Sber displays its leadership ambition in the Russian e-commerce space

02 December 2020

Sber, Russia’s state-controlled financial and tech giant (previously known as Sberbank), is displaying its ambitions in the field of e-commerce, in spite of several previous unsuccessful attempts.

Last week, Sber announced the creation of a dedicated division to run its existing assets in this field. Among these are Sberlogistika and Sbermarket, two services which where acquired in 2019 (Shiptor, Instamart).

Sber now intends to become the majority shareholder of Sbermarket, a grocery delivery service which is currently part of the O2O joint venture on equal terms with Mail.ru Group. In public statements made yesterday, Lev Khasis, First Deputy Chairman of Sber’s Executive Board, said his company will invest 12 billion rubles (nearly $158 million at the current exchange rate) to purchase an additional stake in this asset and support its development.

Sber and Mail.ru Group, which created O2O just a year ago, are now seeking ways to optimize or even restructure their partnership.

Among the other key assets of this JV are:

  • Ready-to-eat food delivery service Delivery Club;
  • Food delivery service Local Kitchen;
  • Grocery delivery service Samokat;
  • Restaurant selection service SberFood.

Sber is also the sole owner of YooMoney, Russia’s leading payment service provider and e-wallet, which previously operated as a JV with Yandex under the brands ‘Yandex.Checkout’ and ‘Yandex.Money.’

Sber aims to become one of the top three Russian e-commerce players by 2023, Khasis said. Among the next steps on this path will be the launch of a “superapp” and of an in-house multi-category marketplace as early as next year.

New acquisitions are likely — but Khasis specified that, in the foreseeable future, Sber would target mid-sized players rather than the largest companies on the market.

Unsuccessful first attempts

So far Sber’s attempts to assert itself as an e-commerce leader have not been so successful:

  • In 2017, the company agreed with Yandex a JV plan to create a “leading e-commerce ecosystem” in Russia. Sber put $500 million in the project, which led to the launch of two marketplaces: ‘Bringly’ for cross-border e-commerce and ‘Beru’ for domestic operations. While the previous shut down one year after the launch, the latter fell under the control of Yandex as the two companies put an end to their alliance in mid-2020.
  • Earlier this year Sber prepared to buy a large stake in Ozon, Russia’s first multi category e-commerce platform — but the talks stalled, Sberbank demanded and obtained a 1 billion ruble ($12.9 million) compensation for terminating the agreement, and Ozon finally found the money it needed on the NASDAQ.
  • More recently Sber started discussions with M.Video, a leading consumer electronic retail chain, regarding a potential involvement in its marketplace Goods.ru. Such a partnership, if confirmed, would be insufficient: in spite of its fast growth, Goods.ru remains a relatively small player on the Russian e-commerce scene. Last year it generated 8.67 billion rubles ($13.5 million) in turnover, up 267% from 2018. The marketplace ranked only 26th among Russian e-commerce sites, according to Data Insight. In addition, note industry analysts, Goods.ru is tightly integrated with M.VIdeo’s retail business, which could complicate its interconnection with Sber’s own ecosystem.

Sberbank made a huge way over the past decade from national savings bank to digital giant. Its large ecosystem — which it implicitly compares with Amazon and Apple — includes first-rank players in driving services (through O2O and 2GIS), media and entertainment (through the acquisitions of Rambler, Okko and Zvooq), online pharmacy (Eapteka), and some other sectors.

Whether the group will finally succeed in establishing a firm foothold in e-commerce will be among the most interesting intrigues of the coming years in the Russian digital space.

Russian e-commerce on the rise

According to market research agency Data Insight, online sales of physical goods in Russia could reach 2.5 trillion rubles this year ($32 billion at the current exchange rate) and potentially some 7 trillion rubles (nearly $90 billion) by 2024.

The market is highly fragmented. Russia’s five largest online retailers and marketplaces account for under a quarter of the total industry. By comparison, Amazon alone controls half of the US commerce market, and more than a third in key European countries.

Among the top players on this market are, notably: Wildberries, which raked in 100 billion rubles ($1.3 billion) in quarterly revenue over Russia’s spring lockdown; Ozon, which has just been introduced triumphantly on the NASDAQ; AliExpress Russia, a joint venture involving Alibaba, Mail.Ru Group, Russian telco MegaFon and sovereign fund RDIF; and Yandex.Market, which raised $1 billion earlier this year to support its ambitious plans.

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