Alibaba has announced it will be establishing a $2 billion joint venture with Russia’s Mail.ru business founded by Alisher Usmanov. Usmanov, Alibaba founder Jack Ma and Russia’s President Putin met when they agreed the deal.
Alibaba will be launching both Aliexpress Russia and Tmall in localised versions for Russians. Both will be able to connect with Russian shoppers via two mail.ru social networks. The Pandao mobile ecommerce app owned by Mail.ru, which is a successful platform for selling Chinese goods in Russia, will be combined with Alibaba.
A big part of what we’ve been able to develop so far in Russia has been our cross-border business. But the future, which will require the presence of our partners at this table, will involve building a much bigger local business.
– Mike Evans, president, Alibaba
Interestingly the deal is backed by the Russian government through the Russian Direct Investment Fund and the team of local investors will collectively control the new business. This is quite a clever move because it will mean that Aliexpress is aided by local specialists familiar with Russian ecommerce from the very start.
What this deal could mean for merchants isn’t yet entirely clear. Obviously, Russia represents an opportunity and is experiencing strong economic growth but certainly many merchants in the UK and the EU have, in the past, been cautious of doing business with Russian shoppers because of concerns about fraud and lost parcels. So if these new partnership wants to attract Western shoppers then something will need to be done to address that.
Interestingly, even though Russia is a vast nation, the majority of the population lives between the two major metropolitan areas of Moscow and St Petersburg and in the rest of the country, the infrastructure has a reputation for being patchy and that too may deter many merchants.
What have been your experiences of trading with Russia? Does this venture with some trusted and established brands make Russia a more appealing prospect?