Online retail in CEE invests in faster fulfilment and market entry

Amin Alkhatib
Senior Retail Analyst
@RetailAnalysis

Date : 04 February 2020

Technology and retail companies in Central and Eastern Europe are investing in online retailing. We are seeing developments in Russia, Turkey, Czech Republic and Hungary.

Retailers are innovating in logistics and fulfilment services to offer shoppers convenience and to underpin attempts to drive profitability. Meanwhile, companies more widely are investing in services that enable shorter delivery times, or expanding into new markets, to boost transaction volumes and support profitability through greater economies of scale.

Yandex launches a 15-minute delivery service in Moscow

Russia’s largest technology company, Yandex, launched Yandex.Lavka (Yandex.Shop) a grocery delivery mobile app service that promises delivery in 15 minutes of ordering. This is much faster than its meal delivery service Yandex.Eda (Yandex.Eats), which averages delivery times of between 30 to 35 minutes on a range of 2,000 products. Delivery is with free. Orders range between RUB600 (US$9.41) and RUB1,000 (US$15.68), a fraction of the RUB3,440 (US$53.94) spent on an average basket at online supermarket, like Perekrestok.ru.


Source: Yandex.Lavka

Micro-dark stores fulfill Yandex.Lavka orders

Yandex has set up over 50 small dark stores (around 150 sq. m. each) from which bike couriers can pick up orders for delivery to customers in a radius of about a mile. The service’s area of coverage for the service is indicated by the blue areas where the shop is already operating, and by the grey ones where they will operate soon. It intends to continue to expand its coverage to add more of Moscow and into St Petersburg. Its strategy is to build market share by leading in the digital convenience channel.


Source: Yandex

How does Yandex win in the food delivery channel?

Yandex has built a fulfilment infrastructure dedicated to small orders. Multichannel retailers have tended to have a slower turnaround because they deliver from several large warehouses in locations far from most shoppers. Also, some retailers work with third-party delivery companies that do not have real-time access to their inventory database to confirm availability and ensure fast-paced replenishment.

Also, it is trying to be profitable. The company changed its sourcing of goods from wholesaler Metro AG to being directly supplied by distributors and manufacturers. Also, by operating small dark stores, means the sites do not have to be accessible to shoppers, so they can seek low cost real estate with minimum set up and operational costs.

Yandex is trying different solutions for food delivery

In early 2019, Yandex launched Yandex.Chef. The service provider will prepare meal kits with ingredients and send it to a nearby restaurant for cooking, then deliver the completed meal to the customer.


Source: Yandex.Chef

Such on-demand grocery delivery is difficult to execute well and be profitable. Yet, we are seeing fast fulfilment online food delivery services appearing in more markets in CEE, such as Getir in Turkey.

Turkey’s Getir also launches a 15-minute food delivery service

Turkish tech startup company Getir plans to launch its 15-minute food delivery service in the country’s most traffic congested major cities by mid-2020. Shoppers access a cloud-based inventory that gives them real-time access to the retailer’s inventory.

This also directs couriers to the nearest warehouse with available product, which limits the distances covered. Like Yandex, the storage spaces will be placed in several inner-city locations to minimise the distance to shoppers.


Source: Getir

Pure online grocery retailers expanding into new markets

Czech online food retailer, Rohlik.cz, plans to enter Germany between 2023 and 2025. This follows its first expansion into a foreign market with its entry into Budapest in December 2019, under the web name Kifli.hu. The retailer also announced its plans to launch the service in Vienna and Bucharest by 2023.

Russia’s largest online retailer, Wildberries, also announced its market entry in Poland. The company will use its learnings from its market expansion into Belarus, Kazakhstan, Kyrgyzstan and Armenia to successfully establish and grow its business in central Europe.

Subscribers wanting to find out more about developments in the online channel can look here.