Yandex decided to abandon the purchase of the online store KupiVip, which specializes in the sale of clothing and footwear, a representative of Yandex.Market told Vedomosti.
Yandex.Market will not use its right to exercise the option to purchase the KupiVIP group, ”the spokesman said, adding that the company is considering“ alternative exits to the fashion segment ”. According to a source familiar with the negotiations, the option did not oblige the company to conclude a deal. According to him, after receiving the option, the active stage of Due diligence began, within which the company assessed KupiVIP and possible risks, and decided that the asset was not suitable for it.
Yandex announced the deal in May. In addition to the online store, its perimeter was to include five KupiVIP offline stores located in various shopping centers in Moscow, the Mamsy online store and a 20,000 sq. M. Distribution center. m in the suburbs, said a company representative.
He emphasized that Yandex.Market “buys, first of all, well-established processes, expertise and infrastructure facilities”. The deal, he said, would give the company an opportunity to enter the clothing market. Yandex.Market this year has already begun to develop the clothing sales segment on its own, but it was not possible to do it on its own, so it was decided to acquire one of the players who had been working in this market for a long time, said the source of Vedomosti. He also added that through KupiVIP, the company does not just enter the clothing market, but starts selling branded items.
KupiVip was of interest to Yandex primarily due to the ready-made team and infrastructure that ensured the development of the fashion segment, says Mikhail Burmistrov, general director of Infoline-Analytics. According to him, “Yandex” “could not convince the team that it would be able to solve the company’s ambitious tasks to actively enter the fashion segment”. “Yandex has a development plan for a certain period of time, and the company could not meet it with KupiVip,” he said. The problem could also be in the price of the deal, because KupiVip has many shareholders who were supposed to agree among themselves, but apparently did not agree, Burmistrov noted.
KupiVIP could become the first store bought by Yandex.Market specializing in direct sales of goods. Although Yandex had similar deals – in 2018 it acquired a company that delivers sets for cooking dishes, Party Food (later – Yandex.Chef). KupiVIP, established in 2008, specializes in the sale of branded items at a large discount, including through the acquisition of leftover fashion brands at discounted prices. Now the company has over 3000 Russian and foreign suppliers. According to Fashion Consulting Group, the service turnover at the end of last year decreased by 10% to RUB 4.5 billion. Mamsy specializes in the sale of mid-range clothing and goods, mainly for children and women. Its revenue at the end of last year, according to SPARK-Interfax, amounted to 671.6 million rubles, the loss – 167.9 million rubles.
Clothing on marketplaces is the largest category of goods: it accounts for at least 30% of sales, says Juliana Gordon, founder of the iWENGO e-commerce business school. According to Fashion Consulting Group, online sales of clothing and footwear in Russia in 2021 will grow by 37% to 335.3 billion rubles. And by 2025 Fashion Consulting Group predicts the growth of this market to 1.01 trillion rubles.