Ozon vs. Turkish and Chinese giants: Can the Russian marketplace survive in Azerbaijan?

By Faiq Mahmudov

The Russian marketplace Ozon , one of the largest online retailers in the country, has taken a significant step in expanding its presence in the CIS by launching operations in Azerbaijan on August 8, 2024 . This initiative highlights Azerbaijan’s growing role in the region’s e-commerce landscape and opens up new opportunities for both local buyers and entrepreneurs. Let’s explore the key aspects of this event and its potential impact on the Azerbaijani market.

Since its launch in Azerbaijan, Ozon has offered customers access to over 30 million products across a wide range of categories—from electronics to beauty and health items.

Although the current delivery time is around 10 days, Ozon aims to shorten this timeframe by developing its own logistics infrastructure in the country in the near future.

Looking ahead, the company plans to significantly expand its product selection, increasing the number of available items by more than tenfold. Additionally, a major focus will be on building a robust logistics network, which will include the creation of warehouse complexes, dedicated delivery services, and branded pick-up points through franchising.

Ozon not only intends to increase the availability of Russian goods in Azerbaijan but also aims to promote the flow of Azerbaijani products back to Russia and other CIS countries. This will create new opportunities for local businesses and enhance Azerbaijan’s export potential.

Alexey Sapon, Ozon's Director of Operations and Development in the CIS, emphasized that Azerbaijan is one of the fastest-growing countries in terms of e-commerce growth. This market has become a key part of Ozon’s strategy to expand its presence in the CIS, a process that began in 2021.

With its steadily developing infrastructure and growing internet penetration, Azerbaijan's economy provides fertile ground for the growth of e-commerce. In recent years, there has been a significant rise in the number of online shoppers, creating favorable conditions for international players like Ozon.

News.Az connected with economic experts to explore the key elements of this event and its potential impact on the Azerbaijani market.

Vugar Bayramov, an economist, spoke to News.Az about OZON, describing it as a virtual marketplace specializing in online sales. "Considering the presence of several online trading platforms in the region and the limited capacity to restrict virtual commerce, OZON has already extended its services to most CIS countries . Essentially, their services are provided online, with the company partnering with local firms and adapting its operations to local customs and regulations," Bayramov explained.

He highlighted that for Azerbaijani consumers, this development brings new opportunities: "It will allow customers to order and purchase products, especially those produced in the CIS, through online platforms. This, in turn, could enhance competition, particularly in online retail. While it may not drastically impact total imports or exports, it is likely to contribute to the growth of the overall e-commerce sector in the country."

Economist Natig Jafarli also weighed in, noting the rising interest in online trading platforms in Azerbaijan: "This sector has been slow to take off in Azerbaijan compared to other countries where e-commerce began developing 10 to 15 years ago. It has only gained momentum in recent years, largely spurred by the pandemic. OZON is trying to capitalize on the success of Turkish and Chinese platforms that have already entered the Azerbaijani market."

Jafarli pointed out that many of the products sold on OZON aren't Russian-made: "In Turkey, the platform is dominated by Turkish products, and in China by Chinese goods. But OZON largely sells products sourced from China and Turkey, primarily China. Given the growing popularity of Chinese platforms in Azerbaijan, it's uncertain whether OZON will be able to maintain a competitive edge here. It will not be an easy task for them to establish a strong foothold."

As for the broader economic impact, Jafarli doesn't expect OZON to significantly affect Azerbaijan-Russia trade: "Our trade turnover with Russia has grown by about 20 to 25 percent. However, I don’t believe OZON will make a significant difference to these figures. Any impact is likely to be marginal."

As major players such as Turkey's Trendyol and China's Alibaba have already solidified their presence in Azerbaijan, the entry of Ozon into this highly competitive market raises intriguing questions. Both Trendyol and Alibaba have cultivated loyal customer bases by offering diverse product selections, competitive prices, and efficient delivery services. These established platforms have become household names for Azerbaijani consumers, making it difficult for newcomers to compete. Ozon, a well-known Russian marketplace, will face significant challenges as it tries to differentiate itself from these formidable rivals.

The success of Ozon in Azerbaijan will depend on several factors, including its ability to offer unique products, competitive pricing, and a seamless customer experience. Additionally, Ozon will need to invest heavily in marketing and logistics to build brand recognition and trust among Azerbaijani consumers, many of whom may already be loyal to Trendyol and Alibaba.

Moreover, Ozon's ability to adapt to local consumer preferences and the overall economic climate in Azerbaijan will be crucial to its success. If Ozon can cater to the specific needs of Azerbaijani shoppers and offer services that stand out in the crowded marketplace, it may be able to carve out a niche for itself. However, only time will reveal whether Ozon can withstand the fierce competition from Turkish and Chinese platforms and secure its place among the leading e-commerce players in Azerbaijan.

News.Az