Distinction between online and offline retail in Russia becomes blurred

Today’s edition of business daily Vedomosti.ru reports that a great number of Russian online retailers started opening their delivery points and stores, thus embarking into the realm of offline retail. Mr. Maxim Faldin, the General Manager of a Russian online-hypermarket Wikimart, stated that the “materialization” of online stores in Russia has become such a frequent occurrence that it can be considered a trend. Wikimart itself opened two delivery points just before the New Year in order to reduce its dependence on postal services and will evaluate the justification of respective costs after February 23 (Defender of the Homeland Day, informal Fathers’ Day) and March 8 (International Women’s Day). Other online magazines already concluded that such delivery points are worth the investment. Sotmarket, an electric appliances online store, opened 200 delivery points in 130 cities across Russia in the last two years alone. It plans to add another 100 points in 2013 and open 45 branded boutique stores. Online retailer Lamoda.ru delivers purchased items to its clients through a courier service and a partner network that operates more than 300 self-service postal booths. So far, the retailer opened only one magazine, in a Moscow shopping mall “Atrium”.

While customers in Moscow and St. Petersburg prefer courier service, delivery points are increasingly popular in regions outside these two metropolitan areas. According to an online retailer Ozon.ru, courier services account for 47 percent of total deliveries in Moscow and 25 percent in St. Petersburg. Outside of these two major cities, as much as 72 percent of deliveries are made through delivery points, while courier services account for only 9 percent of the total deliveries. Ozon.ru delivers its merchandise through 2,000 delivery points in 230 cities in Russia and Kazakhstan. Sotmarket’s representative explains that the customers outside the two largest Russian cities view delivery points as a proof of existence of a particular online retailer and a guarantee for a certain delivery. Delivery points also serve as a channel of communication between the retailer and a customer, thus increasing consumers’ confidence – according to Sotmarket’s representative, after opening of a new delivery point, online orders from the respective area double within months.

It is only natural to expect that the online stores will look to outsource “live” delivery services to other companies, as they are accompanied by costs that are not typical for an online retailer. For instance, PickPoint delivers merchandise from several online retailers (Lamoda.ru, Wildberries.ru, Sapato.ru, MyToys.ru, Rendez-vous, Ecco, Dostavka.ru, re:Store, Avon, Oriflame and others) through 320 of its self-service postal booths. According to PickPoint’s management, the company processes approximately 60,000 orders with an average value of 3,000 rubles (USD 100) per month.

Curiously enough, there is a reverse tendency as well: as the share of online retail trade is expected to rise, retailers are increasingly interested in generating online sales. For instance, the representative of Lamoda.ru expects that approximately 8 percent of the total fashion sales in Russia in 2015 will be generated online. The largest Russian food retailer X5 Retail Group opened its own online shop e5.ru and provides delivery to a vast network of its own magazines. The project started in February 2012 and by November the volume of orders reached 3,500 per day, with an average value of 2.000 rubles (USD 66). The company would like to generate 2 percent of its total revenues through online retail. For comparison, a leading electric appliances dealer M.video generated approximately 10 percent of its total sales in Moscow through its online shop.


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