Wikimart Case Study

WIKIMART CASE STUDY

Wikimart is an online marketplace in Russia. It's a B2C platform where any retailer in Russia can open an e-shop and start selling online. Wikimart charges participated retailers 3% final value fee and provides them with a large number of services including order-fulfillment interface, accounting and legal support, E-commerce marketing tools. The company was founded in 2008 and sets a goal to become a dominant ecommerce marketplace on the territory of the former Soviet Union. The company’s strategy included reaching a younger, tech-savvy segment of customers in the Russian-speaking world. Yet, it encountered the major challenge to implement the company’s strategy as retailers often had insufficient inventories to fulfill customer orders and the difficulty to share information with partners. But Wikimart had attractive for strategic investors as the Internet expansion in Russia accelerated. So, the owners of the company need to decide to sell the company to a strategic investor or maintain control while growing the company to its full potential.

Russia is one of the largest B2C E-Commerce markets in the world. It ranked ninth worldwide, fourth in Europe in online retail sales in 2014. In early 2014, 59% of the adult population (69 million people) had access to the Internet, making Russia Europe’s number one in terms of Internet users. Although Russia's online audience is the largest in Europe, Internet penetration was only at two-thirds of the adult population as of mid-2015. While Internet user penetration tends to be higher in the Central and North-Western regions of Russia, which include the country's two largest cities, and lower in its other regions. Russian consumers generally distrust the safety of online transactions and the honesty of online retailers. Cash on delivery is the main payment method (around 80%). Market size of e-commerce by the end of 2014 exceeded 683 billion rubles and about 650 billion rubles in 2015. Despite the economic crisis, Russia is predicted to see B2C E-Commerce sales grow and maintain the global rankings in the foreseeable future.

The main competitors of Wikimart are Ozon.ru, Groupon and KupiVip and the threat of the rivalry is medium for Wikimart. In 2014, Wikimart has 1% of the market while Ozon.ru has about 2-2.5% of the market. Due to the rapid growth of the internet in Russia and Russian speaking countries, the number of new entry is increasing more and more. So the threat of new entrants is high. Yet, Wikimart has created their own niche in the market by specifically marketing its products and services towards Russian speaking countries so the company has a low threat of substitution. However, some of Wikimart’s competitors such as Kupi Vip which has a similar business model to Groupon which is selling daily its deals at discounted rates so Wikimart has a medium customer power because its customers might switch to Kupi Vip if they found some products or services that they prefer. The suppliers continue to reduce the amount of products due to the commission fee that Wikimart charged for retailing in its space. But it is not so hard for Wikimart to find other suppliers so the bargaining power of suppliers is a moderate threat.