Insights on the Russian e-commerce market: Ozon and Amazon’s strategic layout and off-season operation strategies

While Russia’s traditional economy is growing slowly, the e-commerce sector is expanding at an astonishing double-digit rate. As one of Russia’s e-commerce giants, Ozon’s CEO Alexander Shulgin pointed out that the e-commerce industry already has all the conditions for rapid growth and is expected to maintain rapid growth in the next ten years. Currently, Russia’s online retail sales only account for 4.5% of total retail sales, but the annual growth rate has reached 25%, and the growth rate of some e-commerce giants has even exceeded 70%. Ozon itself has experienced year-on-year growth of nearly 80% over the past year and still has the potential to achieve triple-digit growth in the future.

Although the Russian e-commerce market started late, the market demand is huge, and consumer demand for online shopping is far from saturated. With the development of logistics channels, people are increasingly inclined to purchase various goods online. Ozon was founded in the 1990s. It initially focused on selling books and was known as the “Russian version of Amazon.” In fact, in the early 1990s, typing “amazon.ru” would jump directly to the Ozon website.

Ozon not only has an online e-commerce platform, but also is involved in physical retail business. Sellers can choose to place their goods in Ozon’s logistics center and the platform will be responsible for shipping, or they can choose to store the goods in their own warehouses and Ozon will complete the delivery work. Although Ozon’s group buying discount service has only been launched for one year, it has already accounted for 20% of the company’s turnover. Currently, Ozon’s main sellers are concentrated in Moscow, but there are plans to expand throughout Russia in the future.

It is worth noting that the growth rate of Russian e-commerce in small urban areas has reached triple digits and is expected to continue to maintain this high rate in the next three to four years. However, logistics remains one of the main obstacles hindering the development of e-commerce in Russia, especially with insufficient investment in delivery networks. Shulgin believes that in order to achieve fast delivery within 24 to 48 hours, Russia needs to build six to seven logistics centers. Ozon provides three delivery methods: courier company, locker and self-pickup point. Among them, the locker business has grown rapidly and accounts for 15%-20% of total sales. As the largest locker operator in Russia, Ozon currently has 4,000 lockers and plans to increase this to 7,000 by the end of this year.

As for the impact of Chinese e-commerce on the Russian market, Shulgin said that rather than saying that Ozon has a competitive relationship with Chinese e-commerce, it is better to say that both parties jointly develop the market. Due to factors such as delivery time, Chinese products take several weeks to reach Russia, but Ozon can achieve faster delivery with its local logistics center. In addition, Ozon offers large-ticket items that cannot be shipped from China, attracting local consumers through shorter delivery times and more competitive prices.

For cross-border e-commerce sellers, Ozon’s off-season generally occurs in June, July and August. During this time, sellers should take advantage of this opportunity to adjust and optimize their marketing strategies. Specific measures include: cleaning up existing inventory, analyzing store data to reasonably arrange inventory, reviewing buyer feedback to optimize the purchasing experience, and looking for new market opportunities.

Through the above strategies, sellers can optimize their business during the off-season and prepare for the upcoming peak season, thereby increasing sales and achieving continued business success.