Download ppt - Russian e-business in practice:lessons from experience (2001)

Lovells/RBCC Seminar London, 7, November, 2000

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Russian e-business in practice:lessons from experience

Timur AITOV, CEO, GUM-Internet, Moscow


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Contents

Pure online shops Multi-channel (“click-and-mortar”)

shops Common problems and perspectives Applications for online shops Conclusions


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Pure online shops : 50x5x0,5

Here : 50K – maintaining a shop per a month 5K – monthly turnover 0,5K – revenues per month

Variant for “Russian Amazon”:

150:15:1,5


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Click-and-mortar : 0,5x5x50

Here : 0,5% - means rise in turnover of

“mother” company 5 – number of orders per day 50 - employees working on project


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New! GUM-ARU Project

GUM-Internet and 15 Best Russian Department Stores,

members of ARU, with a help from Lovells (as a law firm) and Terra MediaLink Company …

Setting up New Company!


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Association of Russian Departments Stores (ARU)


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Net can support existing Brick-and-mortar business:

Presenting information on goods and on possibilities to reserve them

Presenting information on location of the shop and parking near it

Support special marketing programs Raising efficiency and quality of services

for online kiosks Using new methods of deliveries, etc.

To rise the capitalization!


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Poor, pure Internet shop…

REVENUES must .GT. EXPENDITURES, so PURCHASES should go up 100 times!

There are 500-1000 online shops,

In a year this number drops to 10!

Russian Market will have a correlation:

3:70%


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I don’t believe in …

Russians still believe well-known western brands !


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Important problems:

Quality of goods:Internet shop is not so strictly controlled by fiscal agencies

The legislation base concerning Internet shops is underdeveloped.

Non-cash payments: in the existing system, both a client and a merchant are not secured enough.

The R-department: all banks-acquirers for e-commerce should create their own departments on e-security as soon as possible.


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Applications for online shops

We have entry-level web-storefronts or

single Store Solutions Applications do not support 10 000 purchases per day We need customized, integrated Solutions with open

architecture INTERSHOP, FirePond, IBM WebSphere are good,

but:

Localization ?Implementation service?Education?Support , etc.


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Conclusion #1

The Russian Internet is developing as a source of mass media and entertainment. There are several successful projects on selling information on the Internet, such as RosBusinessConsulting. However, there are few successful projects.

E-commerce in Russia is in an embryo stage so far.


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Conclusion #2

Multi-channel Internet shops will continue their development. However, no competition should be expected among them, as the volume of trade will remain low on average.


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Conclusion #3

Multi-channel Internet shops are not a good target for investments as all profits go to the company which controls the shop. At the same time, promising trading sites like B2B will be created on the basis of large unions of multi-channel Internet shops


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Conclusion #4

Pure Internet shops are still ineffective. In a about year or a year and a half there will be only about ten of them left on the market. These strongest Internet shops will control the market and make profits.

The task of pure Internet shops right now is to survive during a necessary period of time.


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Conclusion # 5

A struggle between software developers for B2B projects will start on the Russian market soon


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About the author: Timur AITOV, PhD, (Physics and Mathematics), CEO

GUM-Internet, LLC. Prior to joining GUMinternet.com Timur has

developed and managed Computer Technology Center (an IT-department of Trade House GUM). He was responsible for hardware and software in the largest trade center of Russia during 7 years (from 1993 till 1999). Before 1993 he was a head of the “Securities Department of JSC TD GUM”.

E-mail:[email protected] [email protected]