Maria, CEO and strategist at Kreatik talks to Darek Knopinski, UX and Conversion Director at Allegro about the growth of the e-commerce market, the importance of users in product development, and how technology can change our healthcare.
Good morning Darek. We will talk about marketplaces today. Marketplace development is a big part of your career path – you have been working at Allegro for a long time and have seen how this platform has changed over the years. Are you able to get us through your beginnings in the company? What was Allegro then? How has your career developed with the development of the company?
– Hi Maria, I am looking forward to this interview and I hope it will be valuable to your audience. Answering your question – I started my career in consulting. Right after graduation, I came to Accenture, where I dealt with consulting, business and technology. In 2009 I found my way to Allegro. It was at this time that the company began to develop the product management area, which was then a very modern approach used in startups in the USA. I started working as a product manager, mainly dealing with -solutions for the merchants. At that time, the company employed low several hundred people, and the engineering teams occupied only two floors in the office building – today there are much more of them. Back then, the company was organised in a completely different way. As I mentioned earlier, I got to the department related to the merchants and it was a moment when we talked about individual features, e.g. changes to the sales form or adding a function in the sales manager (tool for merchants). At that time, there was no full awareness of the product, what a product is, how to understand this product and how to manage it. These were the beginnings. The next important point in the company’s development was the agile transformation. The change was made by our CTO at the time, along with a technology change from PHP to Java, who was aware of the rapid growth of e-commerce in the world. Allegro, the leading player in our market, also wanted to be prepared for a much larger scale. It was a very good move. Then, I was the first product manager who joined the engineering team in a Product Owner role, but I quickly started developing a holistic product management approach throughout the company in parallel with developing my product owner skills. I started to be responsible for product managers who were product owners on the merchant (selling) side, and one of my colleagues took care of the same on the consumer (buyer) side, and in fact, for a long time, we were implementing the entire product roadmap this way. This was the moment when I jumped on the managerial path. Later, in the next transformation, I took over a larger area: engineering, product management, design, research, and analytics. We were organised in such a way that managers in a role like mine, could independently implement the roadmap with their teams. In fact, it was the moment for me to enter the next level, which was related to the responsibility for Allegro Mobile, the shopping and sales applications, and the experience in the browser on the phone. In 2020, I took over the UX team, which consists of design, research, product communication, and analytics, and this is actually the case today.
A very interesting story, because you took part in many key changes in the company. You talked about how you used to approach development. I wonder what you think about it now? I often work with product managers or help startups that are just starting out and I know that building a road map is a very difficult competence, especially at the beginning. It requires research, understanding the user market, and gathering many different skills in one place. Can you share your experience, and how you are doing it now? Are you still looking at other platforms (you are the 10th or 12th marketplace in the world depending on the ranking and the year of the study) or do you focus only on your users and the needs of the local market?
– My beginning at Allegro was about patching big holes, even though I previously mentioned individual features that we had on the marketplace platform. At that stage, eBay was our role model and role model in the world – it was the largest marketplace at that time and we focused on it. We checked the differences, what to introduce on our platform based on eBay, and the needs of our users were rather a supplement. You could actually say that we copied the most interesting solutions from the largest player that could be attractive to our customers, both buyers and sellers. Now our approach is much more mature. The platform is much more feature-rich and there are fewer quick wins because the feature set we work with is already quite exhaustive. Very often we think about simplifying or even removing certain features, replacing them with others, or even replacing them with new processes. A certain set of features at a given stage was sufficient relating to the platform’s effectiveness or user convenience, but this state may change as the platform’s complexity grows further. For example, along with the scale of sales – some processes must be automated to be practical for the merchants, e.g. Order status changes or integration with an external process management systems like an external warehouse.
In fact, on the merchant side, you have a full spectrum of sellers – from people selling single products to large enterprises having entire teams supporting the sales channel.
– Definitely yes. It is difficult for us because we want to serve both small and large sellers, and they, on the other hand, are divided into those who use external sales management software integrated with or use our software. These groups can be even more diverse, and when we think about development, we must bear in mind all of them because they are essential to our business.
Now, with such a high level of complexity of the platform and the entire business, serving tens of thousands of merchants and millions of consumers, how do you structure the approach to further development? Do you create hypotheses relying on research or benchmarks in other markets? What is your process now?
– We start from certain hypotheses, although these hypotheses are more often posed in the context of consumers and their behavior, e.g. “by changing this or that feature/process, we could improve the convenience of using certain parts of the platform”. When it comes to sellers, here we also study their needs and problems, but these are less often hypotheses, and more often specific observations of what this group is struggling with. Usually, each of these entrepreneurs strives to develop their business and they do it at a different pace, and we (as a marketplace to serve many differently developing businesses) usually chase them because we have to adapt to many different groups with different needs. This needs a lot of focus and many decisions on prioritisation. Hence, our research is very well developed here. We have a large team that constantly analyzes how merchants work, and what tools they use – whether they are ours or, whether they are external. Sometimes we even analyse these external tools, looking for some efficiency or ineffectiveness, because these tools must also work well with our marketplace.
Another aspect that works very well today is the analysis of the competition, but a little different than it used to be. Today much more focused on forecasting their next moves, predicting the strategies of companies or what market segment they want to address so that we can adjust our strategic position. There is less of the usual feature-gap analysis, which was important ten years ago, because currently, the differences between features are usually nuanced or are the result of what a given marketplace focuses on, what it emphasizes, and what its competitive advantage is based on.
You are changing, but this change is also because the user is changing. How have user needs changed over the years? What will the user be like in the future? Do you have any predictions?
– Obviously, the user is changing. To answer the question of “how the users are changing?” we need an observation that takes a long period to start seeing certain trends. When I started working at Allegro 13 years ago, everyone used computers at home, and in addition, it was very rare for users to be logged in permanently anywhere. And after logging in again, your world in that place was still reset. Later, phones with browsers appeared – slow at first and inconvenient, which improved dramatically in time. Later, dedicated applications appeared – they worked even faster, but not always more conveniently because usually applications haven’t had the same functions as the websites. On the one hand, a step forward, on the other hand, a bit of regression. It was the stage in which we could actually create this convenience among users and show them what we can do: when you log in on your computer, you are permanently logged in, then there were cross-platform solutions, e.g. when you watch something on your desktop, you get a hint in the app, if you added something to the cart on one platform, you have it in the cart on the other platform.
These worlds began to merge. For some time now, the mobile OS themselves have become so developed and provided the value to customers to which they quickly got used to and which they began to expect from us. This environment has started to raise the bar in the sense that users are getting better educated, more technology-savvy, more confidently using other services, and transferring their behaviour from other platforms to ours. I have one very interesting case in developing mobility. We were wondering how navigation on our app should work like using swipe gestures. One of our strong points of reference was the other applications that are used by our users. In other words: we started to analyze more closely applications that our users also interact with, starting with the most-used, to understand how the navigation looks like there, and what gestures are there and simply transfer them to our world. And it was not about going the easy way, but more about the fact that if the most popular service is X, in which this navigation works a certain way and users often use it, and then they come to us. This means that the habits that users have already built will be transferred to our application. We wanted to adapt to these habits as close as possible because it eliminates the cognitive load and makes users feel comfortable with us as well.
So you benchmark yourself not only to the competition but also to the other applications that your users use on a daily basis.
– Exactly. We benchmark also to co-used applications, and this is a very interesting aspect of the experience analysis. Of course, you can do some things your own way.
Sure, but then you need to cover the cost of educating the user and creating some new connections of neurons in the brain helping users to build new habits.
– For this to work, you have to be unique and provide a unique value, and even more, you need to be the only one in this area, but rarely in today’s world are we the only ones. Users vote with their fingers on their phones very easily, so you have to stay humble on how much different you want or can be. Otherwise, you won’t attract as many users as you want or need, and your business will not take-off.
Users vote with their fingers on their phones very easily, so you have to stay humble on how much different you want or can be. Otherwise, you won’t attract as many users as you want or need, and your business will not take-off.
When we talk about attracting and caring for users and unique value I have to ask you about Amazon. Amazon entered Poland not so long ago, and as some claimed, they were supposed to take over a huge part of the market share. However, some time has passed, and it didn’t happen. Is there room for more platforms in the market, or is Allegro currently having a unique value in the market that Amazon does not offer?
– I will address this from a different side. We are very modest in how we perceive ourselves, and therefore we closely observe every competition that appears on our market and we follow it. Both from the market perspective, as well as from a feature-related perspective. We look very closely at what value or convenience they provide to our customers. We try to catch all those elements in which they can potentially have an advantage over us and address it in the best possible way on our side. I cannot go into details here, but I can confidently say about our approach and I think that it is a very effective and important mindset. In Allegro we do not think that we are so big, that customers will use us no matter what. Our position may change over time. So in order to prevent either one-time shock or the effect of a boiled frog in the long term, we watch the market very carefully and with great humbleness. We want our users to constantly find value with us and so to stay with us.
Do you think that the Polish market has a lot of space for new marketplaces? New businesses in the traditional e-commerce model have often attacked niches in recent years. Of course, we have a lot of well-established e-commerce sites on the market with a very wide range of products, but many new projects are moving towards niches. On the other hand, a marketplace is a business model that has a huge size and networking effect as a paradigm. So I wonder how you see further growth here?
– The first thing is the space in the market. Poland is very enterprise oriented and our market is growing very fast. The share of e-commerce in Poland is growing, and the adoption of all mobile solutions is usually in the top 3 in Europe. Therefore, here e.g. Apple Pay and Google Play appeared very quickly. Another example – banking applications are also very well developed compared to western countries, they win various awards for the experience. Generally speaking, Poles are adopting new digital and mobile solutions very quickly. This demand is creating is a lot of space on the market. The confirmation of this observation is the very fact that many different platforms enter Poland’s digital market and try to take-off here. Now, the second thing is business models: horizontal and vertical. If someone is planning a horizontal model, they have to be prepared to enter the market a big way. And it’s a long-term play to get some significant market share and to be able to profit from it. If we’re talking about a vertical model, you often try to be multi-country. You are a niche, so you want to cover many markets and cover a given niche in them to build scale. In addition, if such a network effect, international, helps you, the more you want to appear in many countries.
As for the future itself, retail is one of the largest sectors, which is why it was explored most quickly by players who built a marketplace on it. However, with the maturation of the marketplace model and the fact that more and more entrepreneurs begin to understand and begin to see the benefits of such an approach to business, it is tempting to apply it in various other sectors, be it in services, or just like you said, in niches: narrow, vertical segments. And we will see more of those attempts… One of the interesting areas to be covered is multi-modal transportation – our taxis, bikes, scooters, and shared cars.
Side note: once everyone on the vacuum cleaner started to say Electrolux and for trainers Adidas, and this is what our parents explained to us. Now our kids will call taxis – Ubers, and people from our generation, now will be the ones who understand where it came from.
But back to our discussion, multi-modal transportation is a very interesting case to build a marketplace. We have consumers who want to have the fastest, most convenient, and the best possible price at hand for the transportation service. Price, selection, and convenience – the three foundations of the marketplace. On the supply side, however, it is much more complicated. Each of these entrepreneurs involved in this market potentially does not want to compete on price, while the marketplace forces this competition, among other factors like selection and convenience. Instead, they try to offer the best proximity and the widest selection of means of transportation and try to lock-in users in their ecosystem.
In this business model, price transparency is much higher than in others.
– Therefore, we don’t have a marketplace in this market anywhere yet. Those players who entered the market with some form of transport for consumers: be it taxis, car sharing, scooters, or bicycles, start to add or merge other transportation services and want to be as comprehensive as possible. These players this way improve selection to continue growing. And here begins the fight for being under the thumb of users, by having the largest offer plus having the greatest coverage and the highest density of all these means of transportation. However, for the Consumers, the marketplace here would give the most value. So it’s very interesting to observe if and when a marketplace model will be created in this sector. There are probably more similar market segments and even more to be still discovered.
What I am observing is a large increase in marketplace initiatives in the B2B segment in various industries. We recently had the opportunity to build a marketplace for car logistics, so in a related market. A very interesting niche in the area of logistics. I recently read an interesting article by McKinsey, which said that among the businesses that decided to move to the next stage of development by building the marketplace, their market share grew by about 72%. On the other hand, for companies that did not decide to enter this model, the increase was 42%. Is it a strategy for every company or a new buzzword? What do you see as the prospects for the development of this business model?
– The meaning of this buzzword is changing, because some time ago it probably meant something a little different. With the development of e-commerce platforms, it meant meeting the buyer with the seller. Today, more and more often it means different things. It is not a combination of the buyer and the seller because it is actually just a combination of different parties in order to optimize business activity.
I do not want to mention the transaction here, because marketplaces are not always focused on the transactions. Sometimes they just serve to facilitate certain activities. Again, this is the art of discovering a need or a problem to be addressed on the market, i.e. this famous strived for product-market fit. If only we start to connect sides of the market, we are already slowly talking about the marketplace. There might be a discussion about whether this is the correct interpretation or not, but I don’t think it matters. I think more and more this concept of a marketplace is just generalising and starting to mean ‘linking sides of the market’. The key is: what problem are we solving for the sides, in what business model, how to make money on it, and what responsibility to take?
There are indeed a lot of models. At Allegro, we observe a classic transaction model with some modifications – merchants have various paid opportunities to promote their offers. In the market, there are a lot of subscription-based marketplaces where the user pays for access, not for a transaction. Models are also differentiated by the approach to transparency. At Allegro, I know with whom I am actually carrying out this transaction and on what terms. But this share of the market platform (which controls and creates a space in which transactions can be concluded) can be regulated in many different ways – in terms of prices, transparency, security, guarantees, etc. There are many decisions to be made: who we want to be for participants, do we just want to connect them and arrange their deals, or do we want to be more involved in this process and create some additional value?
– And this is the crucial part because you need to find that added value that you will give to both parties. Otherwise, you will not be needed in this market. I think that this way you make an interesting reference to whether the marketplace is the direction of development for a given company. It all depends on how much value you bring to your customers today and how capital-intensive your development is. It seems that the more value you deliver to your today’s customers, the better the chance that the marketplace you build will be successful. The more capital-intensive your development is, the more you should consider redirecting this capital spending to marketplace development. This capital allocated to marketplace development can be very similar to how you would continue your development along the previously chosen path. However, in the long term, it may turn out that the effect of scale will appear. In the short term, the expenses are similar, but in the long term, they start to work in favor of the marketplace because in the current strategy when you scale up, you will have to multiply these capital expenses. You need to consider these two factors and make a difficult decision. On the other hand, there is a trap: because technological solutions are being built faster and easier today and everyone says: “oh great, marketplaces work for others, let’s build a marketplace for ourselves”. And here I will refer to the second thing that you said, we must remember that the added value for customers is often associated with the responsibility of the company that builds this marketplace. If you give security, and a certain level of confidence to customers,, then the responsibility is built on your side to guarantee it. So you take on certain activities, e.g. validating sellers. Where there is an added value, there is an offset to this value – a certain obligation that the business takes on itself. And it costs.
What’s happening on the market is the emergence of SaaS, which are offering a ready-made marketplace platform. You can design a logo, install the platform on a domain, and start building a marketplace. We are talking here about how the platform itself is crucial because it can bring value but the whole point is to understand that this value is not taken from the shelf. This is something, you need to create in a specific market, and at a particular point in time. This is also something that may change over time. In this context, we told each other the story of Allegro at the beginning. The value for the user today will be something other than the value for the user in a few years.
The ready-made solution might not give you that. It can give you a quick test, but each time you need to work in a given market from scratch to understand what will be this unique value.
– Personally, I think that a successful marketplace is so complicated that platforms that offer a ready marketplace address niche needs, on a small scale. In the long run, if you think about a very large marketplace, regional, global, or one that affects a very large segment of the market you will need a custom solution. I have not seen examples of such marketplace platforms (marketplace-as-a-service) with success yet, because, as you say, you can build some basic functionalities and there are such services, but they respond to some basic needs, and we should treat them rather as a tool, but rather not as a foundation of a standalone business.
We’ll slowly need to wrap up. One last question at the end, a bit distracting from what we talked about, but I always like to ask it. Imagine waking up five years after being in a coma. What will change? What technologies are you waiting for? Is there a technology that no one has started working on yet that you would like to see emerge, and you anticipate that someone will finally come up with it?
– A great question, nobody asks me about it in this everyday rush, and even I don’t ask myself about it, so I will probably copy it from you and ask others about it too. Two things pop up in my mind. I wonder if and when we will have glasses with augmented reality enabled. Obviously, I am not waiting for such a solution a’la Oculus, where you put on such a huge VR headset, cover your eyes, and it displays screens and you enter the metaverse there at all. What I have in mind is a solution where you put on glasses while sightseeing, you look at a real monument and get a hint about the next place that may be of interest to you. Or you go to a garden shop and you look at a plant you like and ask those glasses what is it? I am looking forward to seeing a superpower related not to the digital world, but to the offline world, which allows you to move cleverly, and interact seamlessly, so not to constantly check or interact with the phone. I put my glasses on, leave the house, and ask where is the nearest scooter?
The second direction is digital health and health-data. I would love our taking care of physical health to rely on prediction, diagnosis, and not post-factum treatment. I dream that when you go to the doctor, it’s not like he looks at you and speculates, but you are able to provide data from personal sensors (like watch, like digital ring tracker, etc.), combined with medical analysis (like MRs, blood-testing, USGs, etc.), that should be much more democratised, not a referral-based one. . To some extent, this is already happening today, but what an ordeal one has to go through, to first get the data and to already start discussing with a doctor on the basis of these data, what would speed up the treatment process.
We are talking about certain democratization of this diagnostic aspect because now, access to diagnostics is difficult and rationed. Technology facilitates access to at least some basic measurements. We have more and more smartwatches, but unfortunately, no doctor can see the data from my watch and it would be good if our first conversation with a doctor was data-based.
– Exactly. I would like to have all kinds of measurements accessible when needed, and second – gathered in my personal library or digital folder. I want to manage this data and decide to whom and when I can give access so that someone can continue to treat me or even more: monitor and prevent me from getting diseases.
Here you touched on one more aspect that is already under intense discussion – what is happening with our sensitive data and how can we protect it? This might be a topic for another interview, but for today we need to stop here. It was a great pleasure.
– Thank you.