Europe's great exception: Why local firms dominate the Russian internet
Posted in: Internet Use/New Technologies at 21/05/2012 14:36
On the roof, where staff can smoke as well as work, is a big chess set. The names of meeting rooms are in the Cyrillic alphabet. Two sides of the courtyard are a building site of five hollow storeys. You could say that the headquarters of Yandex, Russia's biggest online-search company, symbolises the country's whole internet economy: a bit smaller than expected, but growing fast, and unmistakably Russian.
Last year the number of Russians online went up by 14%, to 53m. That made Russia's online population Europe's biggest, just ahead of Germany's, with lots of room left to grow (see chart). GP Bullhound, an investment bank, reckons that only 18% of those people shop online and that online advertising, though rising fast, takes up only 9% of Russian ad budgets. Yandex's revenues, most of which come from ads, reflect this pretty faithfully. In the first quarter they were 5.9 billion roubles ($200m), 51% more than a year before. Its profits rose at a similar rate.
Selling clothes online in Russia: Two Germans have a mission: to clothe the Russian middle classes
Online as well as offline, imitation is the sincerest form of flattery. Vente-Privée, a firm founded on the strange notion that French women might like fashionable clothes at deep discounts, has been paid this compliment more than most. Companies cut from similar cloth have appeared in one country after another. In 2008 two German men, Damian Doberstein and Oskar Hartmann, spotted that Russian women were missing out. "No one was telling Russian women, 'You could look good for 70% less'," Mr Hartmann says.
They expect that their company, KupiVIP, will have sales of around $200m this year. Mr Hartmann says it breaks even. Given the fast growth of Russia's internet population and of a middle class eager for nice clothes but mostly a long way from nice shops, the two men think they could turn over $1 billion within five years.