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. Last Updated: 07/27/2016

eHouse Reports $16.3M Turnover

Reporting a profit for 2000 of $250,000, the nation’s No.1 Internet retailer eHouse has shown that the RuNet can be a profitable business, although the profit is comparatively low when compared to the firm’s consolidated annual turnover of $16.3 million.

"Trading computer parts [the most popular product on the Internet] accounts for most of our turnover, but brings in very low profits," said executive director Stanislav Ulendeyev. "Meanwhile, our comparatively low sales of toys bring in 10 times as much revenue."

According to the results of the company’s financial activities for last year, published Thursday, eHouse controls no less than 18 percent of the entire Russian e-commerce market and 40 percent of retail.

EHouse comprises 10 Internet stores specializing in the sale of various types of goods from computer technology to cosmetics and toys. They include Dostavka.ru, Megashop.ru, Bolero.ru, Kenga.ru and Aromat.ru.

IDC, an online market researcher, puts the total national turnover from e-commerce last year at $90 million. Thus the holding occupies an extremely solid position with about 18.1 percent of the market. Based on the assessment of analysts from the Boston Consulting Group, the volume of electronic retail in Russia last year was $40 million. In this case eHouse controls about 40 percent of the domestic Internet retail sector.

"Normally profits from trading computer technology do not exceed 2 percent to 3 percent. Profits are made on services, which account for a low portion of turnover," said Yelena Gringaut, public relations manager for the Depo.ru company.

"The tough conditions on this market guarantee that strong competition is unlikely to come from normal businesses," Ulendeyev said. "Our present competitors [on the Internet] are no cause for fear — the majority of them are experiencing financial difficulties.

"Only Ozon is a strong competitor — they sell twice the number of books we do," he said. In summer 2000, Ozon managers announced that their monthly turnover was $60,000.

Turnover depends to a large degree on the effectiveness with which goods are delivered. So far this process takes a big chunk out of turnover.

"About 70 percent of books are bought by the regions," Ulendeyev said. "Payments for transfer by post are delayed by two months. So in order to sell $200,000 worth of books, the initial investment cannot be less than $400,000."

Other companies have a lower share of regional sales.

"Eighty percent of those who buy books and compact disks at Internet stores are from Moscow," said Yulia Sigunova marketing director for netBridge, owner of the 24x7 Internet store.

Despite all its difficulties, eHouse plans to increase its turnover to $36 million next year.

"Their expectations are entirely realistic," said Stanislav Tsirlin, an analyst with the Boston Consulting Group. "Despite the fact that our e-commerce market has existed for more than a year and a half it is still at a nascent stage. The volume of sales through the Internet comprise only a hundredth of a percent of the level of normal sales."