Russia’s Ozon woos Chinese sellers to fill gap left by West
Cross-border merchants jump into the market as popular brands exit and 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 Moscow’s invasion of Ukraine led to an exodus of Western brands.
Russia’s trade activities had come off a bottom hit in February and March at the outset of the invasion, and demand for Chinese products had soared since and now accounted for most of the rebound in imported goods, said Simon Huang, head of Ozon’s China business.
“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.
Following the outbreak of hostilities, the foreign ministry in Beijing said normal trade with Russia would continue and that the United States’ sanctions on Moscow should not harm China’s legitimate rights.
Russia has been forging closer business ties with China this year.
According to Chinese customs data, the country’s bilateral trade with Russia grew by 31 per cent in the first eight months of this year. In July, Chinese exports to Russia were back to near pre-invasion levels, with US$6.7 billion of Chinese goods bought by Moscow.
Western brands that have exited Russia include H&M, Ikea, Apple and Samsung. 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 and Chinese brands made up two-thirds of Russia’s new handset sales between April and June with the market share increasing each month, according to Russian electronics retailer M. Video-Eldorado.
Apart from the changing geopolitical landscape, Huang said improved infrastructure for e-commerce in Russia was another prime reason for Chinese sellers to jump into the market.
Ozon had built a logistics network that cut 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 of next year, which would allow merchants to ship and store their goods in Ozon’s warehouses in advance.
The service was expected to further cut the average shipping period to 10 to 12 days after consumers placed an order and the shipment started from the warehouse, Huang said.
Huang is currently leading Ozon’s goal to sign up 100,000 Chinese merchants by 2024, which would be a tenfold expansion of the number of Chinese sellers on Ozon. Chinese merchants account for about 55 per cent of Ozon’s 180,000 active sellers.
Ozon was looking to attract Chinese brands with a solid supply chain and trusted product quality, as well as factories that made products that were good value for money, Huang said.
To get closer to the seller, Ozon last week announced it had set up its first China office in 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 on its marketplace doubling to reach 147 billion roubles (HK$18.3 billion).