Mail.ru formed a joint venture (JV) with state-run bank Sberbank to create a leading Russian O2O (online-to-offline) services platform focused on food and transportation. This follows the signing of a joint venture between Mail.ru and Alibaba in 2018 that will help the former create a Russian-owned online retail ecosystem.
What is a retail ecosystem?
This is a new model in retail that refers to the integration of online, offline, logistics and data into a single value chain. The model is sometimes referred to ‘unified commerce’, blending social media, ecommerce and mobile messaging.
Source: IGD Research
Sberbank and Mail.ru partner to invest in ‘last mile’ delivery
Sberbank and Mail.ru formed a strategic partnership to create a service platform for taxi hailing and food delivery. They will invest in two of Mail.ru’s subsidiaries, Delivery Club and Citymobil. Mail.ru completely owns the former and bought a 23% share of the latter in 2018. The investment in these two companies will enable them to evolve their ‘last mile’ delivery service, which will integrate into Mail.ru’s online ecosystem.
Source: Mail.ru, Citymobil
Mail.ru is learning from Alibaba to build its online retail ecosystem
Alongside its JV with Alibaba and Sberbank, Mail.ru has a set of digital tools it can draw from to develop its own online services ecosystem. These include its offline maps and navigation app Maps.me to integrate into the taxi hailing system and VK, its social network platform, to market its services and act as an additional sales channel for AliExpress (Alibaba).
Why develop an ecosystem?
The push towards ecosystem development helps unlock many of the advantages, which give both suppliers and retailers a better understanding of the shopper. An ecosystem often works as a virtuous circle, with companies able to mine the data that is generated to continually improve and refine the entire offer. This then drives more shopper engagement and generates a new stream of data.
Source: IGD Research
Mail.ru must catch up with Yandex in revenue growth and profitability…
Mail.ru’s key competitor Yandex is already established in the ‘last mile’ delivery market with both its Yandex.Taxi and Yandex.Eda (Yandex.Eats) services. Yandex.Taxi, for example, is established and is expanding following the acquisition of key competitor, the Vezet Group, buying the operation and the customer base of the latter. It also managed to increase revenues and reach profitability, which have both improved between Q1 2016 and Q1 2019. Mail.ru will have to accept the lack of profit for some years until it is able to take advantage of scale and cost efficiencies.
…and bet on innovations like autonomous cars and voice shopping
New technologies are expected to improve the ‘last mile’ delivery and make it more efficient and potentially profitable. Yandex launched its autonomous car project in 2017, using its own mapping, navigation, computer vision, and object recognition technologies. This service was rolled out in two Russian cities, Innopolis and Skolkovo, in H2 2018, and is being tested in Moscow. Then in 2017, Yandex launched Alice, a Russian-speaking smart assistant that can perform various tasks, such as control in-home devices, order products or a taxi, with a voice prompt.
Source: Alice Yandex, Yandex
Subscribers can read the latest news about retail ecosystems here or the Russian market here
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.
This in-depth guide to Russia explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.
See the latest industry news on Central and Eastern Europe.