Ozon to spend $300 mln on logistics

Russian online retailer Ozon plans to spend more than $300 million on its logistics in the upcoming two to three years. The retailer's aim is to enlarge its market share in Russia's crowded e-commerce market. Analysts expect the market to grow significantly in the coming years as large companies, such as Yandex and Mail.ru, compete for their fair share.

Ozon has a wide and varied assortment of products, from white goods to children's clothes. The Russian retailer increased its sales in 2019 with 93%, to $1.1 billion (80.7 billion roubles). The volume of orders more than doubled to 32.2 million.

Growing stage

Chief Financial Officer Danill Fedorov from Ozon comments the company wants to grab market share now that it is in its "hypergrowth stage". One way the company aims to do this is by adding 250,000 square metres of distribution centres across the country. This is an increase of 125% compared to its current storage volume.

According to Fedorov, the Russian e-commerce market is fragmented. There are many players active, but almost all of them have a less than 10% market share. This is partly due to the size of the market. With its huge distances and eleven time zones, e-commerce merchants face problems in the Russian market. Espcially due to an amount of unreliable delivery service providers.

The $300 million investment will largely come from shareholders. These include Russian conglomerate Sitema and investman fund Baring Vostok. "We are constantly working on financing, shareholders are supporting the company, but we are quite possibly considering different options. We are going to close some additional financing this year," illustrates Fedorov to Reuters.

coronavirus outbreak

Like many online retailers, Ozon sees an increase in sales since the outbreak of the coronavirus. Especially products related to personal hygiene are about 30-40% higher than in a typical winter. The sales of books increased significantly, too.