Entrepreneurs's turnover from Tatarstan at Ozon increases 17-fold
Previous year has changed the attitude of many entrepreneurs to online as a sales channel
E-commerce has surged during the quarantines, lockdowns, and other restrictive measures caused by the coronavirus pandemic. The growth in Russia continued in 2021 and amounted to more than 40% in the first 2 months. As Realnoe Vremya newspaper found out, at one of the largest online trading platforms of Russia, Ozon, the number of Tatarstan sellers in the pandemic increased almost 10 times, and their turnover — 17 times. The previous year has changed the attitude of many entrepreneurs to online, as explained by the operators of online trading. As a result, online stores themselves are beginning to overtake “real retail” in terms of capitalisation.
Boom of e-commerce: turnover in Russia has grown almost 1.5 times
The Association of E-Commerce Companies of Russia (AKIT) in April said that the e-commerce market grew in Russia in January-February 2021 by 44%. The volume of domestic e-commerce market in the first 2 months of this year amounted to 431,3 billion rubles. But the volume of cross-border trade in he Russia continues to decline: in January 2021, it fell by 39% (compared to January 2020), in February — the volume decreased by 30% (compared to February 2020). The drop in certain categories ranged from 30% to 80% (clothing and footwear, electronics and household appliances, goods for children). The AKIT sees the reasons in the active localisation of the business of foreign players in our country.
According to the association, “foreign companies are ready to invest in the creation of full-fledged online stores, invest in the development of infrastructure, create jobs”. Therefore, if at the beginning of 2020 the AKIT associated the decline in the share of cross-border e-commerce with restrictions imposed due to coronavirus, now they say “about stable trends that are primarily due to the strengthening of the domestic market and the strengthening of technologies and competencies of Russian companies”.
AKIT President Artem Sokolov tells our publication:
“Despite that the results of the first 4 months of e-commerce in Russia in 2021 are by 4,5% lower than in the same period in 2020, we can talk about the current habit of Russians to make purchases online. March-April 2020 is a time of lockdown and a sharp increase in online sales, when almost all stores were closed, and for most product categories, online was the only channel for shopping. During these months, there were record sales of household appliances, electronics, and everything that could help arrange remote work for adults, remote education for children, and solve everyday household tasks. During the same period, there was an unusually high demand for clothing, grocery delivery, goods for children, sports, repairs, and a number of other categories. We see that the patterns of consumer behaviour persist today. From January to April in 2020, Russians spent 1,061 trillion rubles on online purchases, and this year, when all restrictive measures are lifted, — 1,013 trillion rubles. According to our forecasts, the result of the year will be a growth of 25% and total sales amount — 4 trillion rubles.
In Tatarstan, the volume of online sales for the first 4 months of 2021 turned out to be by 12% lower than in 2020: 22,84 billion and 20,07 billion rubles, respectively.
The top 5 popular products among Russians have not changed. These are the categories: digital and household appliances, furniture and household goods, clothing and shoes, food, beauty and health. At the same time, the fastest-growing segment is now “furniture and home goods”, which confidently took the second line in the rating: monthly growth is on average plus 300%.
The preferences of the residents of Tatarstan do not differ from the all-Russian ones, but the distribution of the rating lines is somewhat different. Tatarstan citizens spent the most on digital and household appliances and furniture (4,303 billion and 2,477 billion rubles). The third in terms of sales were food products (2,350 billion rubles), replacing clothing and shoes (1,770 billion rubles). The purchases of beauty and health products cost 1,417 billion rubles.
“The previous year has changed the attitude of many entrepreneurs to e-commerce…"
Ozon, which provides its own online platform for online trading, confirmed the growing interest of Russians in e-commerce in recent years. Ozon representatives told Realnoe Vremya newspaper that the main reason is the convenience of marketplace format (e-commerce platform, online e-commerce store that provides information about a product or service of third parties), which was felt by the residents of Russia and some regions, including Tatarstan. Marketplace gives customers the opportunity to buy a variety of products in one place and get them conveniently and quickly, Ozon notes. And business representatives with the help of an online platform get access to a multi-million audience and the opportunity to sell goods throughout Russia and abroad, using the logistics infrastructure of a marketplace.
“The previous year, of course, has changed the attitude of many entrepreneurs to online as a sales channel, because due to the pandemic restrictions, many have lost their traditional sales channel. In that situation, marketplaces were the fastest and most convenient way to establish sales on the Internet. We saw a significant influx of sellers to Ozon trading platform in the spring and summer of 2020, and this trend continued later — at the end of 2020, the number of active sellers at Ozon was four times more than a year earlier," the company told us.
Turnover of entrepreneurs from the Republic of Tatarstan at Ozon in 2020 increased by 17 times
Entrepreneurs from the Republic of Tatarstan also actively entered the marketplace, according to a message sent to the editorial office of Realnoe Vremya by Ozon. For example, in 2020, more than 500 sellers from Tatarstan actively traded at Ozon, which is nine times more than a year earlier. The turnover of entrepreneurs from Tatarstan increased even more — 17 times, they earned almost 1,2 billion rubles. Most often, they sell household goods, goods for children, clothing and shoes. To support the growth of businesses' interest in marketplaces, in February 2021, Ozon reduced commissions for the sale of goods and made logistics more flexible.
“To the previously existing two schemes of cooperation — selling from own warehouse and selling from Ozon warehouse — we added a third type of cooperation, in which the marketplace acts as a showcase, and the seller delivers by himself, or by third-party logistics companies.”
This format will allow the sellers of goods with special storage and delivery conditions and entrepreneurs whose products require additional installation or connection work to enter the marketplace. Today, there are entrepreneurs from remote cities who, because of distance, find it difficult to deliver their orders to Ozon sorting centres — “with the emergence of showcase model, this stage of logistics disappears, and with it — the barrier to platform entry.” Besides, the company provides marketing and analytical platforms — they allow sellers to analyse their sales in detail and promote products on the site.
Entrepreneurs from Tatarstan Rimma and Rustam Kashapovs tell about their experience of entering electronic marketplaces:
“We have been in online trading since 2013. Initially, we created a multi-brand online store of Muslim clothing and accessories. Even before the pandemic, in 2019, we decided to sell it, because we wanted to focus on our brand Vail. Its mission is to create comfortable, somewhat innovative hats. For example, we are the first to create a hijab with holes for headphones and glasses. Since we initially decided to promote our hats through marketplaces, we immediately abandoned the office and warehouse and worked remotely before the beginning of the pandemic. Now we are at Amazon (US), Wildberries, Ozon, Maidenly. Thanks to the marketplaces, our audience is growing, as it turned out that not only Muslim women but also representatives of other faiths are interested in our headdresses on these sites, and the headdresses such as turban are popular, for example, among secular girls and women after chemotherapy. In 2 years, our company has grown 20 times. Our products are bought not only by residents of Tatarstan, but also by residents of almost all major cities of Russia, as well as from Kazakhstan and Ukraine. We are glad that we are partners of marketplaces, thanks to them we have the opportunity to focus on production, on improving the quality of products delivered to these sites, without being distracted by questions about the assembly and delivery of our products.”
On June 1, Ozon holds the large COM.E ON FORUM conference for sellers, delivery agents, and company partners. Professionals will tell stories of success, about logistics, fintech, advertising, useful services and features, problems of agents and franchises, will present analytics with cases on e-commerce markets.
Online stores are beginning to overtake the “real retail” in terms of capitalisation
In January of this year, in terms of market capitalisation, Ozon Holdings became the largest Russian retailer whose securities are traded on the Russian stock market, overtaking X5 Retail Group, whose capitalisation is about $10 billion — while the capitalisation of Ozon, due to the growth of American depositary receipts, reached almost $11 billion on January 18, 2021.
Commenting on the growth, analysts noted that, most likely, Ozon will continue to outperform its key competitors in terms of growth rates: “The company's higher sensitivity to quarantine measures, compared to its competitors, will be associated with a more diversified sales pattern. Not only does its largest category, electronics, account for just 24% of revenue, but the rest of sales are spread across a large number of other segments, including the fast-growing convenience goods segment. In this regard, Ozon express delivery service is an important growth driver.”