Modnique: Californian E-Commerce

company enters Russian Digital Space

Modnique CEO and co-founder Einaras von

Gravrock

E-Commerce is one of the most growing digital

markets worldwide. Everyday millions of

consumers are searching for diverse goods online.

Especially fashion industry reaps the benefits of

online shopping as far as clothes, bags and shoes

are besides diamonds a girl’s best friend. Today,

during the Christmas time, when people are

getting crazy about the holiday shopping, I am

talking with Einaras von Gravrock, the CEO of

Modnique. Modnique is a global fashion retailer,

based in California, a pioneer among Western

brands, who entered the Russian digital space

and is getting popular day by day. So let’s find

out what is Modnique’s secret for success in

Eastern European region.

1. Please tell some words about Modnique and what is the USP of the company?

Modnique is a global fashion e-commerce company headquartered in Redondo Beach,

California and launched in April of 2011. We specialize in sourcing designer brands from

around the world and offer our customers discounts of up to 85% off retail. Since day 1 we

have been shipping internationally and we now ship to over 150 countries. The majority

of our sales come from outside the U.S. and we primarily target stylish,

contemporary women from all over the world.

We have invested in relationships with logistics providers and our value proposition to

international customers is that we have identified the best (most efficient and cost-effective)

ways to ship to each country outside the U.S. Because of this, we particularly appeal to

customers in regions such as Russia, Eastern Europe, Middle East, which are typically under-

served from an e-commerce perspective. Our value proposition to all customers is that we

source both well-known designers and regional brands which are difficult to find or unknown

outside of their local region. So for instance, our customers in the U.S. have the opportunity

to discover regionally recognized brands from Spain that haven’t yet penetrated the U.S.

market.

2. When and why did you decide to enter the Russian market?

Modnique has been an international company since its launch. In early 2013 we noticed that

Russia was one of our fastest growing customer segments and we decided to localize the

shopping experience for them by including regional style preferences, full Russian language

capabilities, Russian customer support in local time zones and local payment methods. Since

day one, we have been shipping to anywhere in the world, so the fact that we offered the

ability to ship to Russia and Ukraine was very compelling and led to an almost viral

communication of our brand in those countries. Additionally, the designers we source appeal

to the international customer and our prices are more competitive than those offered by local

eCommerce companies, so there was a natural draw. As a result, we’ve grown

exponentionally with relatively little marketing to date. Our localization efforts include

dedicated marketing teams and campaigns.

Modnique Russia

3. Some foreign companies are not sure about the expansion in the Russian market

because of local market conditions, geographical, mental differences and immaturity of

the e-commerce infrastructure. Did you have any doubts before making such an

important decision?

We didn’t have any doubts because we had already been serving Russian customers with our

existing (non-localized) processes and services. This gave us insight into which parts of the

process needed to be localized, e.g. shipping and payment methods.

One of our initial steps was to ensure we establish dedicated logistics payments, returns and

supply chain. As part of our recent localization in Russia, we partnered up with leading local

partners such as SPSR Express. We benefit from their experience in the local market and are

able to offer a service that is equivalent to local competitors. We’re always looking for ways

to improve service and logistics and see these areas of business as an opportunity rather than a

problem. Given our scale and resources, we’re able to command partnerships and invest in

solutions that are otherwise not available for another company, which presents a competitive

advantage.

4. Do you have a local team in Russia, which takes care about the Business Development

activities?

All Russian activities are being managed by Andrey Shapovalov, our Russian Country

manager who is based in Moscow and comes with significant eCommerce experience in the

region. His team is managing our operations, marketing, communications, and social media

for the country.

5. What are the strengths of Modnique in comparison to the Russian big players

like Lamoda.ru, Trends Brands and Wildberries, which can attract the potential

customers and ensure the future retention?

We find that our approach to connecting brands and customers from around the world on one

single platform brings a unique and rich experience. When you’re shopping on Modnique,

you’re discovering brands from Spain, Italy, Canada, and France that you may not have

known about before. We recreate the experience of traveling abroad and picking up a

handbag or sweater that will always remind you of that trip.

Functionally, our strengths include:

1. Over a decade of international e-commerce experience

2. Relationships with vendors and access to inventory from around the world at attractive

discount and the ablity to sell merchandise at a lower price point than local

competitors due to our scale and the efficiency of our platform

3. Our international recognition as a trusted retailer due to our authenticity standards,

return policies, and focus on the customer.

6. What kind of payment methods and shipping possibilities are available for your

customers in Russia?

We accept local payment methods including Qiwi, Webmoney, Yandex.Money in addition to

major credit cards and PayPal. We also provide customer service in Russian in relevant time

zones and will assist in customs and duties paperwork. In addition to offering free shipping on

orders over $99 for a limited time, SPSR Express, a contracted courier service, will expedite

deliveries throughout Russia. We’re always looking for ways to improve service and logistics

and see these areas of business as an opportunity rather than a problem.

7. Let’s talk about marketing. How do you reach your target audience? Is it more about

the classic media like TV and print or do you focus on online marketing. How does

actually your marketing mix looklike and who is responsible for its implementation in

Russia?

Our marketing mix is different in Russia than it is in, say, the U.S. We are focusing

proportionally more on classic media like print and eventually TV. We’re monitoring how

Russian consumers react/interact differently to channels such as paid search and social

media. For instance, we see much higher engagement rates on social media from our Russian

consumers.

Russian Country manager, Andrey Shapovalo’s team will be managing our marketing,

communications, social media, and operations for the country. We are currently posting

Russian localized posts on our Facebook page.

Having local expertise has contributed to our success in this area. In addition to

hiring Andrey Shapovalov, we’ve also hired marketers, designers, describers and copywriters

who are familiar with eCommerce in Russian. When approaching this market, we call

attention to different benefits based on what is most valuable to them. For example, we

emphasize authenticity standards on luxury items and differentiate ourselve by caling out that

we are an American company and can be trusted based on our experience. International

business experience is very important to Russian customers of products and services.

8. Do you plan to expand in any other Eastern European country, e.g. Ukraine, Poland

or Czech Republic?

We plan on rolling out several more localized versions of our site throughout 2014 based on

our other growing customer segments. We plan to be everywhere in next 3 years; focusing on

Eastern Europe in the immediate future and creating personalized experiences for customers

in our 150 countries. Currently we’re actively testing 10 different regions and working hard

to identify logistics partners, brand partners and hiring people in Europe, Americas and Asia.

9. What three tips would you give to other Western companies, who are planning to

enter the Russian market and want to become successful with their products?

1. Get the right team in place. Hire and establish a local team who has significant e-

commerce experience in Russia. There are nuances to doing business and marketing in

Russia that are important to get right.

2. Recognize that your biggest challenge will be around logistics. Russia is a massive country

with large distances between cities. You will need the proper relationships, people on your

team, and financial capabilities. It will require significant investment and there are no short-

cuts. We see this as the most serious barrier that only a few large online retailers can address.

This is why there have been fairly few entrants from the West.

3. Reach out to these customers in the right places. Modnique’s digital marketing team is

participating on Russia’s social media sites, VK.com and Odnoklassniki, and executing

targeted marketing campaigns in order to build a brand. Allowing customers to engage with

Modnique through regional platforms leads to brand loyalty.