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"It's only about the mindset and discipline to change business and processes based on data," says Michal Buzek, Chief Data Officer at Heureka Group

"The incoming crisis is an opportunity for us I believe. Many customers are focusing on cost reduction and they literally need price comparison platforms. Also online shops are once again realizing the importance of data and are looking to it for help in tougher times so the other opportunity is definitely in the B2B area," said Michal Buzek, Chief Data Officer at Heureka Group in an interview about Slovenian market for IKT Finance magazin. 

1. The Heureka Group specializes in providing information solutions and services for online sales. In fact, you have an insight into the functioning of the online market in nine Central and South-Eastern European countries. What differences do you see in online shopping between all these countries where you operate?

MB: It was a really interesting experience for us to monitor online shopping during the last 2 covid years and lockdowns in all our countries. We thought that there would be different trending categories in some countries but we saw after a few weeks that people in all our countries in the CEE region were buying products in exactly the same categories and they have the same problems and needs. On the other hand there are some specifics for each country. For example there is a really dense network of pickup points and pickup boxes in the Czech republic and it's absolutely the most popular way of delivering goods for Czechs and big e-shops are focused on the expansion of their own pickup boxes not only across big cities but also to the countryside. Or for example people in Romania love to buy luxury and worldwide brands even though they don't have the purchasing power to do so compared to other countries. If I talk about the Adriatic region, in Slovenia and Croatia we track around 70% of visits and purchases from mobile phones. For comparison, in the Czech Republic it is 55-60%.

2. Which categories is SLovenia good in, and where is still some space for improvement?

MB: People in Slovenia are more open to buy on foreign e-shops. Maybe it's because of the geographical location of Slovenia, size of the country and lower number of local e-shops but I see that all my slovenian colleagues speak very good English and some of them speak German. Czechs, Hungarians or Romanians do not have the same language skills as people in Slovenia and this is a barrier for them to shop abroad.
In Slovenia and globally, one of the largest segments in online shopping is fashion, but in the Czech Republic, Slovakia or Hungary the largest segment is still electronics.
I see the space for improvement on the eshops side. The czech or slovakian e-shops are much more advanced in how they work with database and how they integrate them into their processes. It's because there are much more competition and therefore a lot of pressure for maximum efficiency.

3. You have started to offer to your business partners data reports from a large amount of data you collect in all nine markets. What kind of data is this?

MB: Our price comparison websites are among TOP 3 e-commerce players in all our countries where we are active and therefore we have a great sample of data about what people want to buy in many categories and segments. So, we know which products are the most popular among people, which categories are trendy or for example share of the brands or products in a specific category.
We acquired one czech data company last year that provides a price monitoring tool which helps e-shops with setting the right products prices.
It means that we are able to bring a lot of interesting insights to our partner based on that data. We decided to offer our data to our partners because one pillar in our long term strategy is called - We help partners sell and the data can help with it.

4. Do you already offer this in all markets where you are present? When will it be Slovenia's turn (if it is not already)?

MB: We offer data insights in all our countries and it means in Slovenia too.

5. How can online retailers or even independent providers benefit from your data reports?

MB: There are several areas where our ecommerce data can help online retailers with their performance. I've mentioned the pricing, which is really important on the internet because it's easy for customers to compare prices on the internet. Second area is assortment management. E-shops can easily identify popular products, categories or brands based on our data missing in their portfolio but people buying them. Third area is marketing optimization because our data can show marketers what products to focus on in marketing or for example if they allocate their marketing investments efficiently. I know some of our clients who changed based on our data the products that were their primary focus in their marketing because the most promoted products were in a different price range than market demand.

6. Do you have an estimate of how your data can improve business performance?

MB: This is a very difficult question to answer simply and briefly. It depends on what are the biggest problems of the e-shop. We have a dedicated team of analysts in our analytical department to help with analyzing the performance of the eshops. So, we can help with a basic analysis and identification of some potential problems. I remember one e-shop selling fitness clothes with really bad pricing and their products prices were sometimes 30-70% more expensive than their competitors. It was easy for us to show them the products with problematic prices, they changed the prices and immediately increased their performance by 40% on our platform. Once we analyzed a middle size e-shop with fishing equipment and the insight was that one of the most popular categories of the fishing segment on our czech price comparison website is a category of fishing tents and shelters. This e-shop offered only 2 products in this category. Now they are offering dozens of tents from around five brands and they are the leader in this category on our platform.

7. Are online retailers already aware of the importance of such data? Is the demand for the data reports growing fast?

MB: This is the biggest difference among the countries in our group. There are 50 thousand e-shops on the czech market with 10 milion inhabitants. High competition pushes e-shops to maximize efficiency and optimize all processes in their business. A lot of e-shops use data for their better decision making and data are very often used as a key input for automation of bidding on marketing platforms, price monitoring and so on. There are a lot of third-party tools working with our data on the czech market which help e-shops optimize their processes. One of the last hot topics for Hungarian, Romanian or Adriatic e-shops is automation of bidding and it was the hot topic 4-5 years ago for czech e-shops.

8. Your solutions give an insight especially to large online retailers (what is on offer and price) so they can supplement or refine their portfolio accordingly. What does this mean for niche, smaller providers. Is it a danger for them?

MB: I don't think that insights from our data tools are mainly for bigger or large e-shops. I understand that small e-shops try to solve problems like where to store goods, how to pack and send it to customers and don't have dedicated person - data analysts who analyze for example competitor prices. But from a certain size of the e-shop it is necessary to look at the data and find efficiency and opportunities in them. I'm convinced that it isn't possible not to work with data and be successful and grow in the long run in e-commerce. We did a lot of research and interviews with e-shops of different sizes and we have fine-tuned our data tool a lot. There are several predefined views on a category and the e-shop's position in it. It's not rocket science to look at 5 reports at least once a week and change certain things based on them.
It's only about the mindset and discipline of the people working for the e-shops and their ability to change business and processes based on data. The data are worthless without their integration into everyday processes.

"I'm convinced that it isn't possible not to work with data and be successful and grow in the long run in e-commerce. It's only about the mindset and discipline of the people working for the e-shops and their ability to change business and processes based on data. The data are worthless without their integration into everyday processes."

Michal Buzek, Heureka Group Data Chief Director

9. Your data also allows online retailers to automate a range of processes, from pricing policy management to purchasing, for example by detecting consumption trends for individual products or product groups. What does this mean for the consumer, will everyone soon be offering everything at the same price with the same delivery times?

MB: I'm not afraid that there will be no diversity on the market. E-shops have different conditions with vendors, distributors or shipping companies, which should affect pricing to ensure efficiency. E-shops also have different strategies within their product portfolio. More and more larger czech e-shops are starting to use dynamic repricing tools that automatically change product prices based on many inputs such as competition prices, shipping costs and especially margins and product sales of the e-shop. The goal of dynamic pricing isn't to match the competitive price, but to stop it at such a level that it generates the highest possible profit for the e-shop. So the e-shop can get a lower number of orders due to a slightly higher price, but overall its profit is higher than if it had the same price as its competitors.
We must also not forget that customers look not only at the best price, but also at the credibility and brand of the e-shop, e-shop reviews, certification or the possibility of delivery of goods.

10. You already associate sales data from your platforms with advertising data within your platforms. But how can data from your platform be compared or linked to other sources or advertising providers? Do you plan to supplement your service with data from other sources and provide subscribers with enriched data?

MB: You are right that it's really easy to evaluate advertising activities on our platforms by the data which we provide because you can see if the demand for the promoted product was growing at the time of promotion period or not. But brands or e-shops can use our data for an evaluation of their offline marketing activities too because if the out of home advertising or TV campaign is visible then people search for the promoted products on the internet. There is no need to wait for the end of the campaign when the media agency does research about the campaign's impact, but the advertiser can see an effect of the campaign on the second day and can react to it almost immediately.
Our goal for this year is to integrate all our data products into one tool Heureka Insights and offer more options for data integration and enrichment.

11. Is the online retailer able to respond to events on your platforms in real time and optimize its advertising portfolio as much as possible?

MB: Yes, optimization of marketing investments on our platforms is possible at the level of individual products and e-shop can update its products information several times a day. I know some e-shops that monitor news about celebrities, actual events in the world or for example bestsellers on Amazon and take this into account in increasing investment for relevant products not only on our platforms.

12. Do you think that all physical stores today should already have an online version?

MB: I think that covid showed all companies how the internet is important and a lot of previously only-offline sellers accelerated their digital transformation and built new e-commerce teams. Not only e-shops but big international brands have started to focus on the e-commerce segment too. I think it's no longer possible to operate offline only. It is only a question of what the share of retailer's sales will be generated online.

13. Many customers still look at the product in a physical store first and then look for the best
price online. There are high costs associated with physical outlets. In your opinion, will a physical store still make sense in the future, or will it even represent a competitive advantage?

MB: This is a very interesting trend that large e-shops opened offline stores and showrooms in cities. The biggest czech e-shop Alza tries very successfully to make customers stop distinguishing between offline and online shopping. For example people who are afraid to pay online can order goods on their website and pay at the store. Alza's opened offline stores in Wiena, Budapest or Bratislava. Their goal is to increase sales in the locations with offline stores, support their brand awarness, customers can pick up their orders there, handling complaints there and Alza can offer brands new types of promotion in their showrooms too. On the other hand it brings more complexity to the e-shop and it's definitely not the right way for each e-shop.

14. We talk a lot about online shopping, but less about the full digitization and automation of the shopping path. Is digital shopping really evolving evenly, that is, along the entire supply chain?

MB: I've seen a great progress in logistics in recent years in our region. I mean the part of the path from the e-shop to the customer. The same day delivery is more and more available in the big cities. There were established several companies that built fully automated warehouses and they also provide their services to smaller e-shops. But we can see problems with the supply chain between manufacturers and retailers. It started during covid when mainly asian manufactures weren't able to deliver their products to european retailers and these days we see other problems with transport costs due to rising fuel and energy prices. Maybe it will be an opportunity again for local manufacturers and producers but definitely it affects the whole retail industry.

15. Many providers are seeing a decline in online sales following the release of epidemic measures. Do you see a similar trend on your platforms?

MB: We've done several waves of research among online shoppers in the last two years, and a lot of people have started with online shopping regularly. These were mainly people over 45 and the vast majority were happy with their purchases. A lot of people have also tried shopping in new categories such as medicine, books or clothes. There are definitely segments like books where people have gone back to offline shopping. But on the other hand people have learned more to buy new segments like health care, sports equipment or building materials on the internet during covid years. It will be impossible to reach such high covid numbers in the coming years, also due to the situation in Ukraine and the coming crisis. But the Heureka Group is growing in the vast majority of countries if we compare this year with the numbers before the covid.
We as Heureka Group believe that the coming crisis is an opportunity for us because a lot of customers focus on reducing their costs and they need price comparison websites for smart shopping.
Our second opportunity is in the B2B field because e-shops start looking for help in data during difficult times and again realize the importance of data. Therefore Heureka Group is ready to help them with data.

Original interview is avaliable on IKT Finance magazine online.