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You are here » Home Page » CE Sports Business News » Review of e-Commerce in Poland


Review of e-Commerce in Poland

2018-01-23 source own
Overview

Currently, the barriers for those looking to enter the e-commerce market are fairly non-existent in Poland. However, we should mention that there are requirements for US companies including tax issues as well as personal data protection regulations; these are similar to those found across the European Union.

As a whole, the e-commerce market in Poland is thought to be worth $10.8 billion with tremendous growth still to come; the value of the market should reach $17 billion by 2020. Each year, there is double-digit growth and this makes Poland one of the fastest-developing e-commerce markets in Europe. In terms of the wider picture, e-commerce contributes around 3% of the Polish economy but this number is set to increase three times over in the next three years.

For this reason, key figures are pushing e-commerce as a driver for economic development and it has already allowed for growth in logistics operations. Just recently, e-commerce surpassed 55% of all warehouse space for logistics operators and retail chains. With Zalando and Amazon at the top of the pile, Poland is quickly becoming a hub for numerous e-commerce operations for Western Europe.

Why has it increased in popularity so quickly? Above all else, access to the internet is easier and cheaper than ever before. Today, consumers feel comfortable purchasing products online and this has led to customer-friendly regulations. With nearly 26 million people on the internet in Poland, this is around three-quarters of the entire population and the majority of those between the ages of 18 and 34; all things considered, just under half of the Polish public shop using the internet.

In terms of the websites themselves, Poles have a tendency to use auction websites and half of all e-commerce stores use auction features as a result. Allegro, the most popular platform, has a 50% market share. However, it’s important to note that most online stores still have some form of presence with brick and mortar operations.

Market Trends

With technology and the internet continually expanding, customers can now compare prices in a matter of seconds. For retailers, they’re combining an online and offline approach to keep hold of important customers; they’re also choosing to invest more and more in analytics. If we look at products in the market, groceries are still leading the way. Despite already seeing success with a $120 million market value, this is still expected to grow substantially to $670 million by 2020.

Domestic Sales

In Poland, most online shopping is performed locally and the grocery niche is being closely followed by shoes, clothing, home appliances, toys, books, electronic devices, and cosmetics. In addition to this, services are quickly expanding such as travel services, travel tickets (train, bus, airplane), and others.

International Sales

With 40% of Poles never having ordered a product/service from abroad, it’s thought that only one in ten has shopped in a foreign store online. Likewise, only 10% of Polish e-commerce stores have customers in another country. Despite the positive progress Poland has seen in recent years, it sits with Romania as the country with the lowest cross-border transactions in the European Union.

B2B Sales

Just like the consumer market, business-to-business (B2B) is growing at 8% a year and should reach a value of $92 billion by 2020. This being said, the room for growth is clearly available with only 35% of Polish companies using internet purchasing platforms and a whopping 30% not even maintaining their website.

Services

If we were to look at the market as a whole, it seems as though e-commerce stores in Poland would like to team up with suppliers abroad and sell their products to the public. Within European countries, this is already a big business. Yet, the experience of going beyond the European borders is non-existent for Poland. For example, not many have dealt with US suppliers and this means the logistics support hasn't grown.

Intellectual Property Rights

With the internet only expanding, the authorities have turned their attention towards this arena more and more. Unfortunately, one problem still exists in intellectual property infringement and, thanks to a Deloitte report, we can see that online piracy is costing Poland hundreds of millions each year. If we look towards the figures of 2016, illegal use of content led to losses of $760 million while $210 million was seen in state treasury losses.

According to a recent report, the majority of people combine legal and illegal content online; many actually pay piracy services. As you might imagine, audio and video are the most hacked content available.

Popular e-Commerce Websites in Poland

•    Ceneo - Price comparison website
•    Eobuwie - Shoes and bags
•    Mall - Various consumer products
•    Euro AGD - Home appliances and consumer electrics
•    Allegro - Various consumer products
•    Marketplanet - B2B platform
•    iPerfumy - Cosmetics, perfumes, health and beauty products
•    Dam o Zdrowie - OTC products, pharmacy, healthy and beauty products
•    Empik Cards - Toys, music, gifts, books, tickets, PC games

Just as it does in many other countries, Amazon has a growing presence in Poland and they’ve now grown to five fulfilment centres as well as an original research and development centre. On the German platform, they recently added the Polish language and this has helped them to continue their path of growth.

Payment Online

Nearly 70% of all Polish banking customers have some form of internet banking and, compared to years gone by, this is quickly increasing too. For mobile payment, Poland is one of the strongest European countries and they actually lead when it comes to contactless payments. Similar to Czechia, nine in every ten bank cards have the contactless feature. If we compare this to Germany, only 17% of issued cards have this feature here.

Mobile Shopping

Of the millions of internet users in Poland, 86% also used a mobile device to access the internet with 16% of these shopping on their mobiles. Currently, growth is being limited by e-commerce stores who are actually having trouble making their websites and platforms mobile-ready.

Digital Marketing

So far, it’s fair to say Poland is well behind the world average when it comes to digital marketing. While most countries reached the 2016 target expenditures for both TV and digital marketing, Poland is set to reach them in 2020. In the four years leading up to 2016, 64% of all growth in digital marketing came from Google and Facebook. If we look at the products themselves, fashion clothing remains as the most-advertised.

Seasonal Purchasing

With $1.2 billion spent on online Christmas shopping in 2016, this marked a 23% increase compared to 2015. Since there was only a 2.4% increase in traditional stores, this shows where the consumer places their attention currently.

Social Media

Around the world, social media is a huge outlet for the population and this is no different in Poland; 90% of all users of the internet can be found on social media (just under 40% of all Poles). Per day, the average time spent on social media is now at two hours and 19 minutes. Digging a little deeper, Facebook has the lead in terms of importance and 70% of Facebook users visit the platform daily. Elsewhere, Snapchat, Twitter, YouTube, LinkedIn, and Instagram are also growing. For most e-shops, they’re also trying to build a presence on social media.

Digital Single Market (DSM) Initiative

For the European Commission (EC), the creation of a DSM has long-been a priority because they want to unlock the various opportunities in Europe by removing regulatory and any other barriers that exist in the government and e-commerce world. If successful, the EU believes there can be one harmonised online market as opposed to 28 fairly fragmented ones. In turn, this would lead to only one set of rules for both consumers and businesses.

Originally, the idea was brought to light in May 2015 and it has since been followed by a number of policy actions and legislative proposals. In addition to reforms in audio/visual services, suggestions also include reforms in copyright, VAT, consumer protection, telecommunication laws, and the whole e-commerce sector. In 2018, we’re still in the planning stage but some proposals have now entered the legislative process. Not only will they impact all European countries, they’ll also be important for US companies planning to sell in Europe too.

Ultimately, there are three main sections to the strategy;

•    Section One - Improve access to digital goods and services across Europe for both consumers and businesses. To break down the barriers that currently exist between the online and offline worlds with cross-border activity.

•    Section Two - Create an environment that allows digital networks and services to excel. Ensure that all regulatory conditions are geared towards investment, innovation, a level playing field, and fair competition for everybody. Infrastructures that encourage quick, trustworthy, and secure interactions.

•    Section Three - Install a European digital economy and wider society that has potential for growth; boost standardisation between countries (in addition to interoperability). Invest in Big Data, cloud computing, and other technologies as well as innovation to keep competitiveness high.

Within the Electronic Commerce Directive (2000/31/EC), we already have some rules for online entities across the EU and it suggests that all providers must abide by the rules introduced in their home country. For online providers, they must also adhere to all consumer protection rules which includes the identification of advertising, certain spam restrictions, and providing contact information on the website. In the same Directive, there’s also responsibility for entities that bring illegal content into the country knowingly and, in some cases, unknowingly.

VAT (Value Added Tax)

Inside the European Union, there is currently semi-harmonisation with VAT. At an EU level, the guidelines have been set but their implementation remains the prerogative of all Member States. Thanks to the EU VAT Directive, Member States have the right to apply a VAT rate of at least 15%. For certain goods and services, there are also special reduced rates or temporary derogations. Over the years, Member States have been encouraged to review their own VAT systems.

For sales from companies outside the European Union to consumers inside the EU, when the sales contain Electronically Supplied Services (ESS), there are certain VAT rules. For example, those in the US selling to the EU must apply VAT and submit the documents accordingly. In 2015, the tax expanded to include broadcasting, telecommunications, and electronic services where the customer resides. For businesses, this generally means the country of their fixed premises or where they are registered. For consumers, it’s the location of their permanent address or where they’re registered.

Additionally, the changes in 2015 included the Mini One Stop Shop (MOSS) scheme which is optional for all involved. Ultimately, the idea is to aid the process of taxable businesses selling ESS to non-taxable consumers within Member States (if the sellers don’t have an establishment to document the VAT).

With this addition, no taxable seller has to register in every single Member State in order to sell to consumers. As long as the business/individual is registered for the MOSS scheme in a Member State, they can submit MOSS VAT returns every quarter and this should detail all ESS sales to non-taxable consumers in all Member States.

Despite the positive intentions at the point of introduction, the Commission has actually received numerous complaints regarding the system and is currently discussing revisions as a result.



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