explains Samuel Huba, CEO of Shoptet.
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According to the founder of Skladon, e-commerce will definitely grow despite the cooling, although not as in the time of covid and closed shops, when people had no choice but to shop through e-shops. According to him, crises are part of natural longer-term development. As for e-shop owners, there is a difference.
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“E-commerce is a young field. Even in management there are young people who have not gone through a fundamental crisis, they are not used to it,” Konstantin Margaretis is convinced. But he himself is actually a representative of this generation of managers. Immediately after winning the Brilliant Young Entrepreneurs competition in 2015, he dropped out of college and began to devote himself fully to building the company.
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There are simply no warehouses
During the lockdowns, warehouses especially around Prague experienced a real boom. And e-shops are still interested in storage space, especially in the vicinity of large cities.
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About Skladon
- The company was founded by Konstantin Margaretis and Patrik Babinec in 2015 after winning the Brilliant Young Entrepreneurs startup competition. Later, the third of the founders, Miloš Halecký, also joined them.
- In 2016, they opened the first warehouse and started providing fulfillment services for the first clients. They developed their own application for easier orientation and work with stock, orders, returns or complaints.
- They created facilities in an industrial hall in the village of Mošnov near the Ostrava airport with a current area of 16,000 m².
- In 2021, the company shipped goods to more than 180 countries around the world and increased its turnover by 157% to 121 million crowns. This year, it was also ranked in the FT 1000 ranking, which brings together the fastest growing European companies.
- Currently, Skladon provides logistics outsourcing to 70 e-shops, which include a number of Czech companies such as Kilpi, Skinners, nanoSPACE or Snuggs.
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However, the current range of warehouses is no longer enough for domestic traders and they are also looking for other storage options. Last year alone, the volume of demand increased to a record 2.39 million square meters, while the vacancy rate of the spaces used in this way fell to a historical low of 1.63 percent.
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Between how e-commerce is supposed to grow and how developers are supposed to build, 30 percent of storage areas were already missing. And it’s not a travel-distorted bubble from covid.
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“It is precisely for this reason that companies increasingly use fulfillment services, which provide them with customized warehouse spaces, without the need to wait several months for their construction,” says the head of the company that provides such services. In the first three months of the year alone, compared to the same period last year, the demand for its services has increased fivefold.
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“Between the way e-commerce is supposed to grow and the way developers are supposed to build, 30 percent of storage areas were already missing before. And that’s not a limited, distorted covid bubble,” he claims.
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Skladon is already a traditional successful participant in the Deloitte Technology Fast 50 ranking in Central Europe. In the last four years, it has grown almost sixfold.
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“This is a very high standard result for a company of its type. Currently, not only in e-commerce, we are witnessing falling demand, strong pressure on product prices and the efficiency of business as such. It will be interesting to see how e-shops cope with the current situation. For the company’s further expansion, the key will be how the e-commerce market will develop in general, or how much investment the company can get for possible international expansion,” says Jiří Sauer, partner in the Audit & Assurance department of Deloitte CR and leader of the Deloitte Technology Fast 50 competition. .
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The fight for the customer
According to Konstantin Margaretis, it is impossible to say in general how the current high inflation, which has now risen to 16 percent, threatens e-shops. They make inputs, production, and supply chain problems more expensive. Margaretis, however, assumes a lower purchasing power of the population and sees declines for the most waste items so far.
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“When we look at our customers, those companies that do something extra for the customer are successful. He does a lot of branding work. Businesses that build on personal relationships or extra gifts. When you open the package, an emotion immediately speaks to you, and you remember that for the next purchase,” he says in an interview with SZ Byznys.
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Traders are thus trying to find a patch for falling sales at a time of declining interest. They are looking at new markets and expanding. “We are registering the case of a company that operates in the Czech Republic, Romania and Hungary. It is decreasing at home and steadily increasing in Hungary. When we asked why, they didn’t find an answer,” says the head of Skladon.
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Approximately half of the traders who use Skladon’s services also sell abroad. Skladon itself is currently postponing expansion plans.
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“For us personally, expansion fully means finding local management and the hundreds of millions of crowns that it will cost us. Now we’re choosing carefully and we’ll get to it over the next year. We have arguments for going east, we have arguments for going west, it is a difficult decision and we will go according to the most interesting potential,” he adds, adding that the plan is to create a network of services for their clients, i.e. e-shops, across Europe.
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Skladon’s main competitors
In the Czech Republic, they are, for example, Mailstep or ComGate. ShipMonk is a successful startup in the USA, which is backed by the Czech Jan Bednář.
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Watch the entire interview with the head of Skladon in the introductory video.
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Agenda
A quarter of an hour about business first hand. Interviews with top Czech business leaders, company founders, experts.
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Every weekday on SZ Byznys and in all podcast applications.
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