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Russia’s Makes Deal to Expand

Russia’s biggest e-tailer, Ozon, has raised $100 million to expand is frequently called the of Russia. But the differences between the Moscow-based upstart and the U.S. e-commerce giant are more revealing than the similarities. There’s no equivalent of FedEx or United Parcel Service that covers all of Russia, so Ozon must run its own fleet of hundreds of delivery trucks, which have to get as far as Khabarovsk, nearly 4,000 miles away on the Chinese border. Most Russians eschew credit cards, so customers typically pay delivery staff in cash. Many of Ozon’s customers are also wary of placing orders online, so more than 10 percent of its transactions occur over the phone. “We do look at Amazon, but we always try to adapt what they are doing to the Russian market,” says Maelle Gavet, Ozon’s chief executive officer. “Copy and paste never works here.”

On Sept. 8, the company announced it was raising $100 million from a consortium of investors including the Baring Vostok Private Equity Fund and Rakuten, the largest e-commerce company in Japan. Ozon, which has more than 1,100 employees based mostly in Moscow and at an 8,000-square-foot shipping center in Tver, located centrally between Moscow and St. Petersburg, plans to use the money to improve its website and build data centers to compensate for the country’s sluggish network infrastructure. “They have already delivered millions of packages over the last few years,” says Giuseppe Zocco, a partner at venture capital firm Index Ventures, which has backed Ozon since 2007 and invested in the latest round. “It’s a well-oiled machine and poised to keep growing.”