In late December Sber, Russia’s state-controlled financial and tech giant (previously known as Sberbank), and Merlion, one of the largest Russian IT distributors, agreed to partner in the field of e-commerce.
“The new partnership will strengthen Sber’s position in the e-commerce industry and realize a range of new opportunities for B2B and B2C customers, while offering an integrated seamless customer experience through the financial and technological solutions of the Sber ecosystem. Merlion will also actively distribute the products of the Sber ecosystem through its own channels,” Sber stated, without providing more concrete details.
Merlion owns, in particular, two major sites selling electronic appliances (Citilink.ru, #2 Russian e-commerce site with $1.4 billion in sales in 2019; and Positronica.ru, #67, $48 million, according to Data Insight), as well as a computer manufacturing company and a computer repair network.
“E-commerce is becoming one of the key drivers of the development of the Sber ecosystem, so the development of this area is of paramount importance for us,” Lev Khasis, First Deputy Chairman of Sber’s Board, was quoted as saying.
“We believe that this partnership with Merlion, which we have been negotiating for a long time, will open up a wide range of new opportunities for our retail and corporate customers,” he added.
Unsuccessful previous attempts
In November Sber reaffirmed its ambitions in the field of e-commerce, following several previous unsuccessful attempts to partner with industry leaders.
- In 2017, the company agreed with Yandex a JV plan to create a “leading e-commerce ecosystem” in Russia. Sber put $500 million in the project, which led to the launch of two marketplaces: ‘Bringly’ for cross-border e-commerce and ‘Beru’ for domestic operations. While the previous shut down one year after the launch, the latter fell under the control of Yandex as the two companies put an end to their alliance in mid-2020.
- In 2020 Sber prepared to buy a large stake in Ozon, Russia’s first multi category e-commerce platform — but the talks stalled, Sberbank demanded and obtained a 1 billion ruble ($12.9 million) compensation for terminating the agreement, and Ozon finally found the money it needed on the NASDAQ.
- More recently Sber started discussions with M.Video, a leading consumer electronic retail chain — a competitor of Citilink — regarding a potential involvement in its marketplace Goods.ru. So far the discussions have not led to an agreement. Such a partnership would not be sufficient to support Sber’s ambition in e-commerce: in spite of its fast growth, Goods.ru remains a relatively small player in this space. In 2019 it ranked only 26th among Russian e-commerce sites, according to Data Insight. In addition, note industry analysts, Goods.ru is tightly integrated with M.VIdeo’s retail business, which could complicate its interconnection with Sber’s own ecosystem.
Sberbank made a huge way over the past decade from national savings bank to digital giant. Its large ecosystem — which it implicitly compares with Amazon and Apple — includes first-rank players in driving services (through O2O and 2GIS), media and entertainment (through the acquisitions of Rambler, Okko and Zvooq), online pharmacy (Eapteka), and some other sectors.
Whether the group will finally succeed in establishing a firm foothold in e-commerce will be among the most interesting intrigues of the coming years in the Russian digital space.
Russian e-commerce on the rise
Market research agency Data Insight expected online sales of physical goods in Russia to reach 2.5 trillion rubles in 2020 ($34 billion at the average exchange rate) and potentially some 7 trillion rubles (nearly $90 billion) by 2024.
The market is highly fragmented. Russia’s five largest online retailers and marketplaces account for under a quarter of the total industry. By comparison, Amazon alone controls half of the US commerce market, and more than a third in key European countries.
Among the top players on this market are, notably: Wildberries, which raked in 100 billion rubles ($1.3 billion) in quarterly revenue over Russia’s spring lockdown; Ozon, which has just been introduced triumphantly on the NASDAQ; AliExpress Russia, a joint venture involving Alibaba, Mail.Ru Group, Russian telco MegaFon and sovereign fund RDIF; and Yandex.Market, which raised $1 billion in mid-2020 to support its ambitious plans.
