How has Ulmart established itself since inception?
Ulmart has managed to become Russia’s most successful nationwide online retailer in a very short period of time. When establishing our business, our team had to make do with limited resources. As we found, not having experience in traditional retail actually played to our advantage. We were passionate about building a company which focused on customers.
Because we decided against the traditional shop set-up from the get-go, instead putting all of our efforts into online, Ulmart’s website offers today’s most advanced product selection tools. In 2008, this was a revolutionary approach; not only did we negotiate that challenge, we also created a new business model that combines 100% online sales with our own, fully developed logistical infrastructure.
Sales during the first half of 2015 for Ulmart Group, including the NoLimit Electronics (NLE) chain, totalled €307.3 mln (RUB 21.64 bln) exclusive of VAT. This makes for y-o-y growth of 27% in ruble terms. Our ongoing efforts to diversify product offerings are bearing fruit: pre-tax profits during this period jumped by 66% compared to the year prior.
What sets you apart from competitors?
Ulmart is currently the only e-commerce player in Russia that builds and operates its logistics itself; online-only sales are placed via our electronic storefront with the upshot for customers being that we can guarantee same-day delivery in record time. Our system is unique as all of our order fulfilment centres are open to customers; they can pick up orders just seven minutes after paying, without having to wait for delivery at home or at a collection point. All order fulfilment centres are located within city limits, while suburban distribution and fulfilment centres are strategically located for easy access from Moscow and St. Petersburg.
What is Ulmart’s expansion strategy for 2016?
Ulmart continues to consolidate its market position by anticipating trends. As part of our current business strategy, we are moving towards the creation of a marketplace. We plan to keep investing in our logistical and IT infrastructure. Overall, the company has several priority areas for growth:
- Diversifying what we sell. In 2016 Ulmart will exceed 150,000 SKUs, and by 2018 our electronic storefront will contain a million items – not counting digital content.
- Continuing investment in logistics. We have four current projects: two suburban and one regional fulfilment centres in St. Petersburg (Pulkovskoye Highway, Piskaryovsky Avenue and Sofiyskaya Street respectively) and a suburban fulfilment centre in Moscow (Mytishchi). By 2018, we will build seven high-tech centres.
- Expanding into the regions. Ulmart already has a presence in over 200 towns and cities in European Russia. In the coming months, we plan to open a further 15 urban fulfilment centres.
What kind of trends do you see emerging in the online retailer industry in 2016?
As far as e-commerce in Russia is concerned, growth has been good in recent years. Consider the size of the market over time: €4.97 bln (RUB 350 bln) in 2012, €6.67 bln (RUB 470 bln) in 2013, and €11.36 bln (RUB 800 bln) in 2014 – that’s 70% growth in 2014 alone. While Russia lags behind in internet penetration compared to most developed countries, it is still somewhat ahead of major developing markets such as Brazil and China. And one cannot forget that Russia has more internet users than any other country in Europe.
Traditional retail is undergoing a transformation. Market trends are pressing retailers to adapt and find more efficient business models. More and more internet players are realizing that having your own logistics system is a huge differentiator. If a customer wants a product now but you do not have it available, they will simply go to a competitor. However, major e-retailers are only now starting to invest in their own infrastructure. This means that Ulmart has a seven-year head start on them.
Ulmart is Russia’s leading online retailer, with a unique business model and the distinction of being the first in the country to exceed €882 mln ($1 bln) in annual revenue. Sales are online-only via electronic storefronts, where over 120,000 products are currently available. Ulmart is currently the only e-commerce player in Russia that builds and operates its logistics itself, right across the board guaranteeing 100% control of product transport and delivery.
This Retail Minds interview is featured in Retail Space Europe 2016, available right here in our webshop.