Joint ventures and partnerships by some of Russia’s leading ecommerce retailers is evolving the channel’s service levels. Alibaba and Yandex are forming partnerships with various companies to develop their online shopping offer and improve their services. Such a move is encouraging competing ecommerce retailers in Russia, such as Ozone, to enhance theirs too.
Alibaba signs strategic partnership…
Alibaba signed a joint venture in Q3 2018 with Mail.ru Group, MegaFon and the Russian Direct Investment Fund to create a single platform for shopping, social communications and gaming. The partnership combines the expertise of ecommerce, technology, and telecommunications companies, and the support of state funds. The joint venture will be called AliExpress Russia, with Alibaba owning the largest share, at 48%.
…to benefit from mutual expertise
Alibaba and Mail.ru will benefit from their mutual expertise, with the former offering knowledge in operating an ecommerce business and the latter leveraging its 100m internet users across its social media, messaging, email and online games platforms.
Alibaba and Mail.ru will create Russian ecommerce ecosystem…
The partners in the joint venture aim to integrate the ecommerce business with Russian social media and communication platforms. They will utilise VKontakte (VK), Russia’s equivalent of Facebook, to develop a social shopping platform with the support of its own payment tool VK Pay. Mail.ru could use its instant messaging service, TamTam, with its seven million registered users, to develop a social payment method akin to WeChat Pay in China.
…and develop group buying on social networks
Alibaba’s Tmall (AliExpress) is already encouraging group buying on its Russian website under the tagline S Dryzyemi deshevle (With friends cheaper). It encourages shoppers to buy in groups with discount offers and free delivery for orders. The joint venture will help transfer and expand the shopping concept on to the Russian social network.Source: Tmall Russia
Yandex and Sberbank also sign their own ecommerce joint venture…
Russian search engine firm, Yandex, and state-owned bank, Sberbank, set up a joint venture in Q4 2017. This led to the launch of two ecommerce services, Beru (I’ll take it) and Bringly, in Q4 2018. These are in addition to Yandex’s search engine shopping platform and price comparison site, Yandex.Market.
…to offer a domestic and cross-border shopping platform
Beru and Bringly are business-to-consumer shopping platforms, with the former fulfilling orders from within Russia only, and the latter dedicated to cross-border shopping for shoppers in Russia. Orders from Beru are processed in a fulfilment centre in Moscow and dispatched to homes or pick up points in Sberbank branches across Russia. Bringly fulfils orders from its Latvia-based warehouse to expedite shipping through customs.Source: Beru.ru
Alibaba is improving cross-border delivery times…
The ecommerce company signed an agreement with Russia Post to upgrade the latter’s fulfilment service centre. This will improve cross-border purchases by processing same-day orders and reducing average delivery times from the current of 10 days.
…while Yandex builds on ranging
Yandex.Market announced it will be selling JD.com goods in Russia through its ecommerce platforms. This will strengthen Yandex’s ranging and share of cross-border trade, which is currently dominated by Alibaba’s AliExpress and Tmall.
Marketplace competition heats up with new (re-)entrants
As Russia’s ecommerce evolves, local companies like Ozon are investing in their businesses to keep up with the competition. Ozon has launched its own third-party business-to-consumer shopping platform, Ozon Seller, in Q3 2018. This is the second attempt by the pure online retailer to launch such a business concept. It announced plans to double its fulfilment infrastructure in 2019 to accommodate the additional trade. It is also differentiating its service with its consumer-to-business lending platform, Ozon Invest. Shoppers can grant loans to small and medium-sized businesses with a return on investment.Source: Ozon.ru
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Central and Eastern Europe is a region that illustrates great growth potential for both retailers and suppliers. The region also presents opportunity for retailers to evolve their business model to widen their shopper base and draw more traffic to their stores.