Russian e-commerce giants seek hundreds of billions in state aid

Russia's leading e-commerce firms have petitioned the government for substantial state aid, amounting to hundreds of billions of rubles, in order to offset losses incurred due to Ukrainian drone attacks, according to Vedomosti, a Russian newspaper. The Association of Digital Platforms, comprising prominent e-commerce companies such as Ozon, Yandex, Avito, Kuper, and Wildberries, submitted a formal request to Russian Prime Minister Mikhail Mishustin, seeking government support.

Wildberries, one of the affected companies, has endured significant damage as all of its primary warehouses were destroyed by Ukrainian drone strikes. The Association of Digital Platforms is proposing that the level of federal assistance be commensurate with the actual losses and scale of operations experienced by each impacted company.

The request also includes proposals for tax and mandatory-payment deferrals or installment plans for a period of at least six months, as well as waivers for penalties and late-payment charges during periods when normal business operations were disrupted. The total amount of assistance being sought is estimated to be in the hundreds of billions of rubles.

Since July 18, Ukraine's Defense Forces have been targeting Wildberries' logistics centers, with at least 20 distribution centers falling victim to Ukrainian drone attacks, some of which have been completely destroyed by fires. This has resulted in Wildberries losing approximately 1.18 million square meters, or around 12.7 million square feet, of warehouse capacity.

The attacks have already impacted Wildberries' operations and have broader implications for the Russian economy, with the company's turnover reportedly declining by about a quarter due to lost logistics capacity and a mass exodus of sellers. Russian media outlet Agentstvo, based on information close to the Kremlin, warned that Russia could face a surge in bankruptcies among entrepreneurs who sold goods through Wildberries and lost their inventory in the attacks on its logistics centers.

Analyst Sergei Semko of Data Insight estimated Wildberries' direct infrastructure losses to be between 147 billion and 223 billion rubles ($1.75 billion to $2.65 billion) by mid-August, which could rise to 278 billion rubles ($3.31 billion) when considering demolition, debris removal, and site remediation. Additionally, Wildberries sellers are estimated to have lost merchandise worth between 445 billion and 507 billion rubles ($5.29 billion to $6.05 billion), potentially leading to combined losses of around 800 billion rubles ($9.5 billion).

According to Margarita Yevstigneyeva, head of the Association of Suppliers of Goods for E-Commerce Platforms, seller losses are even higher, ranging from 600 billion to 700 billion rubles ($7.14 billion to $8.3 billion). Including Wildberries' own losses, the total damage could potentially reach 1 trillion rubles ($11.93 billion).