“How did you get the idea to set up Sapato.ru in Russia?“
“The idea was dreamt up by Pascal CLEMENT, Oskar HARTMANN and me. In the Western segment of the Internet there are many interesting and highly successful business models whose analogues had not yet appeared in Russia. In fact the very idea of Fast Lane Ventures came about through the same chain of thought. It was clear to us that there were Russian Internet users who were willing to buy products through e-commerce and use the new Internet services, but no one was offering them the chance to do so. No one was willing to launch a business model where the estimated worth may be more than a billion and in some cases the company turnover may be close to this amount. That‘s why we created Fast Lane Ventures: its main task was to build large, interesting, scalable Internet businesses in Russia. And as it was being created, Fast Lane Ventures launched its first startup Sapato.ru. The main idea and goal of Sapato was to be the best Internet shoe store in Russia.“
“Was it based on the concept of the American Internet retailer Zappos.com?“
“Yes, we studied their experience carefully. Today there is probably not a single person in the online world who has not heard about this retailer’s success.“
“Did you just take the model or do you have any other relations with the owners of Zappos.com?“
“Zappos.com is an interesting potential strategist for us. But at the moment we don‘t have any formal relationship with them.““How long did the adaptation process take, how long did it take from the decision to start to the launch of the company?““The whole ideology of the Fast Lane Ventures is based on high speed. We work with FAST 50 technology that allows us to start up new businesses in 50 days. The online store was opened two months after we made the decision.It is clear that any online business changes daily. So the Sapato.ru of June 2010 was very different from Sapato.ru at the end of 2011. If you had tracked the site on a daily basis you would see these changes. For example, how the range has been expanded – that’s one of the key factors. When we started there were 500 models and today their number is close to 6,000. As the number of services grew, the range of options for delivery, payment, etc. was expanded as well.Of course, we had to adapt to the Russian market. E-commerce in Russia has its own specific matters. But, basically, when you look at consumers they are all very similar. A Russian woman has just the same desires as a woman in America or Brazil, where there are already several similar companies.“
“What exactly did you have to adapt?“
“All e-commerce in the world is based on credit card payments. Germany is a bit different in this respect as there the invoice is included in the parcel and the buyers can pay it by any method they choose. But more often it is done via online payment, it’s just that it is post-paid (in Germany about 40% of payments are post-payments). In America almost 99% of payments are made by credit card. In Russia it is precisely the opposite: 97-99% of transactions are paid in cash to the courier upon receipt. So the entire business process was in need of some serious adaptation. It is very difficult to explain to an American or a German what initial documentation for the accounting department is.“
“A form with a round blue stamp?“
“Precisely. So we needed to make serious adaptations. You can’t operate in a manual mode – everything has to be automated. So a large investment had to be made in what is called the back office.Another element of the adaptation is that, more than in Europe or America, we explain to our customers how the ordering process works, what guarantees we give them, what is behind these guarantees, how the return process works. And we are also educating the market, so we put a large amount of information like this on our site.
There is one more difference. As the cell phone market in Russia is very well developed, we make more use of SMS messages. While SMS marketing by-passed the United States altogether. Here our experience is more European.Other elements that we had to adapt were the logistics, working with the courier services, working with Russian Post (using its services is one of the customer options).“
“Back to the round blue stamp. You meet a lot of foreign investors...“
“... they are mostly from the West.“
“What do they fail to understand about Russia? What advice can you give them? I understand that you could create a lot of competitors, so perhaps you wouldn’t want to say...“
“It‘s very important to be clear: despite the fact that we are investing money in the initial stages, we primarily think of ourselves as an operating company that builds businesses. We are not an investor or a venture capital fund. It is clear that at the initial stage seed funding is required, it is important, and we take on that funding ourselves. But in principle we are not closed and we want to attract external investors. We see them not as rivals but as partners. We tell them that we know what it means “to build a business in Russia“ and we know how to do it effectively. We know how to grow a business quickly and aggressively, in the good sense of the word, over the first three to five years. Let‘s try and do it together.“
“What advice would I give an investor in Russia? A year ago there were a lot of questions from foreigners: what was the actual market potential, how fast could they get a return on their investment, what are the volume of transactions, were there any large deals... Over the past year there has been a number of significant news stories in this area: Yandex shares went public in an IPO on the American Nasdaq Stock Exchange and smaller Russian companies began to attract investments... After this the number of questions immediately dropped.Again, I‘m talking mainly about the Internet. By the number of users, Russia has already overtaken the UK and is catching up with Germany. With our current rate of growth we will overtake it in the next year. So here we have the leading market in Europe by the number of Internet users while the business models market is virtually empty. So this market is definitely attractive!“