Kevin Handa, KazanExpress: "We have digitized everything - even the number of steps of employees"

“Severe hard workers are our audience, the people for whom we make the product”

- Why did you do

marketplace, and not something else?

— We founded the company together with Linar[Khusnullin]. The original idea to create AliExpress in Russia was his. He faced the difficulty that orders had to wait for months. For example, I ordered a bathing suit for my wife to go on vacation, but the goods did not arrive on time, and I had to buy it right on vacation for much more.

This problem has affected many.Even in 2017, when we started the business, we had to wait for parcels for months. Then there were no competitors in Russia - OZON, Wildberries did not work according to the marketplace model, there was not a word from Yandex. There was only AliExpress, which covered most of the market - about 70% of the e-commerce market. There were other sites like and similar microaggregators. But there was no Russian Amazon, it still does not exist. We have a very interesting market, there is no such fierce competition anywhere in the world.

In what year did this competition appear? It seems that in 3-4 years in Russia there was a boom of marketplaces out of thin air.

— Yes, it was.We launched the product in December 2017. Three months later, news came out that Sberbank and Yandex had invested 60 billion rubles in the Beru marketplace. Then we were afraid, because before that there was no competition. 60 billion is unrealistic money, I still can't imagine what it can be spent on. In 2018, OZON announced that it had started working as a marketplace; at the end of 2018, Wildberries began to talk about it. Now there is really a boom in marketplaces, but the only one who started with us at about the same time is Goods, now it has become SberMegaMarket.

Kevin Handa and Linar Khusnullin

What changed for you when they appeared?

— Now the competition is intensifying, but ifConsidering that the e-commerce market is also growing, the influence of competitors is not very noticeable. We ourselves are growing 8 times from year to year, we need to keep up with this pace. Competitors are growing 1.5-2 times, which is also fast enough for them, because they are already large. In 2021, we have grown 10 times, but the market is not even at the peak of its potential when compared to the US, China or Europe.

China is generally in the lead, 45% of total retailis online, in the USA - 30%, we have this figure of 11-12%. There is room for growth, the market is expanding due to the fact that offline flows into online, new segments of the audience are attracted, who have been buying offline all the time. But the struggle for users is going on, especially in Moscow, the Moscow region and St. Petersburg - this is 42% of the Russian Internet market, and we are not focused on it. While all our competitors have focused mostly on Moscow and St. Petersburg, we will work in the regions - we want to get an audience there so that it will be more difficult to lure buyers in the future. And at the moment when competitors set their sights on the regions, we will be able to calmly enter Moscow and St. Petersburg.

— What did you bet on when you launched?

— When we tested hypotheses and testedproduct, they understood that the main thing for buyers is the price and good delivery conditions. Looking at the Russian market, 85% of the population lives paycheck to paycheck. These are people who have 3-5 thousand rubles a month for themselves, they are not particularly shushed. Severe hard workers are our audience, the people for whom we make the product. They, regardless of income, also want to receive quality service. That's why we have the most beautiful pickup points on the market and free one-day shipping.

— And how did you manage to do it? Delivering goods in a day is a difficult logistical task.

— We have a lot of our innovations.For example, its own software is used everywhere - a warehouse management system, logistics. I myself started to develop it and now I am leading the project in terms of algorithms and development strategy. In addition, geography plays a role - we are still not in Moscow, St. Petersburg and we do not plan to enter these markets yet, they are of less interest to us so far. We want to cover small towns, regional centers where people basically have no service. So we will take a large share of the market, because competitors take too long to deliver there. We now have 115 cities - mainly the Volga region, the Urals. The nearest point to Moscow is Balashikha.

"Everywhere uses its own software - a warehouse management system, logistics"

— But is fast delivery still possible because the marketplace is small?

“It's more of a technological innovation.I would even call it work on efficiency - we are confused about this. We try to reduce time and costs so that users can receive an order the next day for free.

For example, these are collection processing algorithms - werecommending warehouse routes to employees so they can take more items at a time and walk shorter distances. Another example: quick sorting of goods. On average, there are 2-3 goods in one order, we consolidate them in the warehouse, the client receives them in one parcel. And competitors have several parcels, so that this does not happen, innovations are needed in sorting and organizing warehouses.

We have a lot of custom databehavior — and we integrate them with marketing. We are able to predict what a person will need and what he needs now based on his previous purchases. We can customize the marketing creative for a specific user — if he bought a phone a week ago, we recommend him a protective glass and a case at a discount. All this is done in two buttons.

Does your algorithm also work inside the site?

— Yes, we have almost everything self-written.The only thing is that we do not have our own image search, but we will implement it in the near future. So far, we have considered that it makes no sense to spend a resource on this, because we have already solved the problem.

Why did you decide to do everything on your own?

— Both the IT background and thedissatisfaction with existing solutions. For example, when we launched the first version of the site, all the work of the warehouse and logistics was based on 1C. About a thousand orders a day, he already worked out very badly, there were errors and freezes.

We foresaw this and developed our systemwarehouse management, which took over the work on a thousand orders a day, and is now capable of processing hundreds of thousands of orders a day. Recently, we had a record - 142 thousand orders per day, and we calmly withstood them. With our decisions, we have more control, and they are much easier to maintain, optimize, and change something on the fly.

This is where our remote system helps us.employee training. When we introduce some kind of update, so that employees can quickly adapt to this, we hold small lectures remotely. They can quickly watch the lecture on the app and answer the questions on the test.

“An employee can find out in real time what his salary will be”

What did you develop that helped you grow faster? What do you like most as a standalone product?

- This is a question from the series “which of the five children is yourDarling?". It's hard to say, because I see our business on a large scale. But one of the most interesting is the direction of working with data. There you can get a lot of different insights. Even the optimization we do on the warehouse management side is based on the data we get from processing employee performance information. I really love numbers and don't trust anyone until they show them to me.

We have everything digitized - for example, how many peoplepassed through the warehouse and how many operations he performed. An employee can find out in real time what his salary will be, based on the indicators that he has fulfilled. This amount of data allows you to look for bottlenecks and weak points that are visible on the scale and not visible when you are immersed in the work in detail.

But our product would not be possible without the systemwarehouse management. This is an innovative product that is changing the market. We already have orders from external marketplaces that want to access the system. I can’t name them, there were two such appeals.

“We have everything digitized – for example, how many people went through the warehouse and how many operations they performed”

- What were the main difficulties?

— When we received the first thousand orders inthe first month, we thought that the job was done - we go for investments, and there will be a queue of people waiting. But this did not happen: we were looking for investments for about 8-9 months, held 150 meetings, went around everyone we could. But they were not interested, they even considered us schizos - it is unrealistic to deliver in Russia in a day. Now the market has changed a lot, and we proved that it is quite possible to deliver in 1 day and, maybe, someone regrets that they did not invest.

“We attracted the first users by frankly parasitizing on AliExpress”

— You say that you want to develop in the regions, not in the capital, but are marketplaces not sufficiently developed in Kazan? What are the differences from Moscow?

- Not quite so, now there is no one in MoscowSurprise with daily delivery. Right now I see the M.Video banner - it says that if you order an iPhone 13, they will deliver it in an hour. There is fierce competition in the Moscow market now, and many players are pouring unrealistic budgets into it. If you know the concept of the "blue ocean", then the e-commerce market in Moscow now is the "red ocean". We'd better calmly wait until the competitors fight and spend money, and then we will enter the Moscow market ourselves with the best product and service.

- That is, free delivery in a day - was this the main emphasis in marketing? Has it changed now?

- We attracted the first users, franklyparasitizing on AliExpress, they said that we have the same assortment and prices, but with delivery in a day. We beat it because all marketplaces stand on three pillars - assortment, pricing policy and logistics infrastructure.

“Soon our customers will be able to receive orders from AliExpress as well”

Has anything changed since the arrival of investors?

“AliExpress gave us access to finance.We can grow, develop and invest in infrastructure more actively and faster. Our customers benefit from this. Soon our customers will be able to receive orders from AliExpress as well. We didn’t have any more joint stories, we are developing in parallel.

The more money, the more responsibility.Now we have business plans, KPIs that need to be fulfilled. But we still historically overfulfill them, so investors are satisfied. No one tried to limit us in any way, because everyone understands that our business model in the market is the only correct one.

Do you have any specialty products that you must have? Are there any items you will never have?

— Due to the peculiarities of logistics, we do not exhibitrefrigerators, cabinets, large household appliances, furniture - simply because it is unprofitable for us. We focus more on small-sized goods, from the point of view of logistics it is much more convenient. Moreover, there is a demand for such goods now, if a person needs furniture, they don’t buy it online.

For large electronics and household appliances, we are stillwhat we think. We will have to rebuild the fleet to accommodate the goods. So far we don't see the need for it. And so we sell everything, in the near future there will also be a pharmacy. Perhaps we will return the delivery of fresh products - we had a test run in 2019, but then the market was not ready. Now, taking into account the development of Samokat and Lavka, we want to open the possibility of ordering food with prompt delivery as an additional direction.

- How to track the quality of goods?

— Goods are checked in several stages.The first is upon acceptance from the seller. We selectively check the batch, if we find a violation, we remove all goods of this type from the seller. Then we actively work with the reviews - they identify repeated violations. Returning a product once is normal, but if the percentage of returns for a certain group increases greatly and is out of the total percentage of returns for this category, then we set an alert and check what the reason is. At the same time, we specify the reasons for the return at the pick-up point and classify the reasons.

“Are you worried that when you expand,Is it impossible to deliver in one day? Will you find yourself in a situation like Amazon had when employees went on strike against inhumane working conditions?

— We have all the logistics built independently,We keep track of all employee statistics. If suddenly we see some violations of indicators, we can talk with the employee, understand what are the reasons for this: do we need rest, are there any personal problems? Everything is decided in individual communication.

There are three types of clients for us.These are, first of all, buyers, then sellers and employees. These are the people who create the marketplace, it doesn’t matter if they are an employee of an office, a warehouse or a pick-up point. Everyone is equal and we try to pay attention to everyone, it is important for us in what conditions they work. All warehouse employees have VHI, every three months we take 50 of the best employees from all departments abroad - for example, they went to Cyprus. After the internship, we give comfortable sneakers to warehouse employees. We try to encourage and motivate our colleagues.

- What kind of data can it be?

- I rather communicate with employees who are indevelopment or marketing, one-on-one communication is a normal story for us. If we talk about warehouse workers, then we have an operational management, employees for adaptation, training, who are engaged in monitoring. There were cases when we understood that a person needed a vacation, a rest, there were family problems. Someone was helped with money to solve an internal problem.

“People who give out commands need to understand what exactly they control”

What improvements have you made to the service since you used the service yourself?

- There were a lot of problems, they still exist -solve and take them to work. I myself try to look at everything from two sides - development and the client. We have a rule - including for managers: we go to work at the warehouse and distribution points in order to understand how and in what direction we can improve. People who give out commands need to understand what exactly they control. Because there are people working in the warehouse who do not always give feedback, and the job of a manager is to find such points. But you won't find them unless you try them yourself.

“We have a rule, including for managers: we go to work at the warehouse and distribution points in order to understand how and in what direction we can improve”

— Do you plan to develop KazanExpress or do you want to get away from regionalism in the name?

- The name is an eternal question, we constantlyset, including investors. This is a special story — many companies that develop regionally win. For example, "Golden Apple", "Magnet", DNS. I agree, they do not have a link to the region in the title. But we decided to leave it, because in our name there is a reference to the fact that many trade routes passed through Kazan. If you look at it this way, there is no regionalism in the name.

When entering a new city, we buy practicallyall marketing tools and say: KazanExpress is now in your city. When we come in with such a message, it doesn’t matter what the service is called, what matters is what it provides. Therefore, for the time being, we still do not plan to change anything in the name, we are testing different hypotheses on how we will enter different cities.

- The main complaint of customers is that there are few goods, you can only buy covers. What will you do with it?

— You are right, such feedback is reallyeat. And we are very actively working on this, attracting major brands - Adidas, Reebok, everything that is in the mass market. I think that in six months no one will say that we do not have enough of some goods.

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