Page 10 - bne_Tech_09_2019

Leaders
September 2019 www.intellinews.com I Page 10
“We believe that traditional retailers are overlooking digital instruments and do not efficiently integrate existing sales and promos online. Yandex.Market could therefore offer
a ready solution. The rapid rollout of the app and associated services is likely to lead to stronger price competition, because of greater transparency and the need for more efficient assortment management and client knowledge,” says Kolbina.
Russian Sberbank takes on Yandex by teaming up with Mail.ru
Vadim Dumesh in Paris
Russia's largest bank and digital innovation front-runner Sberbank will create a 50/50 joint venture with internet major Mail.ru Group (MRG) in the field of transportation and food delivery on the basis of Citimobil and MRG's Delivery Club, the companies announced on July 25.
The JV is a challenge for Yandex, another internet major and Russia's most valuable digital business. Yandex develops its own food delivery solutions under the Yandex.Eda (Yandex. Food) umbrella. Together with Sberbank,
Yandex operates joint venture Yandex.Market marketplace, one of the largest investments in the Russian e-commerce space.
Now Sberbank has signed a memorandum of understanding (MoU) with MRG, with a binding agreement to follow after the approval of the board, anti-monopoly services, etc. The ambition is to create a "leading Russian platform" for online-to-offline solutions for transportation and food services.
Traditional retailers are cautiously observing
the entrance of new players into the segment, particularly those with strong digital focuses
and good access to capital. Competition from these new players is likely to speed up a digital transformation, say analysts, ultimately tightening rivalry but leading to better customer service
and consolidation of turnover at the most efficient and modern operators.
Both companies plan to invest RUB64bn ($1bn) together should the target indicators be reached over the first 12 months. The target valuation for the joint venture is RUB100bn, and it is planned to grow at 30% annually, and IPO in "several years" is not excluded.
"JV with Mail.ru will add exposure for Sberbank’s ecosystem to food and transportation markets (via online delivery service Delivery Club and taxi service Citymobil) that have a potential to grow to more than RUB1 trillion over the next three years (compounded annual growth rate (CAGR
of > 30%)," BCS Global Markets commented on July 25.
MRG will contribute 100% of Delivery Club and 22.7% of its taxi service Citimobil, as well as miniroty stakes in other related joint ventures such as Instamart food delivery service. Apart from cash, Sberbank would contribute 35% in the Foodplex venture.