Battle for Poland’s $19 Billion E-Commerce Market Begins For Real With Amazon Entry

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(Bloomberg) -- A battle for the control of Poland’s booming $19 billion online shopping market is about to reach a fever pitch after Amazon (NASDAQ:AMZN) Inc. said it plans to launch in the European Union’s largest eastern economy.

Shares in the country’s dominant e-commerce company Allegro SA slumped the most in more than a month after the U.S. retail giant announced on Wednesday it started registering local sellers for its Polish website planned to launch soon. The company is already running 10 fulfillment centers in Poland that process European deliveries, but hasn’t been present on the local market.

Amazon’s arrival is a direct threat to Allegro, which has ridden an unprecedented boom in online sales, which only accelerate after many Poles were confined to work from home because of the pandemic. The Polish platform, which has seen its shares almost double since its Warsaw debut in October, controls more than 36% of the market thanks to its strong consumer base and fast deliveries.

“Amazon’s entry exposes Allegro to a significant competition risk, challenging the view that the company may further boost its market share and raise margins,” said MBank SA analyst Pawel Szpigiel. “Even as Amazon fees may be higher, merchants will get fulfillment and packaging services and access to global shoppers, which will be its advantage.”

Allegro, whose shares were trading 6.9% lower at 70.41 zloty after dropping as much as 7.9% earlier, had no immediate comment when contacted by Bloomberg.

More Rivals

Amazon’s move comes only a week after Alibaba (NYSE:BABA) Group Holding Ltd.’s announced plans to invest in parcel lockers in Poland to speed up delivery from Chinese merchants selling goods via its AliExpress platform. Global e-commerce operators bet that a lower share of online sales in Poland will quickly converge to levels seen in Western economies.

The announcement also coincides with a market debut of InPost SA, the country’s top logistic provider that cooperates closely with Allegro. Its stock soared in Amsterdam trading after its owners raised 2.8 billion euros ($3.4 billion) in Europe’s biggest initial public offering since 2018 amid an online shopping boom that’s driving up demand for the company’s automated parcel lockers.

MBank’s Szpigiel said that Amazon’s decision may further solidify InPost’s business model, as it confirms a high interest in Poland’s e-commerce and may boost its volumes. InPost Chief Executive Rafal Brzoska predicts that in the next five, six or seven years the nation’s retail market could split evenly between a traditional brick-and-mortar model and online shopping, he said in an interview with Bloomberg TV on Wednesday.

“A full retail offer for Polish consumers is our next step and it’s now the time for doing it,” Alex Ootes, Amazon’s Vice President for European Union expansion, said in an email.

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