Russian retailer M.Video-Eldorado withdraws from platform channels and focuses on independent websites

The cooperation between M.Video-Eldorado and Ozon began in April last year, when M.Video-Eldorado did not have its own online platform. In order to attract new customers when offline retail outlets were closed, it put 80% of its products on Ozon for sale.

The cooperation with Ozon was one of M.Video-Eldorado’s many test projects. As for the reason for ending the cooperation, M.Video-Eldorado said that this business model did not show results.

According to DataInsight, the reason why M.Video-Eldorado withdrew from Ozon was low profit margins. Due to rising raw material prices, there was a serious shortage of low- and medium-priced products in the market . In this context, it was obviously meaningless for companies to pay 2%-3% of the profit to e-commerce platforms.

Sources said that the traffic growth brought by opening stores through Ozon is not very large, and the risk of brand erosion and the lack of direct contact and communication with consumers also show the inefficiency of this business model.

Exiting Ozon does not mean the end of M.Video-Eldorado's online sales. In July 2020, M.Video-Eldorado launched its own online platform. In addition to selling home appliances and electronic products, it has also gradually added baby care products, electronic toys and sports equipment.

According to its staff, M.Video-Eldorado's own mobile sales channel has brought the group higher conversion rates and average order amounts, so it will increase investment and development in this direction.

Public data shows that M.Video-Eldorado's online sales in 2020 increased by 108.6% to 300.4 billion rubles ; total turnover increased by 15.4% to 504.8 billion rubles.

In fact, M.Video-Eldorado is not the only traditional retailer that cooperates with e-commerce platforms for sales. Other popular electronic product sellers on Ozon include Citilink and Svyaznoy, both of which also have sales channels on AliExpress.

Regarding M.Video-Eldorado's withdrawal from Ozon, David Borzilov, Svyaznoy's senior vice president, said that although sales through Ozon channels have little impact on the company's revenue, they do not plan to withdraw from the e-commerce platform. Citilink does not seem to have such plans either, and they are closely monitoring the platform's sales data.

DataInsight said that Ozon is still an important sales growth channel for many retailers, so he does not expect a large-scale exit of retailers.

Russia