Wildberries, Russia’s biggest online retailer, has successfully merged with the outdoor advertising firm Russ Group, Tatyana Kim, Wildberries CEO, reported in a statement on her social media channels. The deal follows Kim’s bitter feud with her co-founder and ex-husband and comes amid a major slowdown in the growth of Russian e-commerce.
Wildberries and Russ Group unveiled their ambitious merger plans in June, with the goal of creating a new platform named RWB. This project, presented to the top Russian leadership for approval, aims to establish a service that can compete with global giants like Amazon and Google’s parent company, Alphabet. Additionally, RWB is set to integrate a digital banking network and payment system, potentially serving as a Russian equivalent of SWIFT.
However, several local analysts questioned the rationale behind the deal, citing huge size gaps between the two companies and the fact that their core business was completely different. For instance, Wildberries generated RUB 538.7 billion (€5b) in revenue last year, 70 percent up compared with the previous year. According to official information, Russ Group generated RUB 27.9 billion (€262m), twice above the previous year.
The merger was preceded by a deadly shootout in the Wildberries Moscow office, during which two people were killed. Kim accused her ex-husband Vladislav Bakalchyuk and some former employees of attempting an armed takeover of Wildberries. At the same time, Bakalchyuk argued he was attacked after coming to the office for business negotiations.
Wildberries is also one of the largest sporting goods retailers. In the middle of 2023, the company reported that sporting goods were among the top 5 best-selling categories in the marketplace, generating RUB 19.7 billion (€185m) of revenue in July 2023. This means the company sells more sporting goods than any other market player.
For comparison, Sportmaster, the largest Russian sporting goods retailer, generated revenue of RUB 159 billion (€1.5b) in 2023, corresponding to roughly RUB 13.5 billion (€126m) of average monthly revenue.
Slowing growth
Over the past few years, Wildberries, alongside other big Russian marketplaces Ozon, Yandex Market and Megamarket, enjoyed skyrocketing growth amid booming online sales. However, this trend seems to be gradually winding down. As estimated by My Warehouse, a Moscow-based wholesale service, during the first half of 2024, the combined growth of the four largest marketplaces dropped to 21 percent, against 42 percent in the previous year.
Data Insight, a Moscow-based think tank, in turn, calculated that the Russian largest marketplaces saw a 55 percent growth in sales in the first half of 2024, against 97 percent in the previous year.
Fyodor Virin, a partner with Data Insight, calculated that in 2023, the average Russian household spent RUB 6,700 (€63) on online purchases. This means the growth potential is close to hitting the ceiling, as the Russian population’s purchasing power is limited.
