IPO Ozon by Alexnader Gornyi

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The post was originally published in Russian on Startup of the Day. Alexander kindly agreed to republish what we think is of great value to our readers.

Alexander Gorny’s startup of the day 

#thestartupoftheday Ozon announced that it goes public. On the bottom are the main numbers.

Ozon is still small. The service turnover for nine months in 2020 is  120 bln Russian rubles. Imagine that for a full year, taking into account growth and the New Year boom, there will be 180 mln rubles. It is ten times less than X5; it is two times less than AliExpress Russia, and a bit less than Wildberries before COVID came. Yet, it is three times more than Beru. And, Ozon is developing at the fastest pace.

The shop is transforming into a marketplace by selling goods of other sellers. The share of such sales for 2018 was 1%, for 2019 – 17%, for nine months of 2020 – 45%. In current sales, even more than a half, I guess. Amazon, for comparison, has about 55% and it does not grow. But, unlike Amazon, Ozon considers it is promising for the seller to use his own, not platform logistics. Now half of the third-party orders are fulfilled in this way.

Even the shop itself is developing and accelerating, which is unusual for a company with a 20-years history. In 2016 it got +20%, 2017 +46%, 2018 +73%, and in 2019 +60%. And taking into account the marketplace, there is no slowdown in 2019 either – + 93% in terms of GMV. COVID for Ozon is a blessing; the sales growth + 142% during these months. The  revenue is +70%, the shop is + 50%.

Ozon stably works at about zero-profit in basic operations (bought, sold, paid for storage and delivery), but this is not even unit economics; marketing is already going into a net loss. And then it pays for all fixed expenses, like R&D and management. The total operating loss for the last year – 18.6 billion rubles, for this it will be a similar number. Capital investments are an additional loss, but they are rather small, 4.5 bln for the last year and six for this year. I thought that the ratio of operation loss to investment should be the opposite.

As to capitalization, it is better to compare with Amazon. It is profitable, and it has AWS. Yet, Ozon is accelerating faster, so one should compensate another. If to use the US revenue multiplier, Ozon will cost 300 bln Russian rubles ($4 bln). That is what is being expected, we don’t see “Russian discount,” it’s nice.

On the other hand, Yandex has a “Russian bonus” in comparison with Google. Maybe the same will be in this case – the shares will increase after the IPO. 

#ipo #shop #classified #russia

Translation : Valeria Stupnikova

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