Ozon.ru, which claims to be Russia's largest e-commerce store for books, audio and video, software, multimedia games, electronic and digital goods, received $18 million in funding this week from Index Ventures, Holtzbrinck Ventures (the venture arm of one of Germany's largest publishing companies) and Cisco. The money will help develop Ozon.ru's logistics system, expand its product lines and establish new distribution centers across Russia. The investment round was initiated and managed by Baring Vostok Capital Partners, Russia's leading private equity investor and controlling shareholder of Ozon.
According to The Public Opinion Foundation, Russia has the third largest population of Internet users in Europe - with Internet and broadband penetration rates rising rapidly and retail spend per capita expected to double over the next four years. Ozon.ru today offers more than 260,000 items for sale, divided into 12 product categories from more than 400 suppliers. More than 3,000 orders per day are delivered to its Russian-speaking internet audience worldwide from Ozon.ru's distribution center in Tver (160km North of Moscow).
The similarities with Amazon.com are striking. Ozon.ru is headquartered in Moscow, but was founded in St Petersburg in 1998 originally as an online book community and shop. Like Amazon.com, Ozon.ru expanded to become an all-round e-commerce site - the leading online retailer in Russia. It currently gets over 120,000 unique visitors per day. I wouldn't go as far as to say it's a clone of Amazon.com (like all the digg clones around the world), but Ozon.ru has certainly taken a very similar path to Amazon.
Index Ventures and Cisco Eye Russian Market
Index Ventures is generally regarded as Europe's leading VC, definitely in web 2.0 investments, and it sees the Eastern Europe region as one of significant growth. It hopes that the Ozon.ru investment "will be the first of many we'll make in Russia." Index Ventures told me that EU online commerce activities topped $47.9 billion in 2006, growing approximately 25% over 2005 estimates. Index thinks that Ozon "is well positioned to undergo tremendous growth in the next couple of years."
This is also an interesting move from Cisco, which according to Red Herring is beginning to invest in new technologies worldwide to "feed demand for CiscoÄôs routers and help it stay abreast of new technology in developing markets around the world." In that piece, an analyst says that Russia has "substantial opportunity [for technology], but also a great deal of risk". More on that here (via Alarm:Clock).
Given the passionate response Read/WriteWeb received when we posted our Top Web Apps in Russia article, I wonder if any of our Russian readers can let us know their experiences using Ozon.ru. How does it compare to Amazon.com?