Marketplace Leaders:
Jörn Rehse, idealo

Jörn Rehse

idealo, Co-CEO

Idealo is one of the leading price comparison platforms in Germany and is currently represented in 6 other European countries. Founded in 2000, the Berlin-based company reports an average of 76 million online visits per month. These visitors have access to over 50,000 shops and more than 500 million offers.

Jörn Rehse is Co-CEO of idealo. He started at idealo in 2013, concentrating on the Expansion in the marketplace segment. From 2014, he was responsible for the Product & Technology division as CPTO (as part of a dual leadership team). In 2016, he finally became part of the management team at idealo. Prior to his idealo career, Jörn held various management positions, including Vice President Professional Services at YOC AG.

Our Managing Partner and marketplace expert Thomas Natkowski talks to Jörn Rehse from idealo about current developments and opportunities in the market.

The market environment in retail has been quite volatile over the past three years – how have you perceived and managed this?

In recent years, e-commerce has been exposed to various external challenges. idealo has mastered these challenges. We have emerged stronger from the crisis.

The fall of 2022, before the first winter of the war in Ukraine, was particularly pulsating. Concerns about a lack of energy supply, rising gas prices and inflation were predominant topics. These are factors that make people pay more attention to money – which is exactly where idealo comes in. In addition to prices, the actual availability of products and reliable delivery times also came into focus.

How do you perceive the purchasing behavior of customers in times of inflation, war and, until recently, corona?

In 2020 and 2021, people spent more time at home due to the pandemic and therefore also spent more time shopping online. This leads to waves of demand. Initially, it was about the immediate COVID-19 situation (e.g., demand for hygiene products). Then came the challenge of coping with the unfamiliar lockdown. Finally, the altered daily life and free time were filled with new hobbies. Categories like the bicycle industry boomed, and there were repeated supply shortages.

In times of crisis, people assess their purchasing power more conservatively, which significantly increases the interest in reliable price overviews, leading to more usage of idealo. Despite a greater reluctance to buy and a tendency to save, people want to find out about offers and products on the market and strike at a good price.

In the spring of 2023, trust in personal buying power rose somewhat again, yet the critical behavior during the selection process persisted. For example, the average duration of product research increased. We can see that idealo is being used more and more for product selection in addition to deciding where to buy.

The competitive landscape has also been turbulent – many retailers and marketplaces are struggling. How do you perceive this? How is the price comparison segment doing?

The COVID-19 pandemic was a challenge for many market participants. In particular, it was difficult to assess for a long time whether there was indeed a sustainable acceleration of the offline-online shift. A bet on a longer-lasting acceleration, which seemed plausible during coronavirus, did not work out for many retailers in our view.

idealo has proven to be resilient because we give users exactly what they need during the crisis – a credible price overview.

The functioning of traffic channels is of crucial importance for price comparisons. Many price comparisons have been suffering from a decline in the visibility of organic search results on Google for years, particularly because Google has gradually replaced more and more visible space for search results with paid products, especially Google Shopping. However, I think this is not just an issue for price comparisons, but also for retailers and marketplaces in particular. The whole industry should have a great interest in the consistent enforcement of the Digital Markets Act. It sometimes shocks me how often people in e-commerce say that SEO is dead. This simply means they are accepting the self-preferencing of the dominant platform. To my taste, this is a bit too much preemptive obedience to Google before the relevant regulation could even take effect. The Digital Markets Act is very clear. The Digital Markets Act is very straightforward. We should all be confident that it will be put into effect.

It is important to have free competition for the attention of end customers directly at the entry points of the internet. This competition protects end customers and allows every market participant access to customers based on the quality of their performance, especially for the companies of tomorrow. This also applies to other industries – for example, travel.

Idealo discontinued its direct purchase after about seven years on January 1, 2023, thus ending the marketplace chapter. What were the reasons for this?

The direct purchase feature grew wonderfully the whole time and didn’t have to hide from other marketplaces. Nevertheless, direct purchase always had to take a back seat to the classic comparison model, which was also very successful.

With a price comparison, marketplace inventory and classic price comparison inventory are more in conflict than with a retailer who also operates their own marketplace. The retailer extends its inventory through marketplace offers. That wasn’t the case with us. The offers were more in conflict with each other.

So we had two models that were both doing great. We then came to a point where we had to make a decision: to become more of a marketplace for online products or to focus on our original strength, price comparison.

The price comparison is ultimately the more interesting strategic position for us. And that was the right decision for our partners as well. We did not want to stand between buyers and retailers but rather continue to be the strong traffic provider with high conversion and expand this further.

Does idealo face different challenges as a price comparison portal than pure online marketplaces? From your perspective, what factors contribute significantly to idealo’s success?

idealo is simply an incredibly useful product for the end customer. That is the most important success factor. Nowhere else can you get a credible market overview so quickly. It’s not always primarily about the lowest price – idealo doesn’t always choose the cheapest offer either – but about making a qualified purchasing decision. But in order to be able to make such a decision, the customer needs to feel that they have truly seen the market. That is our added value. We show you the whole market. No one else can do that. With one click at no cost to the user.

For this to work, we naturally need a complete inventory, an unbeatable product catalog and an attractive and user-friendly product with a very wide reach, especially in the app stores.

To some extent, we have different challenges than marketplaces: We need more inventory than marketplaces to deliver our added customer value. When it comes to inventory, pure online marketplaces only need a few good listings per product. A price comparison depends on breadth of supply. It only makes sense for users to compare prices on idealo if they can find many different offers and all the suppliers they would expect.

We therefore interact with a broader range of partners than most others. We have thousands of direct cooperations that we manage in account management, from the smallest retailer to the largest marketplaces with very different needs.

We building a unique product catalog that cannot be found anywhere else on the market. We have over 150 content editors who mananage millions of product entries. To do this, we operate our own toolchain, which is now being supplemented with AI and machine learning technologies. Generative AI is already playing a role here in live operation. Being able to curate so many products in the masses will continue to be a unique selling point for idealo.

Our B2C product must maintain a demanding balance between simplicity and information richness. Idealo’s website is more information-heavy than many retailers and marketplaces because we have a different role in the buying journey.

At some point, this also becomes a technical challenge. We process billions of price updates per day and match the offers to entries in our product catalog.

What opportunities do you currently see in the market? Which trends are relevant for you? For example, what significance does AI have for your business model?

We recently released the beta of our ChatGPT plugin on the OpenAI platform. It is the first step towards a conversation-driven price comparison, where consumers can find the right product with simple questions. Our extensive data helps us with this. Not only prices but also product data and other content. However, it is still unclear what the ecosystem for AI-based chat as a B2C interface will look like. Will everything ultimately be reduced to the chat AIs of Google, Apple, and Microsoft? How open will these platforms be? AI is potentially a game-changer in the early phases of the product journey. AI can help users understand what all the product features and data mean and what is really necessary for their product selection. Classic advisor flows have never been particularly successful, but now it is up for debate again. Currently, AI and machine learning at idealo have the greatest leverage in how we internally handle billions of prices and product data. The vision is clear: every product that can be bought online should have a perfectly maintained and categorized product page on idealo, no matter how new or long-tail it is.

What are growth areas for idealo?

We want to further develop our core features to offer our users the best possible purchasing decisions for – or against – a product, even in the early phase of the buying journey. This also enhances the traffic quality for the shop.

Another focus lies on expanding our product listings, ensuring users find everything they are looking for on idealo – of course, at the best price. We see used goods as an important strategic growth segment here. Users have been able to compare used products on idealo for some time. In 2024, we will expand all forms of these pre-loved offers, as there is clearly very strong demand in the market.

We also want to give manufacturers more opportunities to gain visibility on idealo and offer very selected, dedicated retail media spaces. We are already doing this successfully in Spain and Austria.

How do you see the market in two to three years and where do you see idealo in this market in the future?

For more and more people, idealo is becoming a loyal assistant in their purchasing decisions. We are going beyond the topic of price and expanding our inventory. In doing so, we are expanding our position as one of the most relevant players in Europe. Looking at the market, I am confident that e-commerce growth will recover. I have repeatedly heard pessimistic comments from market participants about the offline-online shift as a growth driver. I can’t quite understand that. I believe that there are demographic arguments in favor of this boost increasing again.

The decisive factor for e-commerce to be fun for all of us is that there is once again healthy competition directly where end customers spend most of their time browsing the Internet. By this I primarily mean the Google search results page. But it’s worth taking a look at the entire list of so-called core platform services in the Digital Market Act. It must be prevented that a few dominant market players “redistribute” people who want to shop online or find out about products according to non-transparent mechanisms. The worst case scenario would be a bidding-driven black box at the main entrance to the Internet that automatically optimizes all margins out of the market.

The answer to this is free competition at the key access points of the internet. If we succeed in protecting free competition, e-commerce will become a great growth market with room for many different retailers, marketplaces, price comparisons and exciting services that we don’t even know about yet. We are happy to prove ourselves in this free competition.

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