‘Е-commerce in Russia accounts for no more than 6% but, we see big potential for development’
Director of Ozon in Volga region Rustem Kasimov on trends and key e-commerce market players in Russia and Tatarstan
What policy does Ozon stick to in dealing with regions? How does the company cooperate with the self-employed? What goods do residents of Tatarstan purchase on the Internet? Director of Ozon in the Volga region Rustem Kasimov answered these and other questions during an online conference in Realnoe Vremya’s editorial.
Tatarstan residents to get access to more than 6,5 million goods
Let’s start with assessing the market. What trends, development areas of e-commerce do you see in Russia and Tatarstan?
Е-commerce in Russia accounts for no more than 6% of the whole retail market now, but, nevertheless, we see big potential for development, particularly regional development. For instance, there is a programme in Tatarstan we called Accessible E-Commerce. We develop it together with the Ministry of Economy. The programme includes several important stages. The first stage is the development of logistic infrastructure. We will launch a sorting centre of Zelenodolsk Priority Social and Economic Development Area (PSEDA) in the third quarter of 2020. Thanks to this, residents of the republic will get access to over 6 million goods we offer on our platform.
I would also like to note the development of the chain of pick up points, which is very popular. The first pick up points in Kazan appeared at two metro stations. We noticed that they were popular and decided to develop in this direction. We are planning to locate pick up points at another seven stations as well as in universities, hospitals. Also, late last year we announced the launch of a logistic marketplace. This gives opportunities to small, medium-sized businesses, including the self-employed.
What’s the share of е-commerce in Tatarstan? And what other areas of development of е-commerce exist?
This indicator is a bit higher in big cities — where there is access to the Internet. Of course, it is higher in Moscow and Saint Petersburg and lower in regions. By developing the logistic infrastructure, we want to get closer to our audience: buyers, sellers, partners. It becomes more convenient for them to supply goods to our platform. The development of the commodity marketplace became the second important area.
You said that е-commerce accounted for 6% in Russia. Is Kazan included?
Sales and the number of orders in Tatarstan have grown in the last three years. This indicator doubled only in 2019. Now the republic is in the top 10 in Ozon’s revenue.
Who else is in this top 10?
Moscow and Moscow Oblast, Leningrad Oblast, Krasnodar Krai, Nizhny Novgorod, Sverdlovsk Oblast, Yekaterinburg. It is the most economically developed regions.
Who are the key players in the local market?
If we are talking about the key players in Russia, except for Ozon I would single out Wildberries. Besides, there are regional companies that develop their activity in regions and then reach the federal scale. For instance, it is KazanExpress that opened in Kazan and is now developing successfully.
Е-commerce in Russia is no more than 6% of the whole retail market now, but, nevertheless, we see big potential for development, particularly regional development. For instance, there is a programme in Tatarstan we called Accessible E-Commerce
What’s the share of Ozon among the players in Tatarstan?
It is quite hard to determine the share in that small percentage we occupy in the retail market. This is why I will refrain from commenting.
What policy does Ozon have when it comes to working with the regions?
Nowadays Ozon delivers goods to about 40% of the Russian population for 24 hours. The development of logistic infrastructure, shorter delivery time, better service quality, a bigger number of pick up points — all this leads to rapid sales growth. And this is a consequence of the accessibility of our goods.
“We are going to scrupulously and meticulously select suppliers”
Last autumn you outlined plans for launching a service to deliver farmers’ produce. Will this happen as soon as the logistic centre in Zelenodolsk PSEDA opens?
Our test project to deliver fresh produce has already been operating in Moscow for the second year. We see a considerable rise in demand for this service. The number of orders in Moscow grew by 120%, and consumption of everyday goods rose by 154%. This trend applies to regions too, including Tatarstan. We are convinced that we will expand it through the commodity marketplace. For this purpose, we will try to invite local manufacturers to our platform. As consumers are very loyal to local produce.
So how will you test this service in Tatarstan?
I think that after the processing and sorting centre in Zelenodolsk. We will consider the possibility of expanding our infrastructure and complementing it with delivery terms because fresh produce is such a category of goods that requires special storage conditions. We are demanding towards ourselves, this is why we will announce it as soon as we are ready.
So don’t you know at the moment what agricultural producers you will work with?
We will work with local producers, as it is fresh produce. It isn’t reasonable to supply the produce from afar. Moreover, we are going to scrupulously and meticulously select suppliers, as we assume full responsibility for the quality of goods.
How will this selection be carried out?
We are still structuring our approach to the selection of a farmer. We are inviting absolutely everybody. If a product is manufactured, it means that there is a buyer.
Our test project to deliver fresh produce has already been operating in Moscow for the second year. We see a considerable rise in demand for this service. The number of orders in Moscow grew by 120%, and consumption of everyday goods rose by 154%. This trend applies to regions too, including Tatarstan
Do you assume that you will have to look for agricultural manufacturers on your own?
Over 440 producers and sellers already work with us in Tatarstan. Thanks to the company’s infrastructure, we can supply the producers’ goods almost across Russia. At this moment it is over 6,000 settlements. Our marketplace is convenient for sellers because Ozon has about 30 million active buyers, and the daily audience on the website is 3 million buyers.
What admission ticket will the agricultural manufacturers have?
We don’t use admission tickets. We differ from the modern retailing that we don’t have restrictions on commodities. When there are restrictions, competition begins, and the concept of admission ticket appears. This is characteristic of traditional retailing. Only a fee is a condition of our cooperation. Our seller fixes the delivery time, the price for a good himself. We just charge a fee for allowing the product to be shown to a big audience.
How much is the fee?
From 5% to 35%.
“We will create over a thousand jobs”
How much has Ozon’s sorting centre in Kazan accelerated delivery across the republic?
The sorting centre whose opening we announced last year, first of all, allowed our sellers to deliver goods to Kazan. Earlier, they had to send them to Tver Oblast, which wasn’t always convenient and cheap.
Let’s look inside Ozon in Tatarstan and Volga region. How many people work here? What staff policy do you go by?
The number of workers in Tatarstan is over 350 people. With our ambitious plans in 2020 — the opening of processing and sorting centre, launch of a logistic platform — we plan to create over a thousand jobs this year only.
What is your average salary?
We stick to the policy on a salary that must not be below the market.
Could you tell us more about the cooperation with self-employed people? What are the terms to work with them?
The launch of the logistic marketplace gave an additional impulse to the cooperation with the self-employed. Over 50 self-employed people provide us with courier services. They choose the working hours, the load a day themselves. Such a flexible schedule is very convenient and interesting, including for students. As for the income, it largely depends on the self-employed, his or her readiness to work.
What categories of goods do the self-employed often offer?
We haven’t worked in the commodity marketplace in Tatarstan so far, this is why I can’t say anything. As for our partners, mainly it is goods for home, goods for children, good, clothing. The range is wide.
The average purchase value in Tatarstan in 2019 totalled 2,105 rubles. Tatarstan residents purchase goods from 4-6 categories on average. It is goods for children, books, electronics
Let’s switch to the economy of the company. How much did Ozon’s total revenue grow last year?
Talking about the total growth of Ozon, the third quarter last year turned out a record high in the last 15 years. We grew by 97%, the total turnover amounted to 19,2 billion rubles.
What is the average bill?
The average receipt in Tatarstan in 2019 totalled 2,105 rubles. Tatarstan residents purchase goods from 4-6 categories on average. It is goods for children, books, electronics.
What’s the most active audience?
We divide the audience into two categories depending on behavioural characteristics. Firstly, it is an experienced purchaser who buys goods from 4-6 categories, their average purchase value is 1,7 times higher. They prefer a courier. We have a subscription for them that enables them to get a prepaid order free and in any way. There is also such a tool as Ozon.Card. It is a card that our buyers use and receive cashback from 5% and higher. There is also a service we introduced last year — to leave a good at home. A courier arrives, leaves a good and goes. Mainly people who trust their neighbours use such a service.
The second category is spontaneous purchasers who buy goods from 1-2 categories, choose the simplest ways of delivery. We organise a lot of special offers for them so that our purchasers can try online sales and understand it is profitable and convenient.
What about sales in the mobile app?
The share of sales in the mobile app grows. Sales from the mobile app in Tatarstan in 2018 totalled about 40%, in 2019 it already was 62%.
What is your vision of the market development in 1-2 years?
The market development pace won’t get slower. Big companies that invest and invest in IT and logistic infrastructure help it. A big number of goods is appearing, more pick up points are created, couriers are becoming more accessible. All this will lead to a bigger growth in the market.