A former top executive of Casino Group, a major French retail group, and advisor to the CEOof Æon Group, Japan’s largest retailer, Gabriel Naouri is Chairman of the Board of Yandex.Market. This Yandex-Sberbank joint venture, agreed in 2017, owns three e-commerce platforms: Yandex Market, a popular e-commerce aggregation and price comparison platform launched in 2002; Beru, an integrated marketplace for domestic purchases; and Bringly, another marketplace designed for cross-border orders, the two latter being launched just months ago.
Naouri shared with East-West Digital News his views about the Russian e-commerce market, its challenges, opportunities, and accessibility to foreign players. This interview is an excerpt from EWDN’s international report on Russian e-commerce, which will be released in June 2019.
What is your vision of the Russian e-commerce market and its prospects? How does it compare with that of France or other countries? (Please comment on the size and growth prospects of the market, the absence so far of clear leaders, etc.)
The Russian market offers huge opportunities. With a population of 150 million people and an Internet penetration of nearly 80%, the potential is unique. Now is the right time to build market share. As a comparison, the top four players account for 75-80% of the market in the US, China or France. In Russia it is less than 25%. This fragmentation offers a unique opportunity for Yandex.Market.
What are the main challenges for players to grow on this market?
Some of them are common with other markets. The main difference is territory size. In a country of over 17 million sq. km., given its current infrastructure, your logistic strategy cannot be identical in all regions. It is a differentiated and step-by-step process that requires to have a clear strategic vision; otherwise you could spend trillions of rubles building little-efficient logisitic capacities.
How open is Russia, in your view, to international players?
Very open. For players like Auchan or BlaBlacar, Russia is a key market. [Naouri refers to the huge success of these French companies on the Russian market, since 2002 and 2014, respectively, where they generate more revenues or activity than in any other market, including their home country in the case of Blablacar – editor]
What is the long-term strategy of Yandex.Market? How do you envision its position in three to five years?
Our goal is to see 1) Beru become the leading marketplace in Russia, 2) Bringly become a leading cross-border marketplace and 3) YandexMarket maintain its leadership among price comparison sites.
What are the best assets of Yandex and Sberbank in this endeavor, and which could be the most challenging obstacles?
Our two main shareholders are providing strategic assets, including tangible and intangible ones. Experience, AI labs, talents, more than 14,000 banks locations, calculation capacity, capital, a global presence and the list goes on. Arkady Volozh [Yandex’s co-founder and CEO] and Herman Gref [Sberbank’s CEO] have given the management the means to fulfill our ambition.
The list of obstacles is long as well – but in business, this is part of the game.
What is the company’s financial strategy? Could the joint venture be open to new investors? Are there plans to go public?
As you know we play in a very competitive market and therefore I’ll keep these answers for myself for the moment.
How did you become a board member of Yandex.Market? How do you envision your role and contribution there?
Both shareholders [Yandex and Sberbank] suggested I joined the new venture, due to my experience in both retail and e-commerce in Europe, Asia and the US. At the board level, my role is to lead the board works and devise the strategy with the shareholders. At the management level, I try to be the best possible sparring partner to Max Grishakov, Yandex.Market’s CEO, and help him with strategic recruitments and projects. My role here is to facilitate things.
You’ve invested in e-commerce company Boxed.com, medical apparel brand Jaanuu and health & wellness platform Tictrac. What are your investment criteria, and how do you work with entrepreneurs?
I’ve been working in retail and e-commerce for the last 15 years. More than investing, I help entrepreneurs build fast-growing companies with an international potential. I share with them my international experience, my operational expertise and my network. When I invest, I tend to partner with large international family offices or US and European VC funds. Usually I invest only in categories I know well e.g. apparel, food, e-commerce, marketplaces, retail tech. It would be great to see more Russian wealthy individuals invest in fast-growing companies.
- East-West Digital News is conducting an international study on Russian e-commerce in partnership with Yandex and other major e-commerce companies. Foreign brands and online retailers selling to Russia or considering to do so are invited to participate in an online survey; they will receive the research report free of charge upon release.
