On the afternoon of June 18, the Wildberries marketplace announced a merger with the largest outdoor advertising operator, Russ Group. The goal is to create a “next-generation digital commerce platform” and provide small and medium-sized businesses with tools to develop and promote products.

Experts, at the request of RB.RU, evaluated this initiative. It is already known that the deal will require regulatory approval and the market risks having “an even more serious digital monopoly.” The sellers themselves do not yet understand what changes may arise after the merger. And for Wildberries, depending on the market, further growth may be due precisely to the strengthening of its presence in offline channels and the fight for the advertising market with Ozon and other players.

“We run the risk of having an even more serious digital monopolist”: the market on the merger of Wildberries and Russ
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How the market reacted to the merger of Wildberries and Russ

Member of the expert council of FAS Russia, secretary of AUREK Dmitry Tortev believes that it is too early to talk about the fact of the transaction. He also noted that the deal is subject to approval not only by Russia’s FAS, but also by other national regulators.

“By merging Wildberries and Russ, we risk becoming an even more serious digital monopolist. At the same time, no special rules on the procedure for approving M&A transactions in digital markets were included in the “fifth antitrust package,” Tortev noted.

The geography of the strategic project, as announced by the market, will cover the territory of Russia, the countries of the former CIS, the countries of the global South: Asia, Africa, the Middle East, the CIS, India and China. We are talking about 5.8 billion people.

Tortev believes that the development of Russian digital companies in foreign markets “can only be welcomed,” but warns that the competition protection law, although it enshrines the principle of extraterritoriality of their actions, “neither the practice nor the agreements Interstate laws cover all options for possible unfair behavior of foreign companies in relation to Russian ones and the procedure for action of the Russian FAS in these cases.

Ivan Fedyakov, CEO of Infoline It also points out that income from the sale of advertising on marketplaces is growing around the world and in the near future may reach the income from the commission that the marketplace receives for the sale of products.

Fedyakov generally described the agreement between Wildberries and Russ as “effective and quite trivial”, the effect of which will be positive for both companies.

“Companies are striving to capture the largest possible share of the advertising market, and Wildberries joins this fight, since Ozon started doing it earlier and more effectively,” said Fedyakov. — Since last year, Ozon began selling advertising in click-through format (by clicking on a banner, the user is directed to a website or another page of the brand, and not to a product sheet on the site – note of the editor), such as an advertising campaign was carried out with the promoter “Avión”, with the sale of cars, tourist trips.

All services and companies related to moving on a single map

According to the expert, the interest of the markets in the advertising market is due to the fact that the audience of commercial platforms is already comparable to the audience of television channels, at the same time that they are economically active and solvent. The interest of the advertising group is to expand the customer audience or maintain the existing sales volume.

The business goal of the deal is to take the market offline and create a complete O2O platform, he believes. Marketing Director of Business Bank “Blank” Konstantin Sukhachev.

“Wildberries is now the market leader in the online segment and its further growth is associated with strengthening its presence in offline channels,” says Sukhachev. “By consolidating with an outdoor advertising operator, they discover a new way of monetization by selling spaces to sellers at more favorable prices, thus closing the monetization within the platform directly from the commission and from the sale of additional services.”

From a business expansion point of view, this is a strategically correct move, I agree. senior managing partner of law firm PG Partners Polina Gusyatnikova. “Wildberries merges with the leader of the advertising market and gets its own advertising platforms, which do not need to look anywhere, follow changes in conditions, etc.,” notes the expert.

President of AKIT Artem Sokolov He described this synergy as unique: “It is obvious that Wildberries is moving towards expanding its business and its presence in other areas of the market. Russ is gaining new development opportunities in the small and medium-sized business segment.”

How will the deal affect Wildberries sellers?

First of all, large regional sellers and entrepreneurs in the small and medium segment will feel the results of the agreement, says Blanca’s marketing director.

“Russ’ extensive regional outdoor advertising network will be available to them and they have the resource to scale by taking advantage of these opportunities in the regions. In addition, thanks to this, Wildberries itself will be able to strengthen its position in the regions through active outdoor advertising of its brand,” Sukhachev said.

The sellers themselves still do not understand what will change in their work.

“As a marketer at this stage, it is still unclear to me what this can change globally and if it will change. However, as an entrepreneur, I understand that two large companies merge for a reason: they are preparing something completely new for the market. And, knowing the strength of wild berries, it is most likely a very strong product,” said RB.RU. co-founder of the Paragraph collection brand and the financial and management accounting system for working with OneScreen markets Maxim Popov.

Popov suggested that for Wildberries sellers, the merger could mean launching online products into the offline market.

Open questions

Sources from the Kommersant newspaper previously suggested that the companies could create a joint venture (JV), and RIA Novosti’s interlocutor announced Wildberries founder Tatyana Bakalchuk as the head of the joint company.

The partners themselves have not yet announced what form the merger could take, how they plan to distribute ownership shares and whether the Wildberries legal entity will remain. Both companies did not respond to RB.RU’s request at the time of publication.

Furthermore, neither Wildberries nor Russ commented on the information about the possible appointment of Tatyana Bakalchuk.

“In theory, this deal should increase Wildberries’ profits, but it’s hard to guess by how much,” says Gusyatnikova, senior managing partner at law firm PG Partners.

  • Wildberries is one of the largest markets in Russia. Wildberries LLC, the main legal entity of the site, increased its revenue to 538.7 billion rubles in 2023, 69.8% more than in 2022. The company’s net profit amounted to 18.9 billion rubles.
  • The Russ group of companies is the largest Russian outdoor advertising operator and manages around 150,000 advertising surfaces of various formats. In 2023, the company bought several competitors: the outdoor advertising operator Gallery, which was second in the market after Russ, and Poster Group of Companies, the fourth player in the OOH segment (out of home: outdoor advertising, outdoor and interior). transportation advertising, interior screens).

Author:

Anastasia Marina

Source: RB

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I am a professional journalist and content creator with extensive experience writing for news websites. I currently work as an author at Gadget Onus, where I specialize in covering hot news topics. My written pieces have been published on some of the biggest media outlets around the world, including The Guardian and BBC News.

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