Inside Allegro’s 20-Year Climb to a Multibillion Valuation
Allegro was established in 1999 to compete with eBay in Europe. For its few years of operation, the company focused on online auctions. Its standout success in European ecommerce led a group of investors — Cinven, Permira, and Mid Europa Partners — to buy the company in 2016.
In Poland, Allegro has become the fifth most popular website in the country. With an estimated 16 million active customers, the company now sells approximately 70 million items per year. The company estimates that 12 million Poles — equivalent to 32% of the Polish population — currently use Allegro.
Despite its growth, Allegro does not have the European market to itself. eBay remains an important competitor because the online auction giant earns 60% of its revenues outside of the United States.
Allegro Might Be the Biggest European Tech IPO of the Year
Relatively few European technology companies have gone public this year, and none have matched Allegro’s valuation.
In September, the UK’s The Hut Group made headlines when it achieved a $2.5 billion initial public offering (IPO). The Hut Group is best known as an ecommerce brand selling directly to consumers, including nutrition and beauty products.
Earlier in the year, France-based Nacon went public in February 2020 and reached a valuation of €110 million (about $117.2 million). Nacon is a video game company with more than 100 companies in its portfolio, such as Pro Cycling Manager and Tennis World Tour.
How Allegro Makes Money — Ecommerce Is Just the Beginning
Allegro’s primary business is selling physical products from its website. Most of the products sold on the service are new. Like eBay and Amazon, Allegro is also a platform for many other companies to sell their products. There are more than 120,000 companies selling products through the platform.
Allegro Earns Fees Directly From Merchants
Merchants planning to sell products through Allegro pay a membership fee.
- Basic subscription: 39 PLN ($10 US) per month
- Professional subscription: 199 PLN ($51) per month
- Expert subscription: 3000 PLN ($772) per month
The expert subscription gives merchants more detailed analytics on their online sales, access to online advertising, and branding opportunities.
Allegro Launched a Rapid Delivery Service in 2019
The company launched a same-day delivery package delivery service to a few major Polish cities in 2019. Available in Warsaw, Krakow, Lodz, Wrocław, Katowice, and Poznań, the express service is limited to products weighing 30 kilograms (66 pounds) or less. Customers pay a flat fixed fee equivalent to $6 for each shipped item.
In contrast, Amazon launched a two-day delivery service in Europe in 2014. In the United States, Amazon offers an even faster delivery service. In some cities, Amazon launched a two-hour grocery delivery service. Exceptionally high levels of customer demand in 2020 have made these delivery timeframes more challenging to fulfill.
Allegro is Building a Financial Services Business
In addition to selling ecommerce products, Allegro also offers some financial services. Specifically, the company provides installment financing for buyers. In August 2020, the company launched a 30-day personal loan service up to a maximum of about $1,000. Furthermore, the company provides leasing services.
Allegro also owns a payment company, PayU. Established in 2006, PayU offers a payment gateway and related services so that merchants can accept online payments. Allegro also partners with some banks.
How Allergo Took a Stand Against Racism and Anti-Semitism
Like other online companies serving large groups of users, Allegro does not manually inspect every item sold on its platform. Therefore, it is no surprise that questionable products are sometimes offered for sale. To fight this practice, Allegro partnered with the Never Again Association in 2018. As a consequence, the company has removed over 1,000 items from its websites related to Nazism. Removed items include imitation Nazi military items and products with Third Reich imagery.
Such self-policing is critically essential for Allegro to succeed in central Europe. Other companies like Amazon have faced legal challenges in Germany when Nazi-related items have been sold in the past.
Today, Allegro has a long list of prohibited items that are not permitted on the platform. Prohibited items include “items which promote fascist or other totalitarian state systems,” tobacco, pornography, fishing gear and equipment, shares in companies, and weapons.
About the Author
Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.