Competition among manufacturers drives Polish e-commerce

E-commerce growth since the end of the pandemic has been slower than expected. This is a result of the economic slowdown and inflationary pressures (a state of the economy in which inflation is more likely to rise than fall). However, despite the apparent slowdown, e-commerce growth for the next few years will be faster than the growth of the entire retail market. This is due to the intense competition between companies and the investments in the development of this channel that follow. These are the key findings of the report “E-commerce in Poland: competition and rising expectations drive growth,” prepared by Strategy&.

Poland’s e-commerce market has reached maturity

Over the next four years, until 2028, Polish e-commerce is expected to reach a sales value of 192 billion PLN – up 61 billion from last year and 52 billion from the current year’s forecast. Annual growth is expected to stabilize at around 8%, which means it will be faster than the growth of the entire retail market, which is expected to be 6%. The period from the current year to 2028, is expected to be a return to a trajectory of real volume growth in the market while inflation is falling.

The Polish e-commerce market is already maturing, as indicated by the only slight increase in the number of internet users and online shoppers since the beginning of the pandemic. Shopping frequency and average basket value are responsible for the good growth rate of this channel. The former is now 17.7 times at 15.3 times in 2020 (a 5% increase). The latter, on the other hand, increased from PLN 233 to PLN 304 over the same period (partly also due to inflation).

Moreover, the frequency of shopping in Poland has reached the same level as the average for Western European markets and is slightly ahead of the average for EU countries (17.5). Although they have an advantage when it comes to the average value of the shopping cart, yet compared to other European countries, we see growth potential in the penetration of internet and e-commerce users. Among experts, opinions prevail on the strong growth of digital sales in the long term (many also emphasize the need for consistent coexistence of online and offline channels).

What influences the shopping decisions of Polish consumers?

The factors strongly driving the growth of online shopping are primarily the increased awareness of Poles about e-commerce and trust in this channel. However, in order for online sales to continue to grow, improvements in the UX/CX area are necessary – e-store appeal and innovation will be very important in the battle to attract and retain customers.

Mobile will play an increasingly important role in online sales. The share of sales generated by mobile devices is expected to grow by an average of 2% y/y in the coming years. Apps are becoming an important sales tool. With better user experience, more accurate tracking of customer behavior and more opportunities to activate them, apps help increase sales, as well as attract younger consumers. The latter will also be largely responsible for the anticipated growth of social-commerce.

Among Polish consumers, the correlation between price and purchase decision is still very strong. Promotions, discounts and free delivery are seen by them as additional values that affect the attractiveness of the offer. Consumers are also aware of additional costs, such as delivery, and take them into account when making a purchase decision. Next business day delivery is a standard that customers expect from e-stores, and the ability to easily return products and simplified payment processes are also important to them.

Automation and optimization

Despite the growth of sales in the e-commerce market, staying competitive is becoming increasingly challenging. Consumer expectations, as well as increasingly fierce competition, are forcing retailers to seek optimization and develop new functionalities. That’s why as many as 80% of experts interviewed by Strategy& say they will increase investment in e-commerce development at their companies in the upcoming 12 months.

To meet the growing demands of the market, retailers are focusing on improving the shopping experience of customers. A large part of the investment will go to UX/UI development and personalization of the offer. In response to market challenges, it will also be important to undertake strategic partnerships. In this context, one can distinguish the development of proprietary marketplace solutions (they are expected to provide, among other things, easier access to customers and the possibility to increase sales) and cooperation between entities offering complementary services, such as q-commerce providers and traditional retailers.

At the same time, the pressure to reduce costs is forcing companies to look for new solutions. Process automation and the use of artificial intelligence are solutions that will optimize costs and increase operational efficiency. The use of AI and advanced analytics is also a step towards better understanding of consumer preferences. Thanks to artificial intelligence algorithms, retailers can offer the right products, at the right time and at the right price.

Artificial intelligence is also about automating the sales process – it can automate many routine tasks, such as answering customer questions in real time. Not surprisingly, as many as 89% of CEOs interviewed believe that GenAI tools (including ChatGPT) will significantly change the way companies deliver business value to their customers.