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Competition of online marketplaces in Hungary

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Csaba József Kovács

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 Competition of online marketplaces in Hungary

Csaba József Kovács1

Abstract

Online marketplaces are among of the most popular shopping places nowadays. However,
these kind of selling platforms are competing in a concentrated market. There are only few
participants have significant impact on the whole market and enjoy de facto tight oligopoly
position on the internet. The market situation was similar to Hungary in the past 20 years.
Moreover, the rivalry is more intense in the Hungarian market as the competition has become
even more international in the recent years. On one hand, customers more and more frequently
buy products from abroad. On the other hand, the biggest challenge that domestic online
marketplaces face that Facebook has launched its own marketplace function in Hungary in
2017.
This research work aims to explore shopping behaviour of customers live in the Hungarian
capital. The paper focuses on the choice of marketplaces, the preference of payment methods
and delivery. Research findings based on a questionnaire contains responses from potential
online shoppers in Budapest. Descriptive statistical methods were applied to the analysis of
primary data. Results are contributing to extend our knowledge how generations use the online
marketplaces during stages of the consumer buying process.

Keywords: competition, online marketplace, shopping behaviour, customers, Budapest

JEL code: M31; L81

1. Introduction

The notable importance of researching electronic markets is shown by how according to

Internet Retailer's (2019) research results, these platforms hosted about half of the sales
conducted on the Internet. The business analyses also show that the most successful online
platforms only belong into the stakeholder scope of a few select international conglomerates,

1
PhD student, Enyedi György Doctoral School of Regional Sciences,Szent István University,Gödöllő;
b.kovacs.csaba@gmail.com

140
which means the market is highly concentrated. According to this, almost all countries host
these companies, or their local sub-companies as market leaders (Website Builder Expert,
2018).
Perhaps the most notable indicator of success is the visitor count of said websites, since this is
the strongest influencing factor on the market's profit value for the company. However, visitor
count is highly dependent on local factors as well, which means there are huge differences by
country (Stockdale – Felstead, 2011). This is the reason for this topic to stand as the focus of
relevant research.
In the recent years, significant changes were perceived in the market of Hungarian electronic
marketplaces. Both the popularity of Facebook Marketplace and the frequency of cross-border
purchase have increased in Hungary in the previous years. It can be assumed that it had a
negative impact on domestic online marketplaces. However, there are considerable differences
between younger generations and silver generations in the way of the digital technology they
use (NMHH, 2018). Therefore, it is expected to have some generational attitudes and
behaviours in the choice of online marketplaces. The main goal of the research is to obtain
detailed information about these ongoing changes in the Hungarian market, in this case, for
Budapest specifically.
Research questions of the paper are the following:

1. What is the current market structure of Hungarian online marketplaces in Budapest?

2. Which are the behavioural differences between generations in the choice of e-marketplaces?

The short introduction of the enterprises referenced in the study will make up its theoretic part.
Following this, the methodology used will be introduced, and the analysis of questionnaire
results will take place. The data evaluated refer to the most well-known domestic and foreign
online markets' visitation frequency, specifically for making purchases. The most important
research results and conclusions can be found in the Conclusions chapter.

2. Main participants of e-marketplaces

Website Builder Expert (2018) collected the most frequented electronic marketplaces,
separately for 174 countries, then categorised them by which enterprise holds ownership
(Figure 1). The research was concluded using the website visitor data from Alexa.com.

141
Figure 1.The most visited online marketplaces by parent companies in the World

Source: https://images.websitebuilderexpert.com/wp-content/uploads/2018/07/Ecommerce-Empires-
1024x629.jpg?_ga=2.87319064.1848589051.1579786608-579959145.1577801408

According to their research findings, Amazon is the most frequently visited online marketplace
recently. Alibaba is by far the most significant global competitor of Amazon. The market
position of further participants are much weaker (including eBay, Naspers and Mercado Libre).
However, more of them are market leaders in a specific region of the World. Mercado Libre is
the market leader in Latin-America. Be Forward and Rocket Internet are the dominant
participants of many countries in Africa. These parent companies are mostly operating in
developing countries and having no measurable interest in Hungary. Meanwhile eBay, Naspers
or Schibsted are well-known participants in the Hungarian market as well.
However, their embedding is varied, since some of the enterprises in question are specifically
positioned for the Hungarian market, and have localised electronic marketplaces. A different
part of said enterprises operate international electronic marketplaces exclusively. In the
Hungarian market, long-term opportunities show that maintaining 2-3 nation-wide electronic
marketplaces is sustainable, mostly related to country size. During the roughly two-decade
history of electronic marketplaces in Hungary, there were multiple heated battles between long-
standing actors and new arrivals (in more detail: Kovács Cs. J., 2018). The most notable actors
in the Hungarian market are listed in the table below, categorised by their most important
characteristics. All of the platforms in the table were designed for commerce where multiple
sellers are connected by a single middleman to the buyers (Table 1).

142
Table 1. Features of the dominant third-party online marketplaces in Hungary, 2019
Platform Facebook
Vatera Jófogás eBay Amazon Alibaba
name Marketplace

Founded 2000 2010 2017 1995 1994 1999

Main auction advertising social auction online

online store
type portal site media portal store
Business
C2C C2C C2C C2C B2C B2B
model
Owned Alibaba
Naspers Schibsted Facebook eBay Amazon.com
by Group
Typical cross- cross-
domestic domestic domestic cross-border
purchase border border
Source: Own research

The first Hungarian online auction portal, Vatera is still one of the most notable embedded
actors to date. This marketplace is the property of Naspers. Contrary to this, the other strong
contender in Hungary's market, Jófogás has only been present since 2010. They lead Hungary's
want-ad market as the IP managed by the foreign Schibsted's sub-corporation. In 2017, a new,
important entrant appeared in Hungary's market.
There are a multitude of commerce-related community groups on Facebook, which have been
a challenge to traditional market actors for a while. By piloting the Marketplace function, this
competition became even more accelerated. Since 2017, this application significantly reshaped
the power struggle. Though earlier research doesn't really take it into consideration, as its main
portfolio shows it being a social media platform, the author believes it to be well-grounded to
include this platform in the research. Reason being, nowadays, C2C commerce also lists it as
one of its most notably platforms in Hungary. This is greatly supported by the results obtained
from the questionnaire, since the click data from the webpage could not show how many people
use Facebook as a site to purchase.
Huge international marketplaces are becoming more and more popular each year. However,
they still have a significant lack of competitiveness compared to domestic marketplaces. Their
embedment is understandably much less pronounced than that of local marketplaces. Among
others, there's a necessity for foreign language competence, shipping logistics, and there's low
trust level - these factors make these platforms less desirable for a significant clientele in
Hungary. The largest and oldest ones in Hungary are eBay, Amazon and Alibaba. Though
Aliexpress also became a prestigious actor of Hungary's market, the author saw fit to exclude
it from the current study, because it only entered European markets in 2019, and as a new

143
entrant, it's lacking as a target for comparison. Unlike other marketplaces, it's still in its early
stage, and the most notable effects of it entering the market should be subject to evaluation 2-3
years after its introduction.

3. Research methods

The primary data used for the analyses was collected via questionnaire. Participants filled the
questionnaire through the Google questionnaire spreadsheet embedded into the Facebook
community page in October, 2019. This didn't cause a problem for the sample, since almost all
potential buyers are also social media participants, making the legitimacy of the sample high
(NMHH, 2018). The sample included 280 individuals, all of whom live in Budapest's XVIII.
District. The analysis isn't representative for the entire population of Budapest. The data was
evaluated using descriptive statistics. The analyses took the fact that there are often significant
differences between the Silver Generation and the younger generations' consumer habits into
consideration (Kovács Cs. J. – Sikos T., 2019). In order to easily showcase the differences
assumed prior to the analysis within the sample, two categories were created for the data on
frequency of visiting.

4. Results

The results of the questionnaire support the research report of Website Builder Expert (2018)
(Figure 2). 63% of the participants visited Jófogás in order to make a purchase, 17% do it
regularly (at least once a month). If we don't take the frequency of visits into consideration
among the participants, we can say that Jófogás is the most popular Hungarian marketplace on
the Internet. However, based on the data known on frequent users, the Facebook Marketplace
was the most frequented marketplace of October 2019 (27%). Results show that Vatera's market
leader position from earlier years became weaker, which can be seen most notably in the
frequent visit count.
Both traditional marketplace seem to be more frequented by the elder generations in the sample.
Facebook Marketplace's visitor structure, however, seems to tend towards those below 50 years
of age. The analysis of reasons was not included in the research goals. However, simple
reasoning suggests that the perceived security on traditional marketplaces, and the fact that
there's more and more significant effort to accept and adapt to new opportunities among the
younger people can lead to such results.

144
Figure 2. Frequency of purchasing products on domestic online platforms, 2019
Marketplace
Facebook

age: 0-49 (n= 149 ) 20 11 29 40

age: 50 or above (n= 111) 14 8 33 45

0-49 (n= 151 ) 4 9 50 36

Jófogás

50 or above (n= 118) 10 11 52 27

0-49 (n= 150) 3 5 39 53

Vatera

50 or above (n= 109) 2 8 46 44

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

weekly monthly rarely never

Source: Own research

Another important facet of the questionnaire was to analyse the frequency of purchases
conducted on the popular foreign sites. We can generally say that most of the participants don't
conduct purchases on these sites at all. We can also see that generational differences between
frequent users are rather significant, since the ones below 50 always answered that they're
frequent customers on these sites, whereas the Silver Generation's members were the exact
opposite (Figure 3).
Figure 3. Frequency of purchasing products on international online platforms, 2019

age: 0-49 (n= 150) 3 7 26 63

E-bay

age: 50 or above (n= 110) 32 19 76

0-49 (n= 148) 2 5 18 75

Alibaba

50 or above (n= 108) 2 12 86

0-49 (n= 147) 1 3 17 79

Amazon

50 or above (n= 108) 15 85

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

weekly monthly rarely never

Source: Own research

145
The most popular global Internet marketplace from any research perspective in Hungary is
obviously eBay. The number of frequent users in the entirety of the sample is below 10% for
either platform.
The questionnaire also covered why, or why don't participants choose the option of purchasing
through a foreign site. A rather interesting result is that while none of the generations pointed
out the language comprehension issue as the reason. Both those above and below 50, the lack
of trust was the most definitive issue. In the case of the older generation, trust is more of an
issue in the case of ordering from foreign soil online. Among the frequent buyers, the most
motivational factor - especially for the younger generation - was the cheaper prices.
Furthermore, the larger selection of goods was also mentioned as a factor influencing decision.

5. Conclusions

Nowadays, one of the most notable commerce platform on the Internet is the electronic
marketplace. However, enterprise actors are in a very edgy competition on a very concentrated
market. In this study, we identified the ranking of Hungary's market, supported by prior research
results. The result of analyses was introduced by age brackets, taking purchase frequency into
consideration.
Based on the results, the prior assumption that the Facebook Marketplace, an entrant of 2017
significantly restructured the frequenting order was found true. Specifically, we could see how
the advantage was pronounced in terms of frequent users, compared to domestic rivals (Vatera,
Jófogás). We could also clearly see how international marketplaces and domestic platforms still
have a large difference in purchasing visitors. Facebook Marketplace, and global marketplaces
mostly offering a palette of foreign sellers (eBay, Amazon, Alibaba) are usually frequented by
younger audiences compared to domestic options. The most notable motivational factor behind
international orders was price, while the most notable issue was trust.
To summarise, we can state that in the competition of Hungarian marketplaces, pretty much all
generations are important target groups, including the elder generations. The embedment of
local marketplaces is still strong enough that it provides a hard to tackle advantage in
competition for foreign and global marketplaces. In order to decrease this difference, it's
important to increase trust in buying from other countries. Among other various factors, this is
also one reason for Facebook Marketplace being the main competitor for domestic portals in
Hungary.

146
References

Internet Retailer (2019) Online Marketplaces Report 2019 In. Infographic: What are the top
online marketplaces? Online: https://www.digitalcommerce360.com/article/infographic-top-
online-marketplaces/ Date of downloading: 4th November 2019.

Kovács, Cs. J. (2018) Egy elektronikus piactér regionális jellemzői Komárom-Esztergom

megyében. Földrajzi Közlemények Vol. 142 No. 1, pp. 62-73.

NMHH (2018) Lakossági internethasználat. Online piackutatás 2018., p 36. Online:

http://nmhh.hu/dokumentum/202180/lakossagi_internethasznalat_2018.pdf Date of
downloading: 4th November 2019. p. 36

Sikos T., T. – Kovács, Cs. J. (2019) The Silver Generation as Potential Purchasing Power in
Budapest: a Case Study. Theory Methodology Practice: Club of Economics in Miskolc Vol. 15
No. 2, pp. 53-63.

Stockdale, R. – Felstead, C. (2011) Challenging the global, rediscovering the local: voluntary
market restriction in C2C e-marketplaces. In. PACIS 2011. Proceedings 182. 13 p.

WebsiteBuilderExpert (2018) Age of Ecommerce Empires: Mapping the World’s Top Online
Marketplaces. Online: https://www.websitebuilderexpert.com/ecommerce-website-builders/
age-of-ecommerce-empires/ Date of downloading: 4th November 2019.

147
 International Conference of
Economics PhD Students and
Researchers in Komarno

5th of November, 2019

J. Selye University
Komárno

Conference Proceedings
 International Conference of Economics PhD Students and
Researchers in Komarno
5th of November, 2019
J. Selye University, Komárno, Slovakia

Conference Proceedings

Organizer of the conference:

Association of Hungarian PhD and DLA Students – Department of Economic Sciences

Partners:
J. Selye University, Komárno

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