Maelle Gavet, CEO of OZON, Russia's Biggest Online Store
If read any of my previous posts, you might have noticed that OZON.ru, Russia's biggest online store, is one of my personal favorites in ecommerce. I do not hesitate mentioning it as an example of a success. It's not going to change in this post either.
Today I present you with an interview with Maelle Gavet, CEO of OZON.ru.
Konstantin: Russia is considered by many not the best place to do business. Mostly by Russians themselves, and also by people who do not realize how difficult it is to run a business in Europe. How do you personally feel working in Russia? And how does it compare to your European experience?
Maelle: In my opinion, Russia's reputation as a difficult place to run a business is not as warranted as you might think. Everything in Russia is developing very rapidly, similar to the growth rates that Europe has experienced in the past. The Russian people are used to living under ever-evolving conditions, so they are not afraid of risk. I really like working in Russia. This is a country where opportunities are everywhere and where the right level of energy and will can make an incredible difference.
Konstantin: In your interview to ksonline.ru you mentioned that the transaction commissions in Russian banks are so high you thought the figures were wrong as you saw them first. And thus you do not feel that the fact that 80% of all OZON.ru payments are in cash is really a bad thing. Regarding that, is there generally any way to use non-cash payments for Internet shop owners? What about Yandex.Money or Qiwi?
Maelle: At OZON.ru we find our customers using the following methods of payment: 80% cash on delivery, 10% credit card and 10% other methods of payment, (of which we have 18, including the Qiwi and Yandex.Money). This situation has remained static in recent years. We have been working with the banks and card companies to reduce these commissions. They are still way too high, making cards more expensive to process than cash, but still lower than what they used to be in the past. Russian buyers are trying to protect themselves as they may not yet completely trust online shopping, so in choosing cash on delivery they can check their orders at time of receipt prior to making a payment. However, at OZON.travel the situation is quite different, whereby 60% of our customers choose to pay with credit cards.
Konstantin: Do you think a small-scale online shop can be successful in Runet, the Russian Internet? What would you suggest is a good strategy?
Maelle: Yes, certainly. Today, ecommerce in Russia makes up only about 1% of the retail sector in total. So there is more than enough room for online growth. I would recommend creating niche stores with narrow specialization. Look at any gaps in the market and offer consumers the missing goods.
Konstantin: Apart from ridiculously huge bank commissions, is there any thing that might shock a foreign businessmen or women as they approach to launch businesses in Russia?
Maelle: Coming from Europe, the U.S., Far East or any other part of the world where we take ecommerce for granted, it's easy to overlook how much potential there is in ecommerce. Although Russia has a larger online population than any other country in Europe, just 7% of Internet users currently use the web to shop, according to FOM. Understanding the cultural differences and practical barriers to trading in the region has been essential in getting us to where we are today.
Konstantin: OZON has its own delivery system across the country. But creating an own delivery network from scratch is surely a thing that hardly any online business can afford. One way or another small-scale businesses have to count on Russian Post. In your opinion, is Russian Post reliable enough for small online stores?
Maelle: Yes, Russian Post is quite reliable. Post is in every town, every village in Russia, it is a very important advantage.
Konstantin: Do you plan to develop the partnership with Russian Post or will OZON rather keep its own delivery facilities in focus?
Maelle: Russian Post is sometimes the only way to deliver orders to customers. We will continue to further cooperate with the post, but we will continue to develop our own delivery network. Also, we plan to offer customers and other methods of delivery that they have a choice.
Konstantin: In this blog I try to bring forth useful information for those having business abroad and willing to expand to Russian market. I can hardly imagine anyone whose opinion were more valuable than yours in this matter. Any tips or advice for the ones approaching ecommerce in Russia?
Maelle: I would say that the most important thing is not to be afraid of starting a business in Russia. The country has a great future. You overcome the fear, you do really need to be ready to spending a lot of energy to get things done.
Konstantin: I'd like you to point some books, sites, blogs or anything you draw knowledge and inspiration from. It's always interesting to know what a successful CEO of a huge company considers worth reading and paying attention to.
And Kundera for his incredible way of describing the ups and downs of being human. It keeps me grounded.
But I do read Financial Times every morning, BusinessWeek every week, Wired and Monocle every month, plus whatever I can buy when I'm at the airport and have some time to kill.
I read roughly one book per week on whatever topic I'm intrigued about. Just finished a book about living as an Amish, called Growing up Amish and one about the way brain works, called Brain Rules. I'm about to start one called Beyond Performance Management about the different management tools that exist and how to use them.
Regarding websites and blogs, actually not many. I find that they tend to be too superficial. The only two that I kind of read are Mashable and TechCrunch and not very regularly.
Konstantin: Thank you the great answers! I wish you all the luck in your business!
Rick Watson says:
Seriously, how many retailers can afford to create their own delivery network :-)
Konstantin Molchanov says:
By the way, during the last annual press-conference held on the 4th of April in Moscow Nina Mogilevskaya who is the chief of Ozon's delivery department mentioned that since they can do their job quiet successfully for Ozon, it may will be possible to offer their delivery services to a wider range of retailers. So, I hope retailers will not have to be able to afford creating their own delivery networks, which is apparently quiet a tough one :-)
Here in the UK only around 7- 8% of all clothes sales are made on-line compare to 70% of on-line sales for electronics. The common believe for the reason in disparity is that consumers dont like to buy clothes without trying them on and feeling the fabric. Do you think that Russian on-line clothing sales penetration level is lagging behind the levels of other types of consumer goods e.g. electronics?