"We lost a lot during the pandemic"
During the pandemic, we at AliExpess Russia lost a lot because
The share of the three largest players in Russia amounted to 24% of the entire online market.But the crisis hit not only e-com, but alsoall branches of retail. Usually, the principle “big companies grow faster because they have more resources” works. In fact, while online has received a large influx of customers, it has experienced many challenges. Logistics immediately began to maintain fundamentally different turnovers, and this is an increasing investment that only big players can afford. Therefore, the pace of market consolidation has accelerated. By 2024, the share of online trading will be over 19%. For example, in China the share of top players is 84% of the total market, in the USA - 63%, even in Brazil there is a leader, Mercado Libre - 49% of this market is controlled by top players. In Russia the market was very fragmented, but now it will be highly consolidated. According to our estimates, the share of top players, including us, will be well over 50% by 2024.
Russia lagged behind other markets, which is why it has huge growth potential. At the beginning of the pandemic, our country was at the levelSpain and Italy with a much more developed Internet. In China, this share was already 20%, and after COVID-19 - more than 30%. The growth of the Russian market will definitely continue after 2024, and at a very high pace.
"Marketplace is not only a buzzword"
Small and medium-sized businesses have experienced all the difficulties of the pandemic, but, on the other hand, they learned such a word as “marketplace”.Historically, all sites in Russia operated onto a greater extent, that retail model, when the site buys goods and resells it itself. Today, the dominant model around the world is the marketplace, when the site serves as a showcase connecting the seller and the buyer. The growth of marketplaces is largely due to the entry of small businesses to them, which at some point could not sell in any way except online. The marketplace turned out to be the place where there is an audience and where you can offer them your products.
Marketplace is not only a buzzword, but also a model that allows a business to reach the consumer very quickly.The entire e-com market is developing according to this model. If we continue the logic of offline online, then the store should be located in a place where there are a lot of people. The marketplace market is in many ways similar to entering a shopping center. We, as the administration of a marketplace or the administration of a physical shopping center, are responsible for ensuring that it functions, that people come to it, that it is clean, comfortable, and that traffic in it is properly distributed. It's the same online. We, or, for example, OZON, are developing the marketplace, creating infrastructure, giving businesses the opportunity to use it, and, more importantly, for small and medium-sized businesses, this is a unique opportunity to immediately reach a large audience. Since the start of the pandemic, the number of local sellers has more than tripled.
"Why does a business need its own platform if there is Instagram?"
Another trend is social commerce, where purchases are made directly on social media platforms.And this is not only a powerful direction in China, inThere is a US company called Shopify. In this sense, we have the advantage of being part of the Mail.ru ecosystem, which also includes the largest Russian social networks and has extensive experience in China, where top bloggers in live streams sell more than the largest Russian e- com platforms. When COVID-19 began, there was such a discussion: how long will this trend last, will people return to physical stores. Answer: no, they will not return. But, of course, there are categories of goods that are difficult or impossible to buy online. My favorite example is the sofa. Any person understands that ordering five sofas home, bringing them and sitting on all of them to compare is a rather strange story. Although there are already technologies here that allow you to arrange furniture at home, this is a rather specific case. But if you buy a brand you understand or a product you use every day, you realize that the time spent traveling to the store was not spent in the most optimal way. Such people have remained online since the lockdown was lifted, when we lived more or less without restrictions. But of course there remains one more offline story - about socialization. We are all social creatures at the end of the day, and we go to the mall not just to buy something, but to just pass the time. This will continue, so I believe that we are not talking about harsh opposition between online and offline, but about the channel where the transaction is carried out, where turnover is generated. This is a kind of multi-environment in which an order can be made online and received at the pick-up point. And, conversely, a person can see a product offline, take a photo of it, download it and buy it online. But if we talk specifically about the place where the transaction took place, we see that since the restrictions were lifted, people have continued to buy online because it is convenient. And the effect will only increase: this is the arrival of new users, the creation of new habits, and new categories of goods, first of all, food.
Thanks to social commerce, many businesses don't even need their own platform, Instagram is enough.We are actively working on this area togetherwith VKontakte and Odnoklassniki, the largest social networks in Russia. We recently talked about how we sold almost a billion rubles worth of goods through the livestreams that we launched during the pandemic. We think this is a very important direction. You shouldn’t ignore it, you need to watch and be there, because people spend a lot of time on streams - it’s a kind of mix of entertainment and consumption that has become very big.
We even started buying products online, and even those who had not done this before... I, for example, was a traditional person and notbought groceries online, went grocery shopping. But having ordered once, I realized that it was a wrong time spent. Today there are several models of grocery shopping: for a week, quick (in 15 minutes). But one way or another, people are switching to online grocery shopping.
Hybrid model of the postvoid era
We were better prepared for the pandemic.Because we use Alibaba Group processes,which almost doubled due to SARS-CoV-2. We had ready-made systems and a workflow, which at first seemed tedious and too formalized to many, but then many understood why it was needed. When everyone works from home, there is a need for, for example, weekly reports.
We will never go back to a time when people spent 100% of their time in the office. Until now, our employees have practically not gone into the office - we are working on a hybrid model.Most people work from home, so it is importantorganize task setting. People, of course, have to spend fundamentally more time synchronizing with each other. Although I completely agree that everything related to creativity or brainstorming online is difficult to build. To do this, we gather in the office - the last time we did a strategy session. Everyone voluntarily took tests and went to communicate, because it’s still difficult to build a creative process online.
From a business standpoint, we were the first to experience the COVID shock ourselves because our Chinese sellers weren't technically working.Or they simply turned off their factories so that thesepeople could not come to the factories. At its peak, 70% of salespeople were simply not working. Since we are the leading e-com platform in terms of traffic in Russia, we tried to do everything to present Russian products to all buyers, zeroed out the commission for Russian sellers, introduced support measures for especially small and medium-sized businesses - we ourselves paid for fulfillment for them . If previously our share of purely Russian business was 10%, now it is already approaching 25%. COVID-19 helped us a lot in localization, because it was perceived as a very painful but important challenge.
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