FOCUS: With doubled Q1 GMV Wildberries, Ozon have more potential

By Yekaterina Yezhova

MOSCOW, Jun 19 (PRIME) -- The two leading outlets of Russia’s 2 trillion ruble e-commerce market, Wildberries and Ozon, disclosed impressive January–March results while the analysts said they still have great growth potential.

“All the Russian marketplaces, including the niche ones, account for 46.5% of the total online purchases, which means that other Internet retailers account for the larger volume,” Russian Online Retail Association (AKIT) President Artyom Sokolov told PRIME.

“For comparison, the sales of the country’s top three marketplaces (Wildberries, Ozon, and Yandex Market) stand at about 30%, while on the global scale the share of similar floors reaches up to 80%.”

AKIT believes that the marketplaces’ positions will continue strengthening, “but we cannot ignore that more and more producers and retailers now aim at strengthening and developing their own sales channels.

The e-commerce’s share in the total volume of retail sales has increased to 12.9% at present from 11.6% at the end of 2022. “This is an all-time record for Russia’s e-commerce topping even the lockdown indicators when the online channel was the only one available almost for all non-food products,” the association’s head added.

In January–March, the country’s e-commerce market increased by 13.6% on the year to 1.3 trillion rubles, and the internal market accounted for 1.29 trillion rubles. The share of cross-border purchases shrank to 2.9% from 5.5% a year earlier and 3.6% in 2022. Online sales grew by 17% on the year to 1.8 trillion rubles in January–April, according to AKIT.

Wildberries and Ozon are the leading players on the country’s e-commerce market, and they both demonstrated a very strong growth of their gross merchandise value (GMV) in January–March, Sinara Bank senior analyst Konstantin Belov told PRIME.

“Wildberries, the market leader, continued to expand at a 2020 year rate doubling its GMV on the year. Although the increase of Ozon’s GMV was smaller, we also see its results robust,” he added.

The GMV of Wildberries leaped to 577.2 billion rubles in January–March from 288.6 billion rubles a year earlier. The total number of orders on the platform rocketed by 118% to 618.1 million, the company said in a statement earlier in June.

Wildberries also pointed to expansion of its operations in Belarus, Kazakhstan, and Kyrgyzstan.

Ozon’s GMV advanced by 71% on the year to 303 billion rubles with the number of orders leaping by 93% to 179.3 million. The marketplace said the number of its active buyers added 29% to 37 million.

Total revenue increased by 47% to 93.3 billion rubles translating into a profit of 10.7 billion rubles after a net loss of 19.1 billion rubles a year earlier “primarily as a result of a one-off gain related to the extinguishment of financial liabilities and solid revenue growth,” Ozon said in a statement.

Ozon plans to expand its business in Kyrgyzstan and enter the market of Armenia later in 2023.

The marketplace’s Financial Director Igor Gerasimov said earlier in June that Ozon revised its GMV growth guidance for 2023 to at least 70% from at least 60%.

“We expect a 63% rise of Ozon’s GMV in the current model, yet this outlook seems rather conservative now,” Belov at Sinara Bank told PRIME.

Freedom Finance Global leading analyst Natalya Milchakova thinks the goals set by Ozon’s management are realistic since the country’s e-commerce industry maintains a significant growth potential.

“The company’s guidance, according to which the Russian buyers spent online only every sixth ruble in 2022, points to it. Online sales increased by 30% last year while the total volume of retail sales contracted by 7%. This means Ozon works in a highly promising segment of its industry,” she said in a note.

Ozon’s financial director also hinted at the terms of profit distribution. “Probably, it will happen when the company’s share in the e-commerce industry reaches 30 to 40%,” Andrei Kochetkov, leading analyst for global research at Otkritie Investment, said.

Milchakova added that the stock market found it important that Ozon pledged to stay public. Its depositary receipts rose by 18.7% over the month and by 43.5% since the beginning of the year to close at 2,014 rubles on June 16 on the Moscow Exchange.

(83.6498 rubles – U.S. $1)

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