Illustrating the relative resilience of the Russian e-commerce market amid the current economic turmoil, leading flash sales platform KupiVIP.ru reported a 44% revenue increase year-on-year in Q4 2014. The company attributes this growth to consumers switching from traditional and online retail to discount-based sites.
Sales also grew due to the development of the site’s cross-border business. KupiVIP now deals with active sellers from countries such as Germany, Italy, France, Turkey and the UK. These suppliers’ parcels are shipped to KupiVIP’s hub in Berlin before being sent to their individual addressees in Russia.
The site’s catalog now displays over 2,000 brands of fashionable clothes, footwear and accessories, with discounts up to 90% provided by more than 800 suppliers from all over the world. Cross-border sales now account for more than 25% of the site’s sales volume, general manager Vladimir Kholyaznikov told East-West Digital News.
At KupiVIP, beautiful people buy beautiful clothes with massive discounts.
KupiVIP also announced that it “began to break even in EBITDA” in Q4 2014. The platform’s gross revenue amounted to $260 million (including VAT and B2B services) for the whole year.
“In 2014 KupiVIP.ru changed strategy and redesigned its internal structure. Its commercial expansion to Kazakhstan and Belarus was successful. The international logistics system was significantly optimized. All these changes helped us to cut operating costs and show strong sales growth thanks to a competitive pricing offer in the fashion segment,” explained Kholyaznikov.
The discount platform also benefitted from the current market situation, “which caused changes in users’ behavior,” Kholyaznikov added.
Last week another key Russian e-commerce company, Ulmart, also reported impressive sales growth in 2014 and announced IPO plans.
From marketing excesses to profitability
Launched in 2008 by Oskar Hartmann, a Soviet-born German entrepreneur, KupiVIP.ru was inspired by such successful Western models as Gilt and Venteprivee. As a result of its aggressive marketing strategy, the site quickly asserted itself as the number one flash sales site — but was also criticized for neglecting profitability considerations.
Generously funded by Western venture investors, the site became an important Internet holding with the launch of Kupiluxe.ru, which focused on high-end products, and ShopTime, a more classic e-commerce site. In November 2014, the holding consolidated these properties into a single online platform under the KupiVIP brand.
The holding also includes a business unit for B2B services.
In 2015 KupiVIP aims to “maintain its high growth rates and high level of financial efficiency” — which is “quite an ambitious plan,” the company admits. The international strategy will be maintained, with the goal of becoming “the international platform for liquidation of stock balance of fashion brands” in the CIS region. Beyond Russia, Belarus and Kazakhstan, which remain its key market, KupiVIP is eyeing Ukraine and Armenia as well as Abkhazia and Kyrgyzstan in a further stage.
- East-West Digital News publishes in-depth studies on the Russian e-commerce market, including a full set of market data and case studies on leading market players in the domestic and cross-border segments. To receive an executive summary at no charge, please contact us at [email protected].
