Dismissing the widespread cliché of Russians only being capable of cloning existing Western business models, Enter.ru is a hybrid offline/online retailer with no known equivalent in the world. Launched in early 2011, the company recorded 3.1 billion ruble in turnover the next year (approximately $100 million, including VAT), quickly asserting itself as a major player on the Russian e-commerce scene.
Enter.ru now has 2,200 employees, including 500 in back office and 1,700 in front office. Its CEO Sergey Rumyantsev spoke with East-West Digital News to share some insights on his company’s strategy and operations, from fulfilment, to marketing, to further deployment.
Is Enter.ru’s online-offline hybrid concept really new, or were you inspired by any existing models either in Russia or abroad?
As far as we know, Enter.ru’s concept is totally new. There are plenty of offline retailers going online all over the world; and more and more online merchants launching offline initiatives. But even after deep research, we could not identify any example – at least at this scale – of an initiative designed to develop the online and offline channels with equal attention and in full synergy.
This offline/online blend is reflected by our figures. Of our total sales, pure offline represents about 20%, pure online 30%, and the remaining 50% is so mixed that I really can’t tell you whether it’s online or offline retail.
At bottom, we are building a universe of brand-to-customer points of contact, making our 38,000 SKUs – in 16 categories – equally accessible via our offline stores, website, catalogs, call center, mobile apps, and social media apps. Enter’s customers can use any of these channels, in any place, at any time.
From furniture to DIY, from consumer electronics to health and beauty products, your product assortment is very large. Do you have universal, Amazon-like ambitions?
One could also mention children’s goods, home appliances, gifts, perfumes and cosmetics, jewelry, sportswear, and many other things we offer that are available via our website as well as in our 1,536-page paper catalog.
We offer even more categories than [Russia’s e-commerce pioneer] Ozon.ru. Indeed, we position ourselves as a multicategory reltailer, including big items – with the exceptions of food, fashion and footwear, books and other cultural products. While each of our segments can represent billions of dollars, or even tens of billions from a long-term perspective, we aim to be among the top three in all these segments within five years.
“Promoting a greener way to move. Enter will assemble and deliver your bike to your home for free.”
You certainly need a lot of money for that…
Our planned investments amount to $300 million over five years.
Who are your investors?
For now, the shareholders of Enter are [Russian billionaire] Maxim Nogotkov and myself.
Nogotkov is also the owner of Svyaznoy. Is there any relationship between Enter and Svyaznoy?
The Svyaznoy group was established by Maxim Nogotkov more than 10 years ago. It includes mobile retail business, banking, travel services, some wholesale business, etc. It also runs an exclusive distributorship for Pandora jewelry in Russia. However, Svyaznoy’s main business is still mobile retail, which started in 1996.
Even though Svyaznoy and Enter have a shareholder in common – Maxim Nogotkov – the two companies are entirely independent of one another. Enter has its own warehousing, cash collection, marketing, pricing, staff, etc.
How do you deal with logistics and delivery – a classic and painful hurdle in Russian e-commerce?
This is indeed a challenge, with no really helpful service providers to deal with the big volumes, high prices, and long delivery time across this huge country. Even though we have agreements with four distinct service providers, we are building a warehouse infrastructure and we still do the “last mile” with our own delivery service. The call center is ours, too.
In 2012, we invested in a warehouse project with a long-term lease contract. It became the most significant deal in the Russian logistics market. Next August, we will start operating 62,000 sq meters of warehousing capacity. The main goal of this important investments is to guarantee that Enter customers will get their orders in a timely fashion.
In addition to home delivery service, we provide Enter customers with the opportunity to pick up their order in any of our offline stores. To serve areas – even remote ones – where we don’t yet have physical stores, we have agreements with three logistics operators. In such cases, we do not charge customers ourselves; they are billed by the logistics operator by its own rates.
What about your marketing policy?
An offline presence is important for branding and trust, especially in a country like Russia where the average level of trust in e-retailers is very low. Regarding pricing, we monitor the market very carefully and have chosen to position ourselves, as a rule, just below the competition.
Traditionally, we use the following advertisng channels: OOH [out-of-home] advertising, Internet advertising and promotions. So far we haven’t done TV campaigns in 2011 and 2012. Instead, we focused on developing high quality creative ideas. In January 2013, for instance, we launched an intensive one-week OOH campaign with 2,000 billboards, each 3×6 meters, in seven different cities. (1,500 of the billboards were in Moscow). It cost us less than a regular one-month campaign but brought fantastic results.
We have our own creative studio that produces advertising from concept to implementation. We involve only our employees and their families in our photo sessions. That’s a really important feature of our marketing.
Which areas do you serve today, and what is your deployment strategy? Could you expand one day to other countries?
Today we run 104 offline points in Russia’s Central district – including Moscow – as well as in the Northwestern, Southern, and Volga regions. We are further developing our networks in these four regions this year, but we will expand to the Urals, Siberia, and the Far East in 2014.
We do not plan any expansion to other countries in the very near future. Maybe later. It all depends on the success of the existing business and the market environment.
- RUSSIAN E-COMMERCE REPORT – The total volume of Russian online retail reached approximately $13 billion in 2012, up 25% from the previous year. EWDN has published an in-depth research on this industry, including interviews and case studies about retailers of all sizes. To receive free insights or to order the full version (2013 edition), please contact us at [email protected].
