Moscow. 10 Nov. Head of representative office of AliExpress (enters Alibaba Group) in Russia mark Zavadsky said in an interview as AliExpress is planning to further expand cooperation with the Russian sellers that the company makes to attract audience and increase sales, as well as the introduction of VAT on foreign Internet sites affect the industry.
On AliExpress now sells more than 100 thousand of sellers with tens of millions of products and a monthly audience reaches 20 million unique users. How to continue strategically to develop AliExpress and what is the task now facing the business?
– I think that our strategy can be divided into two main parts: the first is related to our cross-border business, with the ecosystem of vendors, which we are creating in Russia. If we talk about cross-border trade, we are developing in two directions. First, we digressed from the models C2C models to B2C, that is, we got rid of a large part of the small, very small sellers in China and have begun to work much more directly with Chinese brands. As an example, we have a specially on 11 November (world day of shopping) will open an official store LI-NING is a major Chinese sports brand, relatively speaking, who sponsored the Olympic games in China. And similar projects we are doing with many Chinese brands – Xiaomi, LeEco, Shark (men’s watch), Puppyoo (vacuum cleaners), MEIZU (phones), Teclast (tablets). They are large by Chinese standards, but still not fully mastered a foreign markets. And we see that our purpose is to help Chinese brands to stand up, to win customers and work directly with buyers around the world, that is called a strategy M2C – manufacturer to consumer. This is probably the main strategy for cross-border trade. Plus the improvement of services. What we have done: for example, if you buy a phone on AliExpress, you can for a small extra money to purchase a guarantee either for exchange or for repairs. We are improving logistics, payments.
And the second issue, perhaps even more important is the development of our local, Russian sellers. In General, the development of the Russian segment of AliExpress for us an important point, and we see the potential here not only for sales within Russia, but also in the future for export, and we have very big plans for the next six months. Until the end of March, I think we will increase the number of active Russian sellers at least to several hundred.
– How’s it going with the Russian sellers?
Now they account for about 5% of the turnover of AliExpress, however, their number is still small. They are probably a total of several dozen, and this number changes all the time: some companies for one reason or another ceases to work, the part goes to us. This year in the sale on the world day of shopping on November 11 will take part more than twenty sellers from Russia – among them are famous brands like Philips, Redmond, Henkel, Contex, and very small brands and small online stores.
This fall we discovered another interesting direction – work with the licensees. That is, we reduce the right-holders in Russia with the best producers on our site and create a unique collection for sale on AliExpress. On 11 November we shall start together with the football club “Spartak” – launching the sales of an exclusive collection of down jackets and underwear.
– Recently, AliExpress pays much attention to marketing. You can reveal the total investment in Russia?
– Yes, but, unfortunately, we do not disclose figures. Although we do increase its presence in Russia. Recently, for example, for the first time launched an advertising campaign on TV, more than ten channels across the country. But in General we are more like a partnership history, will give an example again of “11.11”. This year we have launched several joint campaigns – posters, 40 000 offices of “Mail of Russia”, a joint promo with SPSR on billboards in airports, online promotional with our payment partners Qiwi, Mastercard and “Yandex.Money.”
– What percentage of Chinese e-Commerce on the Russian Internet is AliExpress?
– Probably, it is better to contact third-party analysts. We know that we are the undisputed leaders in the “transgene” from China. This is more or less objective assessment, and we have open data on attendance AliExpress, which also show that we are the absolute leaders in attendance in the category of “electronic Commerce” and included in the top ten most popular sites in Russia.
– What is the share of the Russian market in the structure of revenues AliExpress, what are the dynamics of revenue?
– Russia is a powerful place that is Russia is always in the top 3 foreign markets AliExpress. Our leaders – the US, Spain and Russia. But it often happens that Russia enters first, and is a key market for AliExpress.
– What regions account for the majority of sales?
– We have a growing share of the two capitals, but it is not such a big value, like other Russian stores. Our audience is evenly distributed on the territory of Russia. We see that probably the share of the two capitals will not exceed 15-20%. The rest is, in principle, the entire territory of Russia, we see that we have cities, small towns, villages. It is worth noting that we have become a very popular first outside of Moscow, and then came to Moscow, and we learned Metropolitan audience, the Metropolitan press.
– How do you feel about the fact that the foreign markets want to oblige to pay the VAT in Russia? What are the steps of the company in case of introduction of restrictions?
– There are several important points:
First, while the decision is not accepted – how to do when, in what form to enter those or other restrictive methods. Now there is a discussion, we’d like more, of course, to participate in it, to be sure that the decision that is made, will comply. Because while the proposal was not developed. Moreover, this scheme does not yet exist anywhere in the world, that is, anywhere in the world AliExpress is not working as I want AliExpress earned in Russia. It is necessary to discuss and provide a large number of technical issues.
Second, it is important to take into account the interests not only of several big players, who favour a drastic change, but for the entire market. According to a study by the National Association of distance trade, for the restriction of “transgene” today only 28% of the online stores and only 3% of the service companies. That is, the situation is not so straightforward.
Cross-border trade in Russia today is playing the role of locomotive that drives for a local online retail at the expense of those flows is improved and cheaper logistics, improving payment systems, increasing the pool of Internet buyers.
Third. And we, and our sellers pay taxes at the place of the official registration of companies. In fact, we are talking about the potential introduction of double taxation, this issue also should be examined carefully.
If new rules are introduced, how to ensure the equality of all players? There is a great danger that sellers and buyers spill over into the gray channels, which will not obey the new rules.
And finally, the most important. You need to remember about the buyers, especially the buyers from the regions, which, of course, any changes also have a significant impact. And that most buyers AliExpress.
Why the cheap products on AliExpress? Not because our sellers something someone doesn’t pay, but because the sellers on AliExpress survive in conditions of severe competition. This is probably one of the most competitive places in the world. To sell, to grow, you have just as squeezed in their spending – they sacrifice margins for volume. Consequently, when someone suggests that a potential 18% VAT, the seller or site “can be sewn into their margins” is at best deceit, the introduction of any additional taxes or duties will inevitably lead to higher final prices for consumers. Average Commission AliExpress 5%, including the cost of the online payment.
Finally, even where these changes are accepted, they usually are not made simultaneously, industry is given at least two years to simply prepare for these changes that they went through as painlessly as possible for the end customer. So that, for example, occurs in Australia. In the US, all in the past year increased the duty-free limit from 200 to 800 dollars. By the way, according to nads, it has occurred including because of the fact that the administration fees fees $ 200 was worth more than the money received for the budget.
Some experts try to present the matter as though there is a General international standard which Russia should comply. It is not, the rules are different everywhere, and very dependent on the overall socio-economic and fiscal situation, the degree of development of retail and industry, domestic market size, the development of logistics.
– How do you see today’s e-commerce market?
– The market grows and develops successfully, the share of e – commerce in the retail sector, according to various estimates, has increased from 2% to 4%, which is undoubtedly a positive trend. If we believe the research base of new Internet customers in Russia is growing largely thanks to cross-border trade, the first online purchase is very often made in one of the foreign stores. We are sure that in Russia in the future, electronic Commerce will reach at least 10% of the retail market.
– And in what term?
– I think it may depend on state policy, so here, perhaps, making forecasts is a thankless task, but in the future 5 years, the proportion of from 10 to 15%, I think, quite real. Especially if they adopted laws that will facilitate the Commerce of jewelry and alcohol, if it is to develop the online trade of food products and FMCG (consumer goods).
– Colleagues in the market believe that now there is practically no competition, you agree with this opinion?
– I generally agree. I think now mainly concentrated not in competition with each other, but rather to ensure their own growth largely due to the new audience. Of course there is competition, but it is not as hard as in markets that have already formed.
– It is believed that China is the emerging trend of brands leave the marketplace, opening their own site. Have you noticed this trend? Why is this happening? And how could it affect your business?
– There seems to be a different story. There is a history with the Chinese brands that are already working in Russia and legalized here, Huawei or Lenovo. That is, companies that have a Russian legal entity, which, for example, previously sold only as B2B, and now are opening their own shops and build their contact directly with the consumer. It really is.
But if we are talking about a Chinese brand that only works in China, I think it is not so, at least I haven’t seen in the statistics of any major private Chinese branded store which would be successfully sold abroad, it is rather difficult. On the contrary, more and more brands are coming on AliExpress, because we have been very successful cases, as we pushed Chinese brands to overseas markets. So I honestly don’t agree with this assessment.
Chinese online retail will actually increase expansion in Russia? Talking about the “second wave” of the release of Chinese retailers. Is it really so?
I’m not ready to comment on the plans of other Chinese companies. On the one hand, the success story of AliExpress was widely reported in China that the idea of overseas expansion is visited by many. On the other hand, competition in the domestic market in China becomes fiercer and robs players of more forces and resources. Today, the release in Russia will cost much more than three or five years ago, given the increased competition.
– It is believed that in the Chinese online stores buy mostly the little things. This ever-changing trend? What products are now gaining demand? In what other segments you just leave?
– I think he’s already changing. And, of course, we buy a lot of little things, but we see that we buy and phones and tablets, and drones, and things cost a few hundred dollars, in principle, such purchases are many. And of course we would like that such purchases were more. We are improving our work shops, we have started to rate them more severely, we improve the logistics, to make it more transparent, more predictable.
In addition, we actively begin to work with the category of FMCG. Now we begin to work the official store Procter & Gamble, Henkel, Durex, and we’re already seeing sales go, this has potential. That is, we want to be the platform on which the Russians are buying not only exotic or unusual goods and commodities.
Plus some history is our cautious exit offline. We opened our first offline show room in Komsomolskaya square in September of this year and so far very happy with the result.
– Tell us more about it.
Overall, he fits the business model we have built for this pavilion. At least our partners satisfied, we plan to develop a network of such halls. We see that indeed for the part of our customers it is important to see the product, it’s important to touch it to look at him, before making a purchase decision. And we believe in this multichannel, especially for expensive goods.
– It is contrary to the logic of e-Commerce?
In my opinion, no. This add-on. Now, in principle, everyone is talking about the multi, a proper combination of online and offline is just important to find harmony between these channels.
– Do you plan to improve the scheme of work with Russian sellers?
We much simplify the opportunity to work with us. Soon the site will be a system that will allow us sellers to register without the help of partners. That is, any company will be able to submit documents that confirm its legal status, submit documents to the brands they want to sell, and it can register on AliExpress and start trading. Thus, we think that we will be able to dramatically increase the number of sellers. I think that we will be able to run such an ecosystem just in the coming months, allowing various companies (trade, manufacturers, and importers) to trade successfully on AliExpress.
– Are not you afraid that this will increase the number of unscrupulous, say, partners?
– No, we still check. And then, in fact, about 70% of our buyers leave feedback. After the first 10 sales will have understood that this is for the seller. And if the rating falls below certain values, then the store closes. Therefore, bad sellers have no chance for a long time we sell. And the buyer is always protected and will get the money back in the event of poor service or improper quality of the goods
– Continuing the theme of Russian sellers. How do you assess the initiative to create a “Russian Alibaba”?
My personal opinion is that it will be very difficult to do, because after all, unfortunately, is not yet a country produces. Russia has no clear image of the country which produces goods, in contrast to many other countries. Come to China for affordable goods of different categories. Italy is fashion, wine, something else. France is also understandable. Russia has no clear consumer image, with the exception of bored all associations with balalaika, vodka, bears, caviar, and other such things. So to make a site that would sell or all Russian or all-Russian, as a separate project, it seems to me, is quite difficult. First and foremost, because of the very high prices, the cost of the hotel traffic that has to drive on this site. And, of course, of supply shortages.
It seems to me more promising story with some integrator-lobbyist, that is an organization, which will provide IT and marketing support for companies that want to go on existing platforms, such as AliExpress, Tmall Global and other sites in other countries. To lobby the interests of Russian business on these sites, speaking, organizing some action. I think such a structure would be useful. Although, if some company with his own money wants to make “Russian Alibaba”, it seems to me, there is nothing bad we can only welcome such initiatives.
At the end of the week will be the annual world day of shopping (November 11). Last year in the course of sales has sold goods worth $15 billion. How will the sale this year and what is the forecast for sales?
– We are now the main focus for November 11 in Russia are doing on the project AliExpress Mall is a delivery from the territory of Russia. This Russian sellers, which we started, and with Chinese merchants that traded with Russia. What we attract in the first place, and we expect that they will be shot during this sale. This is the first time.
The second point. We are very pleased to cooperate with the Bank “AK bars”, which we are launching a new project on trade digital, virtual goods. Including him, we are launching coupons to receive financial services offered by the Bank. We have a running game on AliExpress is called “AliExpress Race”, and “AK bars” provided the main prize in this game – it is an apartment in Moscow. It’s a combination of marketing and business partnerships. The game already adopted by hundreds of thousands of people.
We want this story to show that financial services can be sold and thus. In General, it is interesting to see the potential sales of such services from us. If he goes, we will be able to develop this to a full financial marketplace.
With regard to $15 billion, this figure is around the world. Of course, we have the numbers, but I’m not ready to voice them. But of course we hope it will be more than last year.
– You have more than 20 million unique users per month. What part of them are mobile users?
We your data is not given, but at TNS we have the attendance, Yes, more than 20 million unique users per month. As for mobile users, you can say that our mobile traffic was already more than half. It is clear that they intersect at something, but we very much believe in mobile history. In China last year, in my opinion, 75% of all orders on November 11 were made from mobile devices.
– How do you plan to expand the audience?
– As I said, the story is on the channels, for example. We just launched it, but we also work with Internet channels, of course, “Yandex”, Google and others.
We all develop, our challenge now is to increase the number of new buyers on AliExpress. Last year we had more than 10 million buyers from Russia on AliExpress and we hope to increase in 2016 this number, but I can’t tell you how, sorry.
– Alibaba is the partner RECs in the export of Russian goods to China. According to REC, there are plans for cooperation with you. It is possible to tell about them more?
– Of course, with REC, we have a constant dialogue. We opened our pavilion, the REC is actively oversees. We are with them just discussing the possible extension of the commodity matrix for this pavilion. While I can’t tell you, but maybe they will come out very soon.
– Change the sales model “Yandex.Market” (the transition to CPA model, where purchase can be made directly on the site without going to the seller’s website) had any impact on the Russian market?
– We do not comment on the actions of other companies, but in General we support the development of e-Commerce in Russia. We would like to have shops and customers were more opportunities for transactions.
In my opinion, it may now be difficult with the new model. Because it’s one thing when you come to the market with the model, and it is considered the norm, everyone understands what’s different with you to work. Another thing, when you’re at full speed and take on and change the model. A large number of players expressed dissatisfaction with this model, as I understand it, the Ozone has refused to work with “Yandex.Market”, so it is a difficult period for them, I think. But I sincerely wish you good luck.
We are working on this model and believe that the marketplace should be like that, it needs to provide at least the services of the financial guarantor of the transaction to be an additional source of trust between buyer and seller. If the marketplace does not, he becomes in fact the area that simply passes the traffic.
– How do you feel about the idea of creating an online platform for the settlement of disputes between consumers and online stores? How it could be implemented?
– I think that it is important not to spawn extra entities and do not complicate the situation. We have our own system (arbitration), and, obviously, it works well, because otherwise we wouldn’t have such growth in Russia and so many return buyers. We have about 80% of customers return within a month for a new purchase. Accordingly, we have proposed such a system for Russian retailers to take advantage of her, enough to open a store on AliExpress.
– Are you satisfied with how the cooperation with “Mail of Russia”, are there any problems?
– All very good. We meet with them constantly, and in Moscow, and in Hangzhou we have a very productive exchange of direct. Again, we know that they, too, are actively preparing for the November 11, to on my side to fulfill the orders that will go. Of course, we don’t want to rely on “Mail of Russia”. We are actively developing additional channels, we are actively working with companies SPSR and DPD. That is, we want that the buyer has the option to choose between postal services, courier service, for example, postnatally or delivery points.
– Does the company have plans to develop its logistics infrastructure in Russia?
– While such plans are not decorated, and if you look at how we have evolved in China, where we also try to rely on partner history. In Alibaba we very much believe in the concept of the ecosystem, trying to unite those partners who are close to us that meet our quality requirements of doing business, and to grow with them, that each did what he does best..