Sber, Russia’s state-controlled financial and tech giant (previously known as Sberbank), announced today a new partnership to assert itself in the Russian e-commerce space.
Just weeks after agreeing an alliance with Merlion, Sber signed a “memorandum of intent” with M.Video-Eldorado Group — a competitor of Merlion in the field of electronic goods — to “join hands in developing the [multi-category] marketplace Goods.ru.”
To these ends, Sber intends to invest some 30 billion rubles ($392 million at the current exchange rate) and to buy out an additional stake from M.Video-Eldorado Group for 4 billion rubles ($52 million).
As a result of the deal, “Sber’s stake in Goods.ru will reach 85%, while 10% will be retained by M.Video-Eldorado Group, and 5% will stay with M.Video founder Alexander Tynkovan,” Sber stated.
Bid for leadership
Under plans, Goods.ru is set to become “Sber’s key multi-category e-commerce venue,” in synergy with such other Sber assets as SberLogistics, SberMarket, Sber Eapteka, and Samokat.
Goods.ru currently offers 18 main categories with 2.5 million products, says Sber. But this young marketplace — launched less than three years ago — is not a heavyweight in Russia’s online retail space. In 2019, it ranked only 26th among the country’s e-commerce sites, according to Data Insight, with sales reaching 8.7 billion rubles ($135 million at that time’s exchange rate).
However, by combining Goods.ru’s assets with those of Merlion’s Citilink.ru — the leader in the segment of electronic appliances, number two e-commerce site in Russia (2019), and a potential Sber acquisition — Sber could establish a firm foothold in e-commerce, or even contend for leadership in this space.
So far, the financial and digital giant failed to do so, as its alliance with Yandex and its attempt to take control of Ozon equally failed last year.
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.
Boosted by the pandemic, online retail skyrocketed in Russia last year, as exemplified by e-commerce leader Wildberries (+96%) and the online activity of such retail majors as X5 Retail Group (+362.2%), Detsky Mir (x2.4) and Azbuka Vkusa (x2).
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 saw its sales jump to some $6 billion in 2020; Ozon, which was introduced triumphantly on the NASDAQ in November 2020; AliExpress Russia, a joint venture involving Alibaba, Mail.Ru Group, Russian telco MegaFon and sovereign fund RDIF; and Yandex.Market, which raised $1 billion earlier in mid-2020 to support its ambitious plans.
An adapted version of this story appeared in The Moscow Times.
