A new marketplace could emerge soon on the Russian cross-border e-commerce scene, offering Russian online consumers goods from China and Southeast Asia.
Dubbed ‘Sputnik,’ the project is backed by Evgeniy Sobolev and Vladimir Stupnikov, co-owners of the iMars communications group, who own 66.7% and 33.3% shares of the company respectively, Kommersant business daily reported.
The founders did not disclose the amount of their investments; however, according to a source familiar with the details of the project it will take no less than 150 million rubles (about $2.4 million at the current exchange rate) to develop the platform, do the marketing, and hire the personnel.
Sputnik will seek to appeal to the consumers living in the regions who “do not trust foreign platforms,” the company says. It will feature unexpensive FMCGs, household appliances, clothes, shoes, etc.
The platform aims to work initially with retailers from China and Southeast Asia, then with companies from the EU and Russia.
New players have a chance
In the Russian market, Chinese manufacturers sell large amounts of goods through such companies as AliExpress, Joom, and Pandao, which belongs to Mail.ru Group. However, the audience is not sticking to specific marketplaces yet, Stupnikov believes – perhaps underestimating the traction of such brands as AliExpress and Joom among Russian cross-border e-shoppers.
“Any marketplace can only have a chance to be successful if it offers merchandise on competitive terms. This means either more attractive prices or a unique assortment of goods,” said Ilya Kretov, General Manager Russia and Emerging Europe at eBay.
The lowest prices are most often offered by big suppliers that, as far as Sputnik geographic focus is concerned, most likely have already been placing their merchandise on other platforms, he noted. “It is not the case that a unique assortment goes to a marketplace immediately; rather, it is the so-called long tail. This entails merchants with one-of-a-kind offerings who may come to the marketplace as soon as it generates enough hype; however, it will take a lot of time,” added Kretov.
Another condition for successs is the logistics. To have this task solved, it takes even big players a few years, he said, adding that it may take no less than three to five years for such a project to break even.
Another expert approached by Kommersant at one of the largest Russian e-retailers cannot see how Sputnik can gain its audience quickly. According to him, the existing marketplaces have already got loyal buyers. At the same time, even though Pandao and Yandex.Market’s Beru marketplace have managed to gain some shares of the market, they have not be able to increase them to any significant volumes despite the resources available to their owners, he noted.
Emerging cross-border giants
Yandex.Market and Russian state banking giant Sberbank launched the Beru marketplace in November 2018. Mail.Ru Group launched a platform named Pandao, selling Chinese products to Russian online consumers, in 2017. The group’s cross-border activities are in the process of being merged with those of AliExpress Russia in the framework of a joint venture formed just weeks ago.
The Russian cross-border sales market (foreign sites selling physical goods to Russian online consumers) reached around 348 billion rubles ($5.55 billion) in 2018, notes EWDN’s latest Russian e-commerce report based on Data Insight estimates. The number of orders reached 300 million, up 34% from 2017.
Russian Post processed 341 million e-commerce shipments to Russia, up 22% from 2017.
In 2018, cross-border purchases accounted for some 23% of the total value of online orders from Russian consumers but as much as 51% of the total number of orders, according to Data Insight. The difference is due, in particular, to the large fraction of low-value cross-border purchases made from Chinese sites.
