Leading Russian online retailer Ozon to launch a food delivery service

Leading Russian online retailer Ozon to launch a food delivery service
Leading Russian online retailer Ozon to launch a food delivery service
By bne IntelliNews January 21, 2019

The leading Russian online retailer Ozon will launch a new delivery service for food from cafes and restaurants in Moscow by mid-2019, project manager Nikita Nechaev told Vedomosti on January 21.

The company also plans to enter the regions later including Novosibirsk, Yekaterinburg, Nizhny Novgorod, Kazan and Rostov-on-Don.

Ozon has already signed agreements with more than 200 restaurants, among them many large chains and famous eateries including Tanuki, Menza, Odessa-Mama, Khachapuri, “ig and Rose, and Tazhin.

Currently the market leader for food deliveries is Delivery Club, owned by Mail.ru Group. In second place is Yandex.Food.

Delivery Club has about 9,000 partner restaurants, according to its managing partner Ruslan Gafurov, as cited by Vedomosti. Yandex.Food has more than 8,000 according to a spokesperson.

Ozon launched in the 90s as “the Amazon of Russia” focusing on the sale of books, but since the end of 2017 the company has dramatically accelerated its development and begun to move into new niches. In the near future the company plans to launch a service for renting consumer goods to individuals.

In 2018, Ozon shareholders agreed to invest up to RUB5.25bn ($79mn) in the company for its expansion. Ozon plans to attract more than $200mn for the development of logistics and IT in 2019. Amongst the company’s investors are the leading Russian private equity fund Baring Vostok and the multi-industry conglomerate AFK Sistema.

Ozon has about 1.5mn unique users per day and over 30mn loyal customers, which, in turn, makes it possible to significantly optimise the costs of marketing promotion, the company says.

At first, the orders made on Ozon will be delivered by the restaurants themselves, but in the future the company does not rule out creating its own delivery logistics, according to a spokesperson.

Delivery Club orders are delivered by both their own couriers and restaurant delivery services, but the company does not disclose the proportions. Yandex.Food has a courier partner that serves 80-85% of orders.

Like its competitors, Ozon will receive a commission from each order, although it didn't disclose the size. Delivery Club receives from 15% to 35% of orders that average RUB1,000, Vedomosti reports. On the busiest days in 2018 the service processed 100,000 orders per day.

According to Target Global the food delivery market in Russia is worth about $1.4bn. Food sales by Ozon have already increased ten-fold in 2018.