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July 7, 2017 www.intellinews.com I Page 7
of the stores. Here too the company has already had stellar results after Ebitda grew by more than 70% year-on-year in the first quarter of 2017.
Another way the company can improve the bot- tom line is to sell its own private label basic staples. Virtually all of the goods Euroopt offers are domestically produced and as it offers only
a selected few alternatives, introducing its own brands to the productive mix is an obvious move.
“In other supermarkets you might see ten differ- ent brands of cooking oil, but with us there may be only three,” says Zubkov. “It allows us to order in bulk that helps bring the cost down and we can pass those savings onto the customer to ensure we keep our price leadership.”
Given the tight list of products offered, the compa- ny has begun to produce some of these products on its own private label, which already accounts for 11% of the product mix, a share the company wants to bring up to 20% in the near future.
With the retail network growing fast, the share- holders decided to launch an online retail store in May 2014. It was not an obvious thing to do
as despite being a European node for software development, e-commerce in Belarus itself is not well developed.
Progress has been good. From its four fulfil- ment centres around Minsk the online store can service the surrounding region and some of the nearby larger cities.
In the last two years, the online business has ex- panded and in 2016 made 2.5mn deliveries worth $60mn, or about 3% of the company’s total turno- ver. And the business is still expanding: in June alone online sales were up 40% y/y, a faster rate of expansion than the overall business.
While there are no plans to expand the physical stores into neighbouring markets, the same is not true of the online service.
“We are already stealing customers from our competitors via the online business,” says Zub- kov. “We have deliberately set the bar for free delivery low – any order of $13 or above gets free delivery – as we understand that we need to grow this business first. But that means even online we can maintain our price leadership model.”