The influence of Russia may be rife in the upper echelon of the fashion industry right now – with Western shoppers scrambling for $1000 Vetements sweatshirts – but that does not mean that most native Russians are shopping with such fury. In fact, if Russian online retailer, Ozon, is any indication, sales are not increasing much for the Russian Federation with consumers cautious about their spending in a weakened economy, but that has not stopped online retailers from making e-commerce sales of fashion items a priority.
According to a Wednesday forecast from Ozon, the retailer expects a more modest increase in sales this year. Ozon, which pioneered the Russian e-commerce sector in 1998 and is often referred to as Russia's Amazon, did have a good year. It boasted an increase in sales of 33 percent last year to 15 billion rubles ($222 million), Chief Executive Danny Perekalsky said. But such growth is not coming from fashion. Inflation accounted for around 10 percent of the increase with the rest coming from a higher number of orders mainly for pet food, children's, sporting, and home and garden goods from both new and existing customers, according to Perekalsky.
And as of now, Ozon does not offer garments and accessories. Perekalsky said this week that Ozon had delayed launching sales of fashion goods from Europe to April from last year for technical reasons and put off indefinitely sales of merchandise from China - a niche largely occupied by Alibaba and JD.com. "With fashion from Europe we can have a strong competitive offer. As to China, we have yet to learn a lot in order to sell like the Chinese. It's not a priority now," Perekalsky said.
So far this year, annual sales growth at Ozon, part-owned by the Sistema conglomerate and mobile operator MTS, has slowed to 25 percent, partly because Ozon sold footwear sales business Sapato.ru in the second quarter of 2015. Perekalsky said first-quarter sales growth was in line with his expectations for the year as a whole. "The average bill is not growing. People are buying cheaper goods; this is the trend that we've been seeing," he told a press conference.
New warehouses, scheduled to open in April and July in Yekaterinburg and Kazan, will be the main growth drivers, allowing Ozon to offer next-day delivery in Russia's Urals and Volga regions now served by a facility not far from Moscow. Ozon also plans to add new product categories including alcohol, pharmaceuticals and grownup goods but Perekalsky said he did not expect them to contribute much to growth this year.
In June, Perekalsky told Reuters Ozon expected to increase sales by 30 percent in 2015 and 40 percent in 2016 and that it could break even in its earnings before interest, taxation, depreciation and amortization in 2016. Although the firm has cut losses by 50 percent over the past two years and aims to reduce them by a further 25 percent in 2016, Perekalsky said it was more likely to break even in 2017.