Russian e-commerce giant Ozon woos Chinese cross-border sellers to fill gap left by exodus of Western brands
- Western brands that have exited Russia include H&M, Ikea, Apple and Samsung
- Ozon sees a ‘window of opportunity’ for Chinese merchants in Russia as Western brands retreat, and as e-commerce infrastructure improves
Ozon, Russia’s Amazon-like e-commerce giant, is wooing Chinese cross-border sellers, as local consumers turn to Chinese products and online shopping after the country's invasion of Ukraine led to an exodus of Western brands.
Russia’s trade activities have come off a bottom hit in February and March at the outset of the invasion, and demand for Chinese products has soared since and now accounts for most of the rebound in imported goods, Simon Huang, head of Ozon’s China business, said in an interview with the South China Morning Post on Thursday.
“Chinese cross-border sellers have been looking for new, untapped opportunities, and Russia is one of the few blue ocean markets,” Huang said. “This is a golden opportunity window for Chinese merchants.”
Russia, which is still bogged down in Ukraine, has had sanctions imposed on it by Western governments and has been boycotted by many international brands following the invasion of its neighbour.
Russia has been forging closer business ties with China this year. According to Chinese customs data, the country’s bilateral trade with Russia grew 31 per cent in the first eight months of 2022. In July, Chinese exports to Russia were back to near pre-invasion levels, with US$6.7 billion of Chinese goods bought by Russia.
Major brands that have exited Russia include H&M, Ikea, Apple and Samsung Electronics. Online shopping platforms including Amazon and fashion e-retailers such as Farfetch have also suspended deliveries to the country.
The Western exodus has opened the door to Chinese vendors. Smartphone makers have been quick to fill the gap left by Apple and Samsung. Chinese brands made up two-thirds of Russia’s new smartphone sales between April and June, with their market share increasing each month, according to Russian electronics retailer M Video-Eldorado.
Aside the changing geopolitical landscape, Huang said that improved infrastructure for e-commerce in Russia was another prime reason for Chinese sellers to jump into the market.
Ozon has built a logistics network that cuts average delivery times from 45 days to three weeks, Huang said. The average delivery time is expected to shorten further as the company plans to launch its ‘Fulfilled By Ozon’ service for Chinese sellers in the first quarter next year, which allows merchants to ship and store their goods in the company's warehouses in advance.
The service is expected to further cut the average shipping period to 10 to 12 days after consumers place an order and the shipment starts from the warehouse, Huang said.
Ozon is looking to attract Chinese brands with a solid supply chain and trusted product quality, as well as factories that make products that are good value for money, Huang said.
To get closer to the seller, Ozon last week announced that it has set up its first China office in the southern city of Shenzhen, a hub for the cross-border e-commerce community.
“Ozon will continue to step up our investment in the China market, into the establishment of logistics networks and the resources for local merchants such as discount incentives and training,” Huang said, declining to reveal the amount of the planned investment.
Hailed as the Amazon of Russia, Ozon started as an online book seller in 1998 and morphed into a marketplace for various products in recent years. The Nasdaq-listed company said it had 32.7 million active buyers in the third quarter, with gross merchandise volume (GMV) on its marketplace doubling to reach 147 billion roubles (US$2.38 billion).
While demand for Chinese goods has picked up, the uncertainties of operating in Russia still remain for Chinese businesses.
While AGM is not yet giving up on the Russian market, Ding said he remains cautious considering the “instability” of the geopolitical situation. “We don’t view it as a priority for our investments,” Ding said.
