Data Analysis

Tomáš Braverman: We’re the biggest player in the region. The 7,5 billion validation is a commitment for us.

When you’re shopping online and want to find the best deal for your chosen product you go to Heureka. The Czech online portal has worked itself up to the first place that pops into your mind when looking for the best prices, customer reviews or product advice. After 12 years on the market, Heureka has recently gone through a turbulent period discussing its future, but now enters the Christmas season at full strength.

As a leader in the Czech Republic Heureka attacks the leading position in several other countries of Central and Eastern Europe as well – there are no local competitors of this size. Tomáš Braverman reports about Heureka’s success in this interview for CzechCrunch after leading the company for over 6 years and managing its activities across Europe.

We’ve met up with Tomáš Braverman in Heureka’s Karlín offices where employees enjoy a view of the Vltava river overlooking Štvanice all the way to Holešovice only a few weeks since the decision that Heureka will not be changing owners. The current trio – Jakub Havrlant’s Rockaway, Petr Kellner’s PPF and ECI of Daniel Křetínský – have unearthed more potential in Heureka when planning the sale and made up their minds to keep it. And Tomáš takes that as a confirmation that the company is heading in the right direction under his lead.

We’re sitting here at the end of October. How’s Heureka dealing with the Christmas fever?

Compared to e‑shops we don’t have to deal with stock or part-time workers to manage the doubled number of orders, but we must of course handle the growing traffic on our website for 100% availability and speed. The Christmas season makes up for about a third of our annual turnover so it’s a really important business period to us.

During the season we don’t launch or work on new features, we try to postpone all new stuff and focus on flawless operation. We added some last touches in October, but we would never "dare" to do that in November. We have a unique opportunity to show people the best available deals so it’s crucial to be on 100% performance.

Besides the holiday season there’s also been a lot of moving around inside the Mall Group, which Heureka is no longer part of. How much were you involved as Heureka’s CEO?
Our owners have decided in the course of last year to try to sell us. It was a formal process lead by a London-based investment bank with our owners getting 2 binding offers. The higher of the two evaluated Heureka at 7,5 billion crowns. We are of course very proud of such market valuation but on the other hand it made us reflect on who we are, where we are, where we can get and what are the threats and opportunities.

And what did you come up with?

We realized that our position is extremely strong even when looking into the future. The same happened to our owners that then decided not to sell for the proposed price. I see this as proof that they value us even higher than the offered 7,5 billion. At the same time, it’s a commitment for us, but I have good feelings about the whole thing.

„Spinning-off from Mall Group will let us invest more into our development.“

Tomáš Braverman, CEO Heureka Group

Both offers were from outside? There were rumors that Heureka could be bought by one of its shareholders.

Both came from outside. Shareholders then discussed how to approach this within the group owned by 3 entities and finally decided on this arrangement of spinning Heureka off from the Mall Group and creating a new joint-stock company with a new board of directors. So now we have nothing in common with Mall Group and that makes sense to all the concerned parties.

In the beginning it seemed like Heureka will go to one of the Mall Group shareholders. Now all three are keeping it. What does it mean for Heureka?

For us an acknowledgement that we’re heading in the right direction because we have the trust of our owners. We’ve set visions and strategies where to direct the company that are shared by the owners – that’ why they’ve decided to keep us.

What was the original reason to spin-off Heureka from Mall Group? One can get the impression that it was the only profit making part of the venture that didn’t want to be pulled down by other loss-making companies?

You should ask the shareholders but spinning-off from Mall Group definitely enables us to invest more into our development and maybe even into further acquisitions.

One of your colleagues recently mentioned that Heureka has become a leader of European ecommerce. What does that actually mean?

As a shopping advisor we now operate in 9 countries of Central and Eastern Europe and we’re the leader in every one of them except for Serbia. At the same time, we have the most traffic or are among the most visited websites in general in these states – those are metrics that no one in the region can compete with.

Activities across different countries are now integrating under the newly founded Heureka Group. How does it work right now?

During the past year and a half we have completely changed our approach to managing out business activities in separate countries – on an organizational, managerial and legal level. The joint-stock Heureka Group now roofs our companies across countries and we therefore have one organizing structure for all 200 people throughout the region. Heureka’s management on all markets is completely dependent on me.

How is Heureka doing at home and abroad?

For the last fiscal year ending in March, Heureka Group had grossed approx. 1,25 billion crowns and 550 mil. crowns in EBITDA. Half is made in the Czech Republic, but both parameters are growing in all countries of operation. In fact, growth abroad is even higher. Our advantage lies in being present both on developed markets as the Czech Republic with a 11% share of e‑commerce on retail and extremely undeveloped countries as Serbia and Croatia where on the other hand the growth is immense. Thanks to this we grow as a whole.

Who’s Heureka’s biggest competitor at the moment? Does it vary from country to country?

We used to compare ourselves only to other price comparison sites and patted ourselves on the backs how we’re number one everywhere, but today we look at it from a different point of view – by looking at the customer journey and comparing our services to players based on different shopping phases. In the inspiration phase where we try to create interesting content, Facebook and Instagram can be our rival. In the next phase, where people pick and decide what to buy, shopping advisor portals join he game. When speaking about the phase where the purchase is happening, there are of course other price comparison sites, marketplaces and the e‑shops themselves.

Is Google becoming a much more serious competitor by expanding its Google Shopping?

Definitely, Google and its Shopping is of course positioning itself into the role of our competitor in the product and e‑shop selection phase – we call him our "frenemy", a friend and enemy combined. But we believe that we’re already doing it and will be doing it better and users will always know how to appreciate that.

Why and how do people access Heureka nowadays?

We see great potential in delivering the best service even before the person actually knows what to buy. We try to develop our position as shopping advisor and create content to help customers choose. But of course, picking the best deal is and will be the main goal of users coming to Heureka, no doubt about that.

I heard that about 800 000 reviews are added to comparison sites every month. Is it true that reviews are your biggest added value?

User reviews are definitely one of the most important features of our advice services, but we try to further develop this area – create video reviews, an advisory center – simply trying our best to help the user.

„We have around 35 000 e‑shops on Heureka in the Czech Republic.“

Tomáš Braverman, CEO Heureka Group

Are various markets different in how their users benefit from Heureka? Do you adapt to different countries?

That derives from one pillar of our strategy – forming the so called one platform. Because we’ve entered the markets by acquisitions and not organically, we now must maintain 3 platforms. Our long-term goal is to have one platform for all the countries. It will help us share content, be it reviews, snippets, parameters or anything else, across countries and bring our partners and e‑shops the possibility to sell abroad.

You reach 20 million users across countries and offer products from 55 000 e‑shops? Is it a lot or not?

It depends. For example, in the Czech Republic Heureka has 35 000 e‑shops, while in Slovenia only 300. We register 27 million products at the moment which is an unparalleled selection and it’s clear we can’t grow very much in this area. In Slovenia, Croatia, Bulgaria and Hungary on the other hand there is still much potential. That’s why we want to create this new platform with a common marketplace to let Czech e‑shops expand easily to other countries and significantly broaden the local product and e‑shop offer.

You want to help e‑shops with expanding? How can Heureka be at hand?

We offer full-fledged consultancy concerning countries where we operate and the local e‑commerce scene so an e‑shop that wishes to expand can make use of our data and findings to make it the expansion smooth as possible. We’ve launched a basic version of a dedicated website in September and since then we’ve attracted about 50 interested parties that we’re already linking to contacts abroad. The main goal is still the shared marketplace where a Czech e‑shop can sell to any country without any hassle.

How will it work? You’ll just tick a box somewhere on Heureka that you want your product to show up abroad?

Since we know what products the e‑shop is selling we can arrange a third party to deal with logistics. Then we can offer, sell and deliver the product to a let’s say Serbian customer without the need to open a branch, localize the offer or anything.

How will the logistics work? You don’t need your own fleet as you said. Will that change?

Never say never, but it’s not really our field of expertise so our own logistics are not on the table in Heureka at the moment. We’ll be seeking the best partners for the logistic part we need.

When speaking about the situation in the Czech Republic – Czech e‑commerce turnover in the first half of the year grew by 13% (to 58 billion crowns). Will this growth show on Heureka’s profits? Are you dependent on the growth of the whole sector?

I don’t have specific numbers in my head concerning our growth in the Czech Republic, but we are growing faster than the e‑commerce sector as a whole.

How is Heureka’s business plan designed? What makes you the most money?

I wouldn’t like to get into details, but we try to grow in all sources of revenue. We’re growing and we want to grow further in the website’s traffic and PPC conversion rate, we want to grow in shopping cart earnings and banners, where we’ve already taken many steps in the scope of yield management. At the same time, we have new sources like selling anonymized aggregated data. Our growth is thus made up of separate spheres that together add up to a very interesting number.

What are your plans for this year?

Firstly we’ve planned on a more significant growth in revenue than profit because we’ve made a deal with shareholders that we will invest much more into Heureka – into both marketing and people. We are especially hiring tech professionals.

I guess that the mobile app is becoming much more important to your business? Up to now you had 2 versions – a desktop version and a mobile version without all the features. Is Heureka’s future in mobile?

It is definitely an important part of our strategy. We wish to have one perfectly responsive Heureka that will work on any device. It still isn’t like that but we’re getting close and today you can check out the new responsive version on your mobile phone which we’ll soon launch on desktop too. Besides that, we’re developing native apps for iOS and Android which make up about 3% of our revenue but we are really growing there a seeing great potential.

I’ve recently read a J. P. Morgan report saying that Czechs have the highest number of completed mobile purchases in Europe.

It’s important to put numbers into context. The Czech Republic on the other hand has one of the lowest ratios of users shopping online via mobile. The Czech Heureka has it 50/50, but in Bulgaria it’s 75/25 in favor of mobile phones. A poorer country means less desktops but mobile phones everywhere. Mobile devices in the Czech Republic show a higher conversion rate but less traffic so it doesn’t really mean that we, Czechs, shop via mobile the most.

Let’s get back to a more general question on what sells nowadays on the internet? What are people buying the most?

Today almost everything is bought online but it’s true that the so called old segments like electronics are doing best – right now it’s about half of all online purchases and this trend is stable. All other segments are growing – today mainly non-tech categories like food, that has been a very "offline" thing but is moving to online. Other products of daily use are on the rise, but quite surprising are cars – there we try to be active as we all know they might become a very online matter in the near future.

Can Heureka work with groceries?

We offer more expensive and storable items like coffee, alcohol and so on. Groceries are bought in a totally different way compared to other product segments because you often fill you shopping cart with lots of items which Heureka doesn’t manage very well right now. Nevertheless, there are still just a few online players selling groceries, so it doesn’t yet make too much sense to aggregate them in any way.

How do cars work online? Does Heureka offer them?

We can aggregate all new and slightly used cars offers from a majority of dealers that sell cars in the Czech Republic. That’s quite unique – we offer people who want to purchase a new or used car a complete overview of what and where is sold and for how much. In what we see great value is again advice on cars. Which car should I buy while not being an expert? That’s another thing we’re addressing right now.

And how does fashion work for Heureka?

We offer fashion through Heureka, but we are aware of the fact, that Heureka, as you know it today, is not ideal for buying fashion items. Fashion is shopped for quite differently compared to more technical categories were parameters are the deal makers. Fashion is about images and inspiration, that’s why our position isn’t so strong in this field. However, we would like to get better in this category as we see that it’s one of the fastest growing segments of online shopping.