Online distribution of food increasingly popular in Poland

2010-03-09

The online food distribution market has a promising outlook in Poland. Not surprising, e-grocers are expanding their reach to more cities and towns. Soon, a new large player may also appear on the scene – as UK’s Tesco gets ready to launch internet sales in Poland.

Though the online food market is not as developed in Poland as in western countries, according to Jerzy Mazgaj, CEO of Alma Market as quoted in Puls Biznesu, sales of foods over the internet are growing 100% each year. In his opinion, in 2010 this distribution channel may be worth PLN 300m in Poland, and grow another two-to-three-fold by 2014.
Without a doubt, the beginnings of online sales were challenging – as attested to by the leaders of the industry, including Piotr i Paweł, E.Leclerc, A.pl, Alma and Frisco.pl. Yet, order volume continues to rise, and today Frisco.pl logs 450 online orders a day, and the most promising prospects of growth in online food sales are currently before Warsaw and its vicinity. This continuous and rapid increase in online sales undoubtedly underlies the optimistic estimates formulated by the Polish Organisation of Trade and Distribution (POHiD), which has said that in this coming decade online sales may come to account for 5% of the value of total food sales in Poland.
Only a few years back, when thinking of e-shops, Polish consumers thought of the purchase of luxury items. But, as internet services have become more widely available, the offer of online shops has also broadened and today includes products that Poles use every day.
Internet shops endeavour to show that products available online and in brick and mortar shops cost the same. What is more, according to dlahandlu.pl the rising competition has led to lower prices in most of the surveyed online shops. So that the cost of the standard shopping cart (50 standard food products) at A.pl is PLN 297.43 in mid-February, that is PLN 27 less than at the beginning of February and PLN 40 less than at the end of January. Meanwhile, that same shopping cart of goods at the online delicatessen frisco.pl in mid-February cost PLN 377.42, i.e. PLN 9 less than at the top of February and PLN 18 less than a month earlier (prices quoted by e-shops between 16-23 February 2010).
The leading representatives of grocery chains in Poland are looking to satisfy an increasingly larger consumer body. Thus, they are expanding their distribution offer by eco and exclusive foods; in an effort to make their products more readily available they are also opening online shops. Piotr i Paweł opened its first online supermarket in 2003 in Poznan, followed by one launched in 2005 in Warsaw and one in Bydgoszcz, and then another in 2006 in Wroclaw. Since 1 March 2010, Piotr i Paweł’s products ordered online are also delivered to clients living in the Tri-City (Gdansk, Gydnia and Sopot).
Alma Market is also not behind its competitors. As stated by Jerzy Mazgaj, its CEO, Alma Market’s online portal generated PLN 16m sales revenues in 2009, up from PLN 6m in 2008. Financial analysts have predicted that the company’s online sales in 2010 will stand at PLN 33m. Alma Market’s products are sold via its online portal in Warsaw, Krakow, Katowice and the Tri-City. The good sales in the above cities have prompted Alma Market to decide to open online sales also in Poznan, Nowy Targ, Lublin and Bydgoszcz. E-shops should open in those cities this year. According to Jerzy Mazgaj in an interview with portalspozywczy.pl, for residents of smaller urban areas Alma Market will offer mail distribution as an alternative to e-distribution and as a result Alma Market’s products will soon be available countrywide.
Soon, the e-grocery market might see a new investor. UK’s Tesco hypermarket chain is planning to expand the operations of its online food shop by additional national markets, including Poland. Angela Maurer, Tesco.com’s Senior Marketing Manager, told portalspozywczy.pl that Tesco plans to transfer its online grocery shop onto a new platform which will make it possible for the retailer to distribute to clients outside of the British Isles. Yet, the news has yet to be confirmed by Michał Sikora, PR officer at the Polish branch of Tesco.
New internet platform offer additional amenities for businesses that would like to invest in selling their products online. In fact, according to dlahandlu.pl some of the platforms, such as SklepyFirmowe.pl, Nokaut.pl and TradeMaker.pl, have organized competitions for entrepreneurs who’d like to launch online product sales, also of perishables. A business that decides to open its internet shop on the SklepyFirmowe.pl platform, can win prizes that will help in generating business further down the line, i.e. the founder of the e-shop with the best sales among the newly established onliners, will receive PLN 10,000 in cash, PLN 3,000 for promoting the e-shop via Nokaut.pl and PLN 2,000 for SEO positioning by TradeMaker.pl.
The outlook for continued development of e-distribution of food in Poland is very promising. If the country follows the trends observed in western states, such as the UK where in 2009 already 13% of residents shopped for groceries online, this year Polish e-shops could generate sales of up to PLN 300m.



Patrycja Nalepa
Senior Retail Analyst
PMR Publications