OZON’s announcement of the largest ever investment in a Russian eCommerce company marks a fantastic achievement for the whole team, and all of us here at Index are very proud to be playing a small role in this remarkable story.
Our initial investment thesis, developed early in 2007 when we first met Bernard, was (deceptively?) straightforward: “eCommerce is taking share from traditional retail worldwide and Russia is growing fast, so Ozon is in a great position to take advantage of these macro trends.” Any discomfort we may have had in investing in what was then – to us – unfamiliar geography was quickly dispelled as we met both Ozon’s management and the Baring Vostok team led by Elena Ivashentseva, and as we learnt how the Company operates.
So how’s it gone? Well, I have to say it has been a real pleasure so far, in particular thanks to the teams’ attitude and thirst for learning and improving all the time. Reality is far more complex than a one-line investment thesis and it takes some painstaking work and execution to achieve the outstanding milestones Ozon has managed. A few of which spring to mind:
- Growing the business fivefold despite facing the challenging market environment of late 2008 and 2009
- Developing a website product on a par with worldwide best practice
- Building a state-of-the-art eCommerce fulfillment center and warehouse, the largest in Eastern Europe, on time and under-budget
- Setting-up a powerful and efficient nationwide delivery organization, from Kaliningrad to Vladivostok
- Launching Ozon-Travel and growing it into one of the leading OTAs in the Russian market over just a 2 year period
- Attracting and integrating Maelle, who is exceptionally talented and has smoothly been taking the reins, complementing Bernard and the rest of the excellent team.
The most exciting part, however, is that it still feels like we are just scratching the surface of Ozon’s potential. This new investment round, in which we participated with Index Growth, will give Ozon the ability to build on the solid foundations created over the past 10 years and to accelerate future growth by delighting its customers with continuously improving services and expanded product offering.
One might wonder: so why such a large round? Suffice to say that it is aligned with the size of the company's ambitions, and our view of the market opportunity! Ozon was fortunate enough to be in a position of strength and to be able to continue to grow without any additional external investment. However, operating at the intersection of a fast moving industry (the internet world) with a rapidly expanding Russian Internet population, the company faces a range of opportunities to improve and expand that are virtually limitless. A few of the things to look out for will be wider and deeper product selections, faster and cheaper deliveries, new categories, wider travel offers, and more personally relevant shopping…
All this makes for a tough challenge – but we have full confidence in Maelle, Bernard and the team to make Ozon ever-more synonymous with successful eCommerce.
On a final note, back in 2005 we started to actively follow the Russian market as we believed it would soon become a source of exciting investment opportunities in new innovative technology companies. The more we learn about Russia, the keener we are to continue being regularly on the ground and to continue to work with the next generation of Russian entrepreneurs, some of which will hopefully be inspired by the great work going on at Ozon!
Giuseppe and Tony