Competition Market Study of Online Marketplaces in Poland, Latvia and Lithuania

1. Introduction

Abstract

In the context of increasing digitalisation and the growth of online shopping, online marketplaces play an important role in the e-commerce sector. They connect two distinct user groups: sellers, who use these platforms to offer and sell their goods, and consumers, who use them to discover and purchase goods. This chapter describes the scope of the OECD study analysing competition in online marketplaces in Poland, Latvia and Lithuania, the approach taken, and the sources used.

1.1. Scope

This OECD market study analyses competition in online marketplaces in Poland, Latvia and Lithuania. This project is funded by the European Union via the Technical Support Instrument (TSI), with the general objective of supporting Poland, Latvia and Lithuania in identifying potential competition issues in online marketplaces, particularly in relation to large platforms’ market power.

Operating as multi-sided platforms, online marketplaces connect and facilitate transactions between consumers and sellers. Online marketplaces provide the necessary infrastructure to third-party sellers who offer their goods for sale via the platform, as well as a structured set of services including processing payments, managing complaints, and, in some cases, providing logistical support. From the consumer’s perspective, online marketplaces enable users to browse, select, and purchase products directly on the platform.

General online marketplaces focus their product offerings on a broad assortment of goods spanning multiple retail segments, ranging from books and electronics to household items, hardware, and clothing. These platforms give consumers the ability to purchase a wide variety of products within a single transaction.

Other segments of the e‑commerce sector or related services will be considered in this report to the extent that they influence, or are influenced by, competition in online marketplace services.

1.2. Approach

This market study follows the approach set out in the OECD Market Studies Guide (OECD, 2018[1]). A market study involves assessing how competition works holistically to understand the impact of market forces and structures. It is in-depth and evidence‑based, and it considers the behaviour of consumers and firms (both those currently operating in the market and potential market entrants) alongside the regulatory framework. Market studies can be used for a variety of purposes. One aim is to identify poor outcomes for consumers and reforms needed to make markets work more effectively. A market study can also enhance knowledge of a specific sector, which can be leveraged in future work by policymakers, or it can be used to support competition authorities’ enforcement activities by uncovering evidence of anticompetitive conduct.

In this study, the state of competition will be assessed and evaluated separately in each of the three countries under review, and the report’s findings and recommendations will be tailored to the specific context of each country where relevant. However, where appropriate, some analysis in the report will be presented thematically, assessing and comparing common market features or dimensions of competition across the three jurisdictions.

1.3. Sources of evidence

The analysis presented in this report is based on information obtained from a wide range of sources, including information gathered during interviews with stakeholders, information provided by stakeholders in response to questionnaires or surveys, proprietary data from supplier SimilarWeb, and a wide range of publicly available data and information. This section provides a brief description of each source.

1.3.1. Meetings with stakeholders

The OECD project team held 20 meetings with different stakeholders, 9 virtual and 11 in person. The project team met with representatives of public institutions, key market participants and industry associations based in Poland, Lithuania and Latvia. Critical input and expertise were also provided by competition authorities both within and beyond these jurisdictions.

1.3.2. Stakeholder questionnaires

The OECD prepared detailed qualitative and quantitative questionnaires requesting a range of information from public and private stakeholders in Poland, Lithuania and Latvia. These questionnaires included questions covering key market characteristics and participants, and business operations and strategy. Quantitative data was requested on revenue, sales volumes and user numbers.

The team received responses from 13 stakeholders. Additional recipients did not provide responses to the OECD’s questionnaires.

1.3.3. Seller survey

The OECD circulated an anonymous online survey for sellers using online marketplaces in Poland, Lithuania, and/or Latvia. The surveys included questions covering sellers’ experiences using online marketplaces, including substitutability of sales channels, ability to switch or multi-home, ability to set prices and levels of transparency.

The team received partial or full responses from 41 sellers across the three countries.

1.3.4. SimilarWeb data

The OECD obtained detailed data on website and app usage from supplier SimilarWeb. In relation to websites, SimilarWeb provides data on a wide range of metrics, including total visits, unique visitors, bounce rates, audience demographics, audience interests, and referral traffic. Regarding apps, the data covers a range of metrics including installations, active users, audience demographics, audience interests, ratings and rankings.

SimilarWeb includes a Poland country filter, which means that all metrics can be geo‑attributed to users located in Poland. While no country filter is available for Lithuanian and Latvian users, some metrics can be weighted by the percentage of a website’s visitors from Lithuania and Latvia respectively, or alternatively analysis was focussed on websites with a.lt or.lv domain. Depending on the metric in question, data was available to the OECD on either a rolling 37‑month or 15‑month period.

In each case where SimilarWeb data is used throughout the report, the OECD has included explanatory notes and stated the relevant metric, geographic filter and time period applied. Additionally, Annex A describes in detail the methodology used by the OECD to analyse the data from SimilarWeb, for the purpose of constructing the indicators on online marketplace activity presented in this report. This annex should be considered as the central source for all necessary explanations of the data.

1.3.5. Publicly available data and information

The OECD’s analysis was informed by a wide range of publicly available data and information, including:

• Data from Eurostat and from national statistical agencies covering e‑commerce sales, internet usage, online shopping behaviour and other demographic characteristics

• Financial data from databases of company financial information

• Public reports from communications and postal regulators

• Publicly available information from key market players, including service descriptions, terms and conditions, and promotional materials; as well as annual reports and other transparency initiatives

• Relevant legislation and legal cases from the three countries and European Union

• Reports of the Latvian and Lithuania competition authorities into the e‑commerce sector, and previous decisions of the Polish competition authority related to online marketplaces

• Other sources of data, information and analysis on internet usage and e‑commerce trends, including Statista, industry reports and news sources

The structure of the report is as follows:

• Chapter 2 defines online marketplaces and provides an overview of the e‑commerce sector.

• Chapter 3 describes the relevant institutional and regulatory framework in the three jurisdictions and the European Union.

• Chapter 4 presents a mapping of the key market actors and developments in each country under review, focussing on online marketplaces as the central pillar of digital commerce.

• Chapter 5 highlights key market features which are distinctive to online marketplaces in Poland, Latvia and Lithuania.

• Chapter 6 examines the competitive constraints on online marketplaces in the three countries covered by the report, identifying the relevant competitor set on both the consumer and seller sides of these platforms, and considering their substitutability with other services.

• Chapter 7 presents an assessment of the state of competition between online marketplaces in the three countries under review, divided as follows:

  • Section 7.1 presents market share estimates, providing an overview of the extent of market concentration and a summary of the market position of key players.

  • Section 7.2 analyses the key dimensions of horizontal competition in online marketplaces in the three countries, including barriers to entry.

  • Section 7.3 examines related vertical, conglomerate and ecosystem dimensions of competition, as relevant to online marketplaces in each of the three countries under review.

• Chapter 8 analyses the structural relationship between online marketplaces and sellers across Poland, Lithuania and Latvia, and the related risks for competition.

• Chapter 9 summarises the findings of the study.

• Chapter 10 presents the OECD’s recommendations.

References

[1] OECD (2018), Market Studies Guide for Competition Authorities, OECD Publishing, Paris, https://doi.org/10.1787/7381b582-en.