Page 22 - RusRPTMay21

DataInsight has published its annual rating of the 100 largest online operators. Their combined turnover almost doubled y/y to RUB2.1tn in 2020, from RUB1.17tn in 2019. This was primarily fuelled by the increasing number of online orders, while the average ticket has grown slightly.
The e-grocery segment outpaced the development of e-commerce overall, as the comparison base was low, with the total number of operators in the list doubling to 12 (from 6 in 2019).
The highest increase was shown by marketplaces and aggregators: Yandex.Lavka increased 47.5x, followed by Samokat (17.4x) and Sbermarket (13x). Retailers showed lower growth profiles due to the higher comparison base: 4.7x for metro.cc, 2.1x for Vprok.ru (X5 Retail Group), 94% for Azbuka Vkusa, 66% for Utkonos and 24% for O'Key Group.
According to Infoline agency, the Russian online food retail market showed a material acceleration of 3.6x to RUB155bn in 2020, from RUB43bn in 2019. The respective surge was driven by social distancing measures, which were introduced from April - 12 May, prompting customers to stock up in advance and increasing the demand for e-grocery. For this year, the respective market is to reach RUB295bn (+90% y/y), we forecast, continuing to benefit from changed customer preferences in favour of the e-commerce channel.
Another important factor behind this rapid development of e-grocery was the introduction of the express delivery sector (ED, i.e. on demand delivery), which we believe will create a new layer of city social infrastructure in the near future. Once a city is covered by dark stores (the key locations for ED businesses), they can be used to deliver any type of product and address any frequency level. In Russia, it was pioneered by Samokat, then followed by Yandex.Lavka, while traditional retailers have recently developed their own similar services. As of 2020, ED constituted 25% of the total online food retail market (RUB39bn, based on Infoline data), and its share is to continue growing rapidly, we think: 31% this year and 35% by 2023F.
In our coverage universe, X5 became the market leader (13% market share) in 2020, with its Vprok.ru stock-up mission and express-delivery services from Pyaterochka and Perekrestok stores. According to its strategy, the company aims to achieve a 20% share in e-grocery in the medium term. In our model, online sales reach 8% of the total by 2025F, at RUB227bn, and increasing at a CAGR of 62% in 2021-25F.
Magnit is targeting 5% of total sales via the online channel by 2025. This would imply turnover of RUB100bn in our model and account for some 10% of the e-grocery market in five years (RUB1tn by 2025F).
Both operators have wide logistics infrastructure, broad access to capital and strong liquidity positions, significant experience and track records in the retail sector, as well as the best procurement terms. All of these factors create the necessary foundations to allow X5 and Magnit to develop their online operations effectively and make them a new growth pillar.
22 RUSSIA Country Report May 2021 www.intellinews.com