Marketplace with foreign suppliers, developed by Sberbank and “by Yandex” will start in October. Although most of the supply now comes from China, the new project will be reoriented on more expensive goods from other countries
Photo: Natalia Seliverstova / RIA Novosti
“Yandex.Market”, the Sberbank has developed the concept of your marketplace focused on cross-border trade. It will be launched in October. “The basis of logistic models will be experience Amazon company”, — told RBC Director of international development of “Yandex.Market” Alex Vasiliev. This means that the company “takes full responsibility for logistics and product delivery, for adaptation of content in Russian language and its marketing”. And although 90% of all cross-border parcels to Russia comes from China, “Yandex.The market” has decided to focus on suppliers from other countries.
The emergence of a new marketplace from “Yandex.The market” has paralleled other major player in e-commerce, AliExpress Russia — a joint venture of China’s Alibaba Group, the Russian direct investment Fund, “MegaFon” and Mail.Ru Group. The creation of a new company, the parties announced early in the week.
What will be different in the new platform “Yandex” from the Russian-Chinese conglomerate and how the two competing systems will divide the market of Internet trade in Russia, understood RBC.
“The Russian Amazon”
In August 2017, Sberbank and “Yandex” has announced the creation of a joint venture, whose purpose, as explained by the head of the Bank Herman Gref, “to build on the basis of “Yandex.Market” Russian Amazon”. Internet holding has received 30 billion rubles of investment from both parties — non-controlling interests (10% of the shares transferred to the optional formation of a Fund for the “Yandex.Market”). For the new company identified three areas of work:
- the creation of a marketplace for suppliers to the domestic market (the project was called “Take” and was launched in may of this year);
- the future development of “Yandex.Market”, working now as a platform for selection of products and price comparison;
- development of cross-border online trade.
Called the new marketplace, despite the imminent launch, in “Yandex.The market” is not defined. However, Vasilyev says, the company chose a working model and decide what niche it will occupy.
According to the Association of companies the Internet-trade (AKIT), in quantitative terms at the end of 2017, 90% of foreign online purchases were in China, the share of goods from EU countries — 3% USA — 2%. But in the Chinese money purchase is a much smaller market share — only 53% of EU — 22% USA — 12%. The total market for cross-border trade amounted to 374,3 billion rubles or 24% of all online purchases of Russians.
Focus on China “Yandex.The market” is not planning. According to Vasilyev, the company has agreed with partners from India, Japan, Korea, Turkey, Israel, England, USA. “In local markets have a lot of strong players that produce quality goods, but they do not go with him to Russia. On them we will focus. This is a company with a turnover of $1 billion a year. We are considering options for partnerships directly with brands, retailers and, in the future, with foreign marketplaces,” says Vasiliev.
From the point of view of the delivery system, “the Russian Amazon” plans to use this model Amazon. Scheme “fulfillment platform” (from the English. fulfilment — execution, execution) provides that the seller delivers the goods to a bonded (customs) warehouse of the marketplace in Europe (“Yandex.Market” it is located in Latvia) or to an affiliate of the logistic hubs, where the goods are sent to the buyer. Completely organizes the logistics of the marketplace: if the administration something happens on the road, the buyer will make a complaint not to the seller and the platform intermediary.
“Not all sellers are willing to organize delivery to Russia, particularly in Europe. The market they are not very well known, moreover, the entering of a new player is risky. We give you the opportunity to go to Russia brands without investment, with our marketing, logistics and other support we give them,” — said Vasiliev, adding that sellers are, in principle, will not be allowed to process shipment of the goods. For these services the platforms take Commission from sellers as a rule, 5-10% of the check. However, what exactly will the Commission in this case, Alex Vasilyev did not elaborate.
For buyers benefit from this scheme because they can receive products faster than in cases where logistics deals with the seller. “Our warehouses will store the most popular products and their delivery to the buyer in approximately two days. Now the delivery of cross-border purchases account for at least 15 days”, — said Vasilyev.
In the case of conflict, many buyers feel more comfortable to communicate with representatives of the marketplace than sellers, who often do not speak Russian. “The fact that the owners of the marketplace are Yandex and Sberbank, also inspires confidence,” — said Vasilyev.
In the middle of 2017, the General Director “Yandex.Market” Maxim Grishakov has stated that the service plans to evolve in the online version of the traditional supermarket and negotiating with warehouse operators to have their stock of salable goods.
How a real Amazon
- Amazon is the world’s largest online retailer. Seller it can act as a store, and third party renting marketplace.
- According to Morgan Stanley, in an average year, one Amazon user leaves the site $544, and the subscriber’s premium service Amazon Prime spends nearly $2.5 million
- Revenue from sales among retailers in the world only inferior to Walmart and in the field of online retail remains the leader.
- Amazon today is one of the most expensive companies in the world: in September 2018, its market capitalization briefly topped $1 trillion and becoming the second after Apple, the American company managed to overcome this mark.
- Revenue from Amazon sales at the end of 2017 amounted to almost $178 billion, almost 60% of them were in North America. In 2016 and 2017, revenue from sales increased by 27 and 31%, respectively. The company’s net profit in 2017 amounted to more than $3 billion In the first half of 2018, the revenue from Amazon sales reached nearly $104 billion, net profit of $4.2 billion.
The company has also chosen the category of goods, which will be a priority for her. “Mostly clothes and shoes, as well as smartphones and similar gadgets. However, we understand that the average check at our site will be higher than on the marketplace, focused on Chinese sellers. Now the average purchase receipt there is $3. We are talking about $30 for the category “clothing and shoes”, $100 for gadgets” — says Vasilyev. While the share of orders in this price range is small: according to AKITA, the majority (61.4 percent) of online shopping in foreign stores does not exceed €22. In the range of €22-50 are 22.2% of the parcels, 11,6% — €50-150, 3,1% — €150-500, 1,2% — €0,5–1 thousand, over €1 thousand was worth only 0.5% of purchases.
Photo: Richard B. Levine / imago / Levine-Roberts / TASS
Vasiliev does not deny that at the initial stage, the range will products from China and they even prevail, but in quantitative rather than monetary terms.
The President of the National Association of remote trade Alexander Ivanov considers such a strategy is justified. “In Russia there are practically no sites that would offer a mass, but a quality product from Europe because competition in this direction will not grow,” he says. As a potential competitor to the new marketplace Ivanov was able to name only site Farfetch.com that offers luxury clothing and accessories from Europe. But he is sure to abandon Chinese products new platform will be able to: “in Order to attract a buyer, we need more cheap goods from China. And when the buyer will get used to the new store, he starts to look at offers from other countries.”
According to experts of the market of online Commerce Alexey Petrovsky, JV of Sberbank and “Yandex” will not compete with AliExpress Russia: on the contrary, they complement each other, as will potentially occupy different niches in terms of the geography of suppliers and in terms of the range and average check amount.
Top-Manager of “Yandex.Market” is a little behind schedule with the development and implementation of the strategy in the segment of marketplaces, the head of INFOLine-Analytics Mikhail Burmistrov. If six months ago, the competitive field was free, now a joint venture of Yandex and Sberbank has a good chance of losing the fight for leadership in the Russian market, he said. This is the conclusion the interlocutor of RBC explains the emergence of a large number of projects, in particular:
- VTB Bank and “Mail of Russia” will invest over 20 billion rubles in the construction of logistics centres and in partnership with the “Magnet” begin to test new services delivery;
- Alibaba Group agreed to establish a joint venture;
- Wildberries and Ozon.ru expand the range and network of points of issue;
- X5 Retail Group plans to become the leader among the networks of the terminals.
“The idea is to focus on the products of Western companies that are not yet presented in Russia, sounds a bit humorously on the news of the establishment of Alibaba Russia, says Burmistrov. — Today’s most popular Russian Internet-site is AliExpress for those who want to get a wide selection at a low price, as well as eBay and Amazon who are choosing more advanced and focused on Western goods buyers.” According to him, the new marketplace of “Yandex” it will be hard to compete with them in terms of a latitude of choice and prices. “Despite the fact that the marketplace with this focus in Russia, the idea to compete due to specific suppliers sounds pretty utopian, because it is a very limited niche that can be a subproject to “Take”, but it is not obvious that the focus on it will not hurt the ambitious plans of the basic platform,” he said. Unclear strategy and delays in developing and testing jeopardize the guaranteed long-term growth and can lead to the fact that Sberbank, the question arises, was it a mistake to invest such funds, and the need to consider other options for partnership in the online trading market, said Burmistrov.