Is it profitable for new companies to sell on Allegro?

You can still make money by running a shop on Allegro and I know people who have done it before and those who continue to do it. However, the market has already cooled down.

A few years ago, doing this was a great idea because the market was fresh and the competition was low. However, recently there have been a lot of companies teaching how to deal with Allegro dropshipping, which has led to a lot of competition and professionalization.

You can still enter Allegro and earn reasonable money if you find a good niche, but it will be much more difficult and you risk that the competition will quickly notice you and start selling the same products, lowering the price.

Allegro is slowly turning into a red ocean, where big fish with ready-made processes and contacts win.

In fact, Allegro from 5 years ago and the current one give completely different chances to start sales. It is more difficult for several reasons. Maybe I'll split this answer into two parts - let's start with the dark side.

1. Competition has increased - many companies have decided to diversify their sales channels, hired employees to handle auctions and joined sellers on Allegro. Recently, even sellers from China have appeared. A few years ago, there were many more ordinary people who put things for sale. They have now moved to OLX or other local portals.

2. Huge increase in costs - listing an auction itself often costs nothing, but the website charges a commission for each sale, the amount of which varies greatly and depends on the category and even the subcategory in which the item was sold. The rates range from a few to over a dozen percent (with a minimum value of such a commission, e.g. 25 groszy), and that's not all.

Better sales are at auctions that will buy additional promotion and here you also have to take into account the cost of up to several dozen zlotys per offer. In addition, a separate commission is paid on sales in such promoted auctions. Allegro will charge another one depending on the type of shipment selected by the buyer as part of the Smart subscription. The result is that it is impossible to determine in advance what costs will be generated by sales and what the actual margin is. In the case of cheap items, the fees charged can exceed the price of the goods! So it is not surprising that we will hardly find items for, for example, PLN 1 there, and prices are still rising. Companies simply pass the costs on to the customer, as everywhere. And the Allegro price list itself changes every few months. Maybe only Amazon's competition will change something in the future.

1. The seller must adapt to many rules of the website and ensure that its offers comply with the constantly updated regulations. This applies to photos, descriptions, titles, types of products, forms of contact with the customer, creating the so-called. catalogues, etc. The auction may be closed without notice if the service employee decides that it violates the regulations. Sometimes it is difficult to understand what was the reason for the closure. It may be just a report from another seller. Of course, there is no compensation for lost sales when such an auction is reinstated.

2. The customer is always right. There are even "professional" scammers who can blackmail sellers that they should pay them a certain amount of money in exchange for giving a positive assessment of the transaction. Such a threat can be effective, because the average rating and the number of so-called positive reviews are crucial for companies. unresolved discussions. Even one problematic customer a month can cause the seller to lose the ability to add Smart shipments or the Super Seller status, and this translates into measurable financial losses. That is why some companies do what the scammers demand of them. And Allegro itself, despite the evidence presented, can stand on the side of the client.

There are even cases when the customer reports the return of the goods (to which he has the right within the agreed time limit) because he never sends the shipment, and after a few months (when it is no longer possible to check the shipment in the system) he asks for a refund for the purchase and receives them from the seller or Allegro itself. Such situations mean that the group of crooks preying on submission is growing, and the sellers themselves have their hands tied and have to accept losses.

1. The seller is practically "cut off" from the customer's data - he sees only what Allegro wants to show him. Even e-mail addresses are encrypted, which makes it impossible to create your customer base and redirect them to, for example, an online store. There was even an idea that companies could not show their phone number for contact, because it threatened to get along with contractors outside the website.

And now the bright side :)

1. Allegro is still the e-commerce leader in Poland. Many customers do not even look for products in online or stationary stores. It is true that there are millions of offers, but so are buyers, and this will probably not change anytime soon.

2. Free deliveries and Smart returns for customers are not only very convenient, but also facilitate making a purchasing decision. The goods can be sent back for free, and a slightly higher price on Allegro is usually a better alternative than buying a cheaper item with shipping in an online store.

3. Companies that want to enter this market for the first time can count on bonuses and discounts for several months. Thanks to this, they have a chance to start their sales before the same rules apply to them as other sellers.

4. There is no need to invest in e-commerce tools, sign shipping contracts, etc., because the service takes care of everything. In principle, all you need is a computer with the Internet and a printer to start working. This is a great help for beginners.

I guess that's it. To sum up, if you have a product with a good margin (20% may not be enough even for commission costs) and you want to try it, then why not, the risk will not be high. Just keep in mind that with so many sellers, the cheapest one often wins, and you can't work on the edge of profitability forever, so it's better to have some idea ahead of time on how to stand out in a different way.