1. I see a lot of posts and comments on Twitter with people being very cautious and skeptical when it comes to investing in Russian companies. I totally understand where you guys are coming from and I would like to tell you why I am bullish on $OZON as a long-term investment.

2. Russian E-commerce
Russia has the largest number of internet users among European countries and the seventh largest number of Internet users in the world with approximately 113 million users (internet penetration rate of 83% / possession of smartphones rate of 75%).

3. . In 2019, only about 6% of Russian retail sales took place online. That was one third of the UK’s rate (18.3%), and one quarter the rate of China (28.2%). The world average is 19%, and the US comes in at just under 20%.

4. However, lower market penetration means more room to grow and the possibility of higher growth rates. In 2020, Russian e-commerce grew at an annual rate of 43%. Bank of America Securities estimated that 9% of the country’s retail revenues this year were made online.

5. The rate at which the offline to online migration of commerce is taking place, combined with a large population and strong macroeconomics fundamentals, are key pillars of the growth drivers for the Russian e-commerce market.

6. The Russian domestic e-commerce market is highly fragmented with the top 3 domestic e-commerce companies accounting for only 18% of the total e-commerce market (significantly lower compared to the market share of the top 3 e-commerce companies is some other countries).

7. Russian e-commerce is one of the major emerging online commerce markets worldwide. The value of the Russian e-commerce market is estimated to nearly triple in value between 2020 and 2024, amounting to 7.2 trillion Russian rubles in the last observed period.

8. The Russian e-commerce market is projected to experience an enhanced growth over the post-pandemic period. The major market players (Wildberries, OZON, Mvideo) are still growing at a fast pace alongside customers’ strong intention to shop online in the future.

9. OZON is a leading e-commerce platform in the large, fragmented, underpenetrated and growing Russian e-commerce market. The company was founded in 1998 as an online book retailer and its core addressable market is the Russian retail market (4th largest market in Europe).

10. Ownership: Baring Vostok Capital Partners (45.1%) and Sistema (45.2%). Baring Vostok is the largest independent private equity firm focused on investments in Russia and the Commonwealth of Independent States. Sistema is a Russian conglomerate and investment holding.

11. The current CEO of OZON is Alexander Shulgin who was appointed in December of 2017. Under his leadership, OZON has focused on expanding its technological capabilities and on developing its marketplace and fulfillment service for merchants.

12. Prior to OZON, Alexander served as Chief Operating Officer (2014-2017) and earlier as CFO (2010-2014) of Yandex. Between 1997 and 2010 he held a number of positions at Coca-Cola Hellenic, the latest being financial director for Russia.

13. OZON represented approximately 6.6% of the overall domestic Russian e-commerce market and is the leading multi-category e-commerce business in terms of offering the widest assortment of products and selection of delivery options.

14. OZON is the most recognized e-commerce brand in Russia. OZON reports it has 32% brand awareness compared to 18% for the next highest competitor.

15. OZON developed one of the largest and most sophisticated logistics infrastructures in the Russian e-commerce market with nine fulfillment centers and delivery infrastructure consisting of 43 sorting hubs, 7,500 parcel lockers, 4,600 pick-up points, 2,700 couriers.

16. OZON’s mobile-first approach makes shopping more convenient, increases buyers’ retention, improves the efficiency and conversion rate of marketing programs and accelerates growth. Mobile orders made through shopping app accounted for 70% of total orders.

17. OZON offers same-day delivery services in Moscow and Saint Petersburg as well as next-day delivery coverage for over 40% of the Russian population. In 2019, OZON expanded its assortment in more than 24 product categories and launched express delivery in under an hour.

18. Financial overview
The company anticipates to incur losses in the near term as a result of expected increases in operating expenses as it invests in the business in order to grow and retain buyer base, expand logistics and fulfillment capabilities.

19. Primary sources of revenue are sales of goods by the company under the Direct Sales model and Marketplace commissions from sales of goods by their-party sellers on the company’s Marketplace. Service revenue includes Marketplace commissions, charges for delivery services.

20. Services
OZON Travel, a service for booking hotels and tickets, has launched a B2B business trip service OZON Travel Business Trips. It will automate the coordination of work trips, taking into account the specifics of medium and large businesses.

21. OZON Card, a bank card with a cash back offer (5% - shopping on OZON), featuring its own installment payment service for customers and OZON Pay technology. Based on the company’s website, 600,000 people are currently using this card.

22. OZON Account, an e-wallet in which buyers may store funds for later purchases. OZON Installment (point of sale buyer loans). OZON Seller (gives sellers access to a broad set of tools to manage their sales, tools for inventory management, assortment management).

23. OZON Invest that grants loans to small and medium-sized businesses that sell their products on the OZON marketplace. Ozon was also the first online retailer in Russia to launch consumer loans for multi-category online purchases, as well as its own debit cards.

24. OZON Premium, the first e-commerce subscription service on the market, and launched Russia's first contactless delivery service across more than 40 major cities.

25. OZON Education includes OZON Academy (kids 5-17 years), OZON Masters, OZON New Skills, Summer School.
In 2017, the company acquired a stake in LitRes, the leader in Russia’s fast growing domestic e-book market.