-- Allegro is the leading e-commerce brand in Poland and is the preferred online shopping destination for Polish consumers. -- A significant percentage of Polish consumers start their search for products on Allegro.pl rather than on any other website. In June 2020, 43% of Polish surveyed consumers cited Allegro.pl as their initial product search destination, more than twice as many Polish consumers who cited Google (17%), which was the nearest competitor. -- As of June 30, 2020, Allegro.pl had a user base of approximately 12.3 million active buyers who connected with approximately 117,000 merchants, which resulted in an average of 32 million monthly transactions in the twelve months ended June 30, 2020. -- This user base generated GMV of PLN 22.8 billion (USD 5.7 billion) for the year ended December 31, 2019, and PLN 28.4 billion (USD 7.1 billion) for the twelve months ended June 30, 2020, making the Group the largest e-commerce retailer in Poland. -- Allegro's GMV grew by 25.4% in 2019 compared to growth of approximately 16% for the rest of the e-commerce segment in Poland. -- Although the Group attracts a large number of Polish consumers to its e-commerce marketplace, excluding sales of second-hand items on the Group's e-commerce marketplace, the Group's GMV accounted for only 3% of the total Polish retail market by value, which had an estimated size of PLN 621 billion, in 2019. The Group believes there is a significant opportunity to increase growth.
Market[3]:
-- Poland is the leading economy in Central and Eastern Europe, the fifth most populous country in the European Union and the thirteenth largest economy among OECD countries in terms of GDP. -- Poland's GDP-per-capita has experienced sustained growth at a CAGR of 6.9% from 2016 to 2019 and is expected to continue growing at a CAGR of 4.3% between 2019 and 2024. -- The country's real GDP growth rate has been consistently above the European Union average growth rate for the last ten years, growing at approximately 2.5 times the average European Union real GDP growth rate in 2019. -- The Polish retail market grew at a CAGR of approximately 5% from 2016 to 2019. It is expected to grow at a CAGR of 4% from 2021 to 2024. -- The Polish e-commerce segment has grown faster than the overall Polish retail market at a 2016- 2019 CAGR of 19%, with growth accelerating throughout the period and exceeding 20% in 2019 year-on-year. This growth rate was faster than the growth experienced in the United States (16%), the United Kingdom (11%) and Germany (9%) over the same period. It is expected to grow at a CAGR of 14% from 2021 to 2024. -- Online penetration in the Polish retail market has grown meaningfully in recent years, from approximately 5.8% in 2016 to approximately 8.4% in 2019. The Group believes that there is still significant room to grow as the online retail market share in Poland remains underpenetrated relative to other markets, including the United Kingdom (18%) and China (27%). The current low online penetration and secular tailwinds driving the ongoing shift from offline to online support further growth in the Polish e-commerce segment.
The Group's superior value proposition benefits from the "flywheel" effect, underpinned by an unparalleled focus on "retail basics".
-- The Allegro platform creates powerful network effects that benefit both buyers and merchants. -- As more merchants join the platform, the breadth of the products offered increases and price competitiveness improves, which in turn leads to increases in the number of buyers browsing and purchasing on the Group's e-commerce marketplace. Conversely, as more buyers browse for and buy products, merchants become increasingly attracted to the Group's e-commerce marketplace. The Group refers to this effect as the "flywheel". -- As of June 30, 2020, the Group had approximately 12.3 million active buyers on its e-commerce marketplace, representing an annual increase of 13% from June 30, 2019.
For buyers:
-- The Group is relentlessly focused on improving and actively stimulating key "retail basics" - namely, breadth of product assortment, price competitiveness and superior shopping and delivery convenience. -- Selection: Polish consumers can shop a large breadth of products across a broad range of categories from global brands such as Bosch, Adidas and Samsung, as well as unique local brands, such as Cobi, Kruger&Matz and Wittchen, and long tail brands, such as Baseus, Lemfo and Green Cell. -- Price: The Group measures prices on the most popular set of products in each product category. Of these monitored top selection products, Allegro's goal is to offer the best prices across its product range. -- Convenience: The Group is focused on improving multiple levers to drive convenience for Allegro buyers, namely website and app user experience, delivery and returns, payments and customer service. Delivery experience has been a key area of innovation, and the Group believes its delivery experience is market-leading in Poland, with approximately 75% of the products sold on the platform being delivered to buyers within two working days and approximately 30% of orders delivered the next working day. -- All of this drives high buyer satisfaction, demonstrated by its best-in-class global Net Promoter Score ("NPS") of +72 (June 2020), which outpaces the e-commerce industry average of 40, and indicates strong buyer loyalty, with more than 8 out of 10 customers recommend Allegro to family members and friends[4].
For merchants:
-- The Group is the number one route for merchants to approximately 12.3 million active buyers as of June 30, 2020, and the leading online gateway for merchants in Poland. Its merchant base ranges from large brands, such as P&G and Reckitt Benckiser, to retailers, such as MediaMarkt and Carrefour, to SMEs. -- In addition to providing access to a large buyer base, the Group has transformed the merchant experience over the last 3 years. Merchants benefit from the SMART! loyalty program which drives sales, access to a range of payment providers, unique delivery solutions, incentives for quality performance, and merchant finance. -- The Group has also developed a comprehensive range of merchant tools and value-added services. This includes leveraging data and analytics to drive automation of key processes; marketing tools and support; trainings through Allegro Academy (a digital entrepreneurship education program launched in 2020); and trade analytics tools to monitor sales performance and manage offer competitiveness. -- Allegro's unique value proposition has driven significant growth in the number of merchants from fewer than 100,000 as of December 31, 2018 to approximately 117,000 as of June 30, 2020.
Allegro's continuous platform innovation,including a focus on delivery and the SMART! loyalty program, drives improving user experience for buyers and merchants
-- The Group's SMART! loyalty program, with free delivery and free returns, has proven successful at addressing a crucial historic impediment for e-commerce growth, namely the impact of the cost of delivery on the price competitiveness of goods purchased online as compared to products purchased offline. -- The SMART! subscriber base has grown rapidly from 684,000 as of December 31, 2018 to 1.5 million as of December 31, 2019, before reaching 2.1 million paying subscribers, representing approximately 17% of the Group's active buyers, as of June 30, 2020. -- SMART! subscribers are highly engaged, with 1.4x more site visits and 2.5x more orders than non-subscribers. These customers are also more responsive to the Group's communications and commercial campaigns, with an average uplift in GMV per active buyer for SMART! subscribers of 55% after the first twelve months. -- SMART! merchants experienced 5x higher GMV growth in the twelve months ended June 30, 2020 than merchants without SMART! offers. As a result, SMART! is improving merchant quality and accelerating the "flywheel" and there remains significant opportunity for further growth.
Allegro provides a unique combination of growth, profitability and cash conversion at scale
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