Comment: New Taxes For E-commerce And Netflix In Poland

Few days ago Netflix officially launched Polish version (as well as many others). At the same time, new Polish government announced that new taxes primarily dedicated to hypermarkets will also include e-commerce. In both cases, someone made a mistake.

It was 2005 when Ebay decided to enter Polish market. It’s not so big as German but still quite a nice place to earn money. In 2015, 70% of Poles which is 24,82 million use the Internet. That number grew in last five years from 18.,21 million. [source: Gemius] When Ebay was entering Poland the number was smaller ) 27% of the population which means 9,55 million of Poles), but there were a lot of proves that e-commerce is doing well. Since many years, Allegro.pl is the main player in e-commerce in Poland. It was at the same in time when Ebay tried to enter the market. And what Ebay did to convince Poles to switch platforms?

Nothing.

OK, it wasn’t nothing, but it looked like someone at Ebay decided that it’s enough to announce that THIS BIG eBay is coming to Poland, and all Poles will change their habits and automatically switch to American platform. Well, it was a big mistake.

Few days ago Netflix entered more mature and developed market than it was when Ebay tried to conquer (ok, it’s not proper word) Polish market. What Netflix did? Netflix did the same, the same what Ebay did. And it’s worth to emphasize that Polish VOD market is not easy.

And it’s always worth to remember that there’s no second chance to make a first impression. Ebay failed, and Netflix is on the same way at the moment.

There are two options:

1. Netflix entered many markets at the same moment and counted on income from the long tail. Maybe they just decided that they will implement MVP in terms of the offer, and it should be enough for the very beginning, and more movies will be added later. Unfortunately, many people are disappointed already. No one wants to be treated as the less important client.
2. Netflix thinks that they are so big and known that it’s enough to announce the launch and people will come. Well, that’s risky. And it’s even worst then option  1

In my opinion, this launch was a fail (sure, we can say that fail is First Attempt In Learning) but many can change with the 4th season of House Of Cards. If Netflix will fail then too…

While Netflix did it wrong, other big brands like Amazon, Zalando and others should be happy. New Polish government plans to introduce new tax primarily dedicated to hypermarkets. Few days ago we learnt that also e-commerce gets this “gift”, but only companies that are based here in Poland.

Today many Polish e-shops works on small margin (it’s tiny in electronics). With new tax, many of them will come close to the limit of profitability or even lower. For many of them, it is a choice between bankruptcy or moving the business abroad, for example to the Czech Republic. Sure, there’s another option – they can increase prices, but it’s a road to nowhere, especially that competitors from abroad won’t do this as they won’t be affected by the new tax. The funny thing is that new government promised to support Polish business but from this perspective it looks just the opposite.

2016 it’ll be a fascinating year for e-commerce in Poland. Worth to keep an eye on.