1/ The destruction by Ukrainian drones of two of Wildberries' massive warehouses near Moscow is a huge disaster for the Russian economy, which will inflict far more damage than the headline $1.2 billion loss of stock. Here's why. ⬇️
2/ While Wildberries itself can absorb the loss of two of its biggest warehouses – it will not need to compensate sellers as it has very recently disclaimed responsibility for losses caused by enemy action – the impact of the strikes on the wider economy will be significant. 3/ Wildberries is frequently called the 'Russian Amazon', but it has a far more dominant role in the Russian economy than Amazon does in Western economies. Since it was founded in 2004, it's become one of the most structurally important companies in the Russian economy. 4/ The company is Russia's largest e-commerce operator and has been Russia's largest retailer since 2019. Wildberries and its rival Ozon are projected to control 77% of Russia's e-commerce market by the end of 2026, with Wildberries alone expected to hold a 45% share. 5/ It operates an enormous logistics footprint — reportedly handling around 4.5 million daily orders with roughly 48 million monthly shoppers, and delivering about 95% of orders within 24 hours through thousands of pickup points and delivery partnerships. 6/ The company has become deeply embedded in Russian consumer life and now operates across several Eurasian countries including Armenia, Belarus, Georgia, Kazakhstan, and Kyrgyzstan, alongside partnerships with Chinese sellers. 7/ Wildberries has over 1 million active sellers, many of them small businesses and individuals traders. It influences the livelihoods of millions more people, including the sellers' employees, suppliers, and the workers at thousands of pickup points and logistics hubs. 8/ The aggressive sales tactics and economies of scale that Wildberries practices have enabled it to displace many ordinary 'bricks and mortar' retailers. Traditional shops and markets have lost custom or been put out of business as a result of online competition. 9/ For many Russians, online shopping through Wildberries has become a central part of life. The Wildberries pickup point in towns and villages has become as much a key location as shops and kiosks used to be. 10/ Ukraine's drone attacks have struck at the heart of the company's success – its huge warehouses. In the Elektrostal attack on Saturday, Wildberries may have lost about 350,000 square metres of logistics capacity. This have knocked out 7-15% of all of its warehouse space. 11/ Another 200,000 square metres is likely to have been lost in the latest attack on a Wildberries warehouse in Podolsk, south of Moscow. The destroyed Elektrostal facility was a distribution centre, while that in Podolsk is a regional logistics hub. 12/ Hundreds of millions of individual items are likely to have been destroyed in the attacks, causing huge losses for traders and likely putting many out of business. Billions more rubles in sales and income taxes are likely to be lost to the state as a result. 13/ The effects on Russian military logistics are also likely to be severe. Wildberries and Ozon have become key channels for dual-use material and non-lethal supples for soldiers at the front – drones, spare parts, night vision equipment, boots, uniforms, generators, and so on.
14/ Volunteer 'humanitarian aid' providers and soldiers themselves, using donated funds or their own salaries, have relied on Wildberries and Ozon to provide such supplies. They play a crucial role in supporting the Russian war effort and making frontline life possible. 15/ For ordinary Russian consumers, the effects are likely to be felt in lost orders, slower deliveries as distribution networks have to be rebuilt, and likely higher costs as insurers price in the risk of Ukrainian drone attacks. 16/ It will take a long time for Wildberries to recover. After its warehouse in Shushary near St Petersburg was destroyed by fire in January 2024, rebuilding and reopening took 18 months. The destruction this time is more severe and more widespread. 17/ The targeting of Wildberries won't end the war – but it will make it harder for Russia to fight, and will almost certainly increase popular discontent and boost an already widespread desire to end the fighting quickly. /end