Czech E-commerce: Past, Present and Future
Jiří Hlavenka
enterpreneur
Lenka Stašová
Head of
Poland branch
Jan Svoboda
CEO
Czech e-commerce: past, present and future
Agenda
1) History and recent developments, major
players and their moves.
2) Is 10 000 e-shops enough for a small country?
What´s selling, who´s selling, who´s buying
3) A picture of a Czech e-commerce customer.
4) Future years: growth or quick maturation?
5) What´s behind the scenes: software solutions,
leaders, technology for the near future.
An early start...
• First e-shops: just five months after Amazon.com launch
(1995)
• Year 2000: hundreds of e-shops, revenue totalling
approx 100 mil. EUR
• First leaders were unsuccessful; the new leading
segment emerged: electronics, PCs, kitchen and home
appliances
• Auctions: no success until Aukro/Allegro came, even
then the growth was slow at the start
Who are today´s leaders?
• Alza.cz (computers, digital electronics): 200 mil. EUR
• Obchodni-dum.cz and Kasa.cz (one owner now, home
appliances, digital electronics): 130 mil. EUR
• Mall.cz (wide assortment, also in Poland): 100 mil. EUR
• CzechComputer.cz and Mironet.cz (both computers): 40
mil. EUR each
• Vivantis.cz (health, perfume, wide assortment): 35 mil.
EUR
• Parfums.cz (successful in Poland): 15 mil. EUR
• Aukro.cz: approx. 100 mil. EUR
• Total market: 1,2 bln. EUR
What sells well and what doesn‘ t?
First wave: books, music, video
Second wave: PC and home appliances
Third wave: apparel, perfume,
hobbies, auctions etc.
Fourth wave? FMCG?
??
1995
2000
2005
2010
Prices, margins, competition, marketing
• Internet means discount. That´s the rule.
• Computers, digital electronics and home appliances:
ridicuously low margins (2-5%), customers extremely
price sensitive
• Other goods: more normal margins (20%), a lot of
competitors
• Market niches: still a lot of space, low competition
• Currently approx. 11 000 running e-shops (+Aukro.cz),
every year brings up 1 000 new e-shops.
• Marketing effort: only „big5“ make real-world
campaigns. The rest rely on SEO/PPC visibility, price
comparison engines (Zbozi.cz, Heureka.cz).
Local specifics: every country has some
• Local portal Seznam (4.7 mio RU/mo, 2.1 mio RU/day) beats
Google in search 60:40. Google market share slowly grows.
• Seznam.cz owns the key price comparison service Zbozi.cz
(1,5 mio RU/mo, 140 th RU/day). Second is Heureka.cz (coowned by Aukro; sophisticated engine), half of Zbozi.cz
• Auctions make some 10% of total volume of local ecommerce
• 70+% of payments are cash-on delivery; distrust of
credit/debit cards (5%), in-store pickup is very popular (20%),
online payments are close to zero.
• Shipping and delivery: Česká pošta (state enterprise) 80%,
PPL (=Deutsche Post) 9%, DPD (French) 9%
• Speed of delivery and reliability is very important.
A portrait of typical Czech customer:
Seasonability: Christmas is not the killer season
Monthly revenues fluctuation (Jan = 100%)
2
1,8
1,6
1,4
1,2
1
0,8
0,6
0,4
0,2
0
Leden
Jan
Únor
Feb
Mar
Březen
Apr
Duben
May
Květen
Jun
Červen
Jul
Červenec
Aug
Srpen
Září
Sep
Oct
Říjen
Nov
Listopad
Dec
Prosinec
A portrait of typical Czech customer:
Price versus brand loyalty
66%: First I will find what to buy, then
I go to the e-shops to compare offers
27%: I go straight to the trusted e-shop
and search there
5%: My shopping decision is based on
recommendations of friends
1%: Based on advertising
1%: Other reason
A portrait of typical Czech customer:
Who ships – and how´s the delivery?
Shipping company / type of delivery
Czech Post Czech Post PPL
CoD
parcel
DPD
Czech Post Prague Courier
upfront payment
A portrait of typical Czech customer:
Why do you buy on the Internet?
40%
35%
34%
30%
25%
24%
17%
20%
14%
15%
10%
5%
6%
5%
0%
Money saving Time saving
Best-quality
products
A nice way to Other reasons
spend time
Hard to say
A picture of typical Czech customer:
How do you pay?
CoD
Card
bank
personally! transfer
Card
At the Reiffeisen PaySec
online cashdesk
A picture of typical Czech customer:
Shopping while at work (is our sport)
Ráno, odpoledne nebo večer?
Morning, afternoon or in the evening?
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Working hours
16
17
18
19
20
21
22
23
24
A portrait of typical Czech customer:
Average order size (in EUR)
35,00%
30,00%
25,00%
20,00%
15,00%
10,00%
5,00%
0,00%
0-500
0-25
501-999
25-50
1000-1499
50-75
1500-1999
75-100
2000-2999
100-150
3000 a více
150+
O
lo
m
a
a
HK
St
ře
dn
íČ
ec
hy
ý
ez
sk
ý
Ka
rlo
va
rs
ký
ěr
Pr
ah
a
Pr
ům
or
av
sk
os
l
a
or
av
sk
ý
Li
be
re
ck
ý
om
Pa
rd
ub
ick
M
ze
ňs
ký
lí n
sk
ý
ou
ck
ý,
Z
Pl
Jih
A portrait of typical Czech customer:
Regional differences? None
2000
1800
1600
1400
1200
1000
800
600
400
200
0
E-shop systems for small
companies
- the Czech market
• The Czech Republic and e-shops producers:
• General information
• Technology and quality differences
• Open Source platforms don´t gain strong positions
• Customers and e-commerce
• Czech e-shops solutions: inShop, ShopSys, ShopTet, OXID eShop, Ready2Go,
FastCentrik and others…
FastCentrik - CASE STUDY
2008
about
Low-cost shopping cart software
offered through rental payments.
Ready within 24 hours, amazing
functionality, custom graphics, free
updates and excellent support.
• NetDirect is market leader in e-shops for medium and large sized companies in the
Czech Republic
• September – talk about crises begins
• Desicion to create e-shops for smaller companies by the end of the year
• December – FastCentrik is introduced to the market
2009
• Product becomes very popular in Czech and Slovak Republics
• Turnover increases from 48 mil to 61 mil largely due to FastCetnrik
2010
• E-shop already ordered by nearly 1000 customers and rate of sales continues to grow
• English and Polish versions launched, company prepares for entrance into other
markets
FastCentrik – REASONS FOR SUCCESS
• Identification of target market segment and its needs
• Market survey showed that some competitors are selling products priced from 100
CZK / month
Conclusion
• Our product must be superior – 100 CZK / month (15 Zł) is not profitable
Strategy
• Enter the market with a higher price but overwhelmingly higher quality and service
Results
goal
Fair and friendly communication,
the key factor in customers’
motivation to buy this product and
stick with it
• Price 2290 CZK / month (352 zł)
• Free of charge – updates, training, manual, video-manuals, books, top quality
support, phone lines and chat, connections to financial systems
FastCentrik – CONCLUSION
We established ourselves in a market in which we had zero
share and where the existing competition provided lower cost
products.
We managed to convince the market that high quality software
and support services were worth paying more for.
For more information go to www.NetDirect.pl or www.FastCentrik.pl.
Ladies and gentlemen, thank you for your attention. If
you have any questions, we'd be happy to answer them
now.