Russia’s online footwear market, which only a year ago almost resembled a desert, is witnessing rapid transformation following the initiatives of a number of major players. This market was recently estimated to have a potential of at least €100 – 150 million.
Although still not officially announced, LaModa.ru, a new online shoe retailer, launched last month with a large assortment of Italian, German, Polish and Russian brands.
Through partnerships with DHL and SPSR Express, deliveries are organized throughout the country from LaModa’s warehouse in Yaroslavl. LaModa users also have access to a 24/7 toll-free call-center. The service includes the option to cancel an order upon delivery as well as a 14-day cash-back guarantee. The site accepts a variety of payment options in addition to bank cards, which are not popular in Russia for online payments.
Though the site is online, some features are not yet fully operational.
LaModa investors include Rocket Internet, a prominent German incubator that has introduced Groupon and eBay in several countries, Holtzbrinck Ventures, owned by major German publisher Holtzbrinck Group, Tengelmann Group, a German based multi-sector retailer with international operations, and Investment AB Kinnevik, a large Swedish investment company.
Otto Group in the running
At the beginning of this year, another site, Promenad.ru, was launched by the Otto Group, the leading global distance selling group with a strong presence in Russia.
The site’s catalog includes approximately 1,000 shoe models from Russia, Italy, Germany and Portugal, in addition to a variety of accessories. Some of the site’s brands are being offered for the first time on the Russian market, reports Oborot.ru, an online resource specializing in e-commerce.
Promenad delivers their shoes across the country to homes, post offices and pick up points in Moscow, Tver and St. Petersburg. Payments are so far made only on delivery.
Sapato.ru’s first-mover advantage
The first major player in the market was Sapato.ru, launched in mid-2010 by Fast Lane Ventures, the incubator of Direct Group, a major Western investment company operating in Russia. Among other investors were Investment AB Kinnevik and e-Venture Capital Partners, a VC fund backed by Otto Group.
In November 2010, Sapato.ru closed a $5 million second round of financing. The funds were aimed to enlarge the site’s selection to “10,000 references in 2011,” iBusiness.ru reported the company saying. The funds also allowed Sapato to launch an aggressive marketing campaign, which recently included TV spots.
Oborot.ru reported that Sapato’s monthly traffic now exceeds one million visits.
Ozon.ru, the last but not least player
The last key player entering the market is Ozon.ru. This leading Russian e-commerce site, sometimes called “the Russian Amazon,” is about to launch a new section dedicated to shoes. Ozon initially will deliver items purchased from this section to Moscow, St. Petersburg, and Tver (a city northeast of Moscow and where the company has its warehouses); later it will deliver them across the country, as it does with all other items.
Among other sites specialized in footwear are Bagsandshoes.ru and Online-obuv.ru, both launched in 2010.
Expert commentary
Special to EWDN by Tobias Schubert, e-commerce expert in Russia
Only a few years ago if you suggested buying shoes online, the response was predictable, ”Shoes online? No, way! Forget it!” Zappos.com and Zalando.de have proven, however, that selling shoes online is not only possible, but also highly profitable.
If we look at the retail market and consider the trends among Russian women regarding fashion and shoes, it becomes obvious that Russia is a highly attractive market for such a business. After its peak in 2008 at $22 billion and subsequent 34% retreat to $14.5 billion in 2008, the total size of the Russian shoe market has rebounded in 2010 to $17.5 billion.
Currently only 5% of all active online Russian shoppers buy fashion, including clothes, shoes and accessories, online. By contrast, in Germany for example, about 30% of online purchases were fashion related in 2010. While this fact underlines the great potential for growth, it also shows that the Russian market and local consumer behavior are still some years behind the European market. This makes it all the more important to have both a huge and attractive assortment of shoes and a well designed, user friendly website with high-resolution images and detailed product information.
In Russia e-commerce is still a new sphere and retailers still need to work hard to gain consumer trust in their shopping platforms. As for any other e-commerce business, logistics remain the main obstacle when it comes to service quality. While consumers in the regions are more tolerant regarding delivery times, Muscovites expect delivery within 1 or 2 days at most.
Whichever player most effectively manages its products and best guarantees fast and reliable delivery times has good chances to become the go-to online resource for shoes – and later maybe handbags and other accessories – for fashion conscious Russian women.
• Tobias Schubert, 28, is a German e-commerce expert living in Russia for more than 4 years. Currently Mr. Schubert is a business development manager for the Otto Group Russia, where he is working on new e-commerce projects. The Otto Group is a global leader in distance selling active in more than 20 countries, already deriving around 50% of their €10 billion turnover online. Mr. Schubert is formerly a strategy consultant with Roland Berger, where he founded and led Sapato.ru as CEO. Sapato.ru is now Russia’s largest and leading e-commerce site for footwear, with an approach comparable to zalando.de in Germany and zappos.com in the US.
