Activities of the largest marketplaces in Russia and China: theory and practice

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Introduction More than 40 years have passed since the emergence of the first online stores in the UK in the 1980s. During this period, e-commerce has undergone significant changes and is considered the most digitalized sector of the economy according to A.A. Vlasenko and G.G. Glovenchik (Vlasenko, Glovenchik, 2022). In Russia, the first online store selling printed products, “Simvol-Plus”, was opened in 1996. Then, between 2001 and 2007, the growth rate of online stores averaged 16.84% (Bespalov, 2011). This period also saw the launch of “Wildberries” and “Lamoda”. The first Chinese company in the e-commerce sector which became quite popular was established in 1999 under the simple name “8848”. That same year, in 1999 the marketplaces “eBay” and “Alibaba” were launched. In recent years, China, the US, and the UK have held the largest shares of the global e-commerce market volume. In China, e-commerce accounted for 27.6% of total retail sales in 2023, while in Russia, it was 13.4%[56]. Growth in e-commerce volumes worldwide is forecast for the coming years of 2025 and 2026. Marketplaces represent the largest segment within this economic sector. The complexity of analyzing and forecasting the dynamics and development paths of e-commerce and marketplaces, in particular, lies in the fragmented nature of the available statistical information and the lack of international and Russian databases. The purpose of this study is to examine the performance results of the largest Russian and Chinese marketplaces and identify future trends in their development, considering their impact on the overall economic situation in the country. In the course of the study, the following tasks were addressed: outlining the principles of platform economy theories in relation to the real-world activities of marketplaces; evaluating the performance results of the largest companies in this economic segment; and identifying potential paths for the transformation of their activities in the future. Methodology and Literature review In researching the operational specifics of marketplaces in Russia and China, methods of statistical and comparative analysis were employed, based on materials published on the official websites of the companies under study, as well as leading news agencies covering business activity. Specifically, key indicators characterizing the development of this industry were examined. The study of major works on platform economy theories in relation to the actual processes occurring within marketplaces has enabled the identification of patterns and factors that will influence the dynamics and specificities of the development of e-commerce platforms in Russia and China in the future. The Russian market features large domestic multi-sided platforms, whose scale and functional scope are rapidly expanding, impacting market participant behavior and numerous economic processes. Certain distinctive features of marketplace development in Russia, such as the formation of their own infrastructure and independent businesses (logistics services, social networks, microfinance organizations, etc.), are covered in the article by Voskobovich N.A. (Voskobovich, 2023). Contemporary marketplace strategies in response to changes in consumer behavior (e.g., the growing role of social networks and smartphone use in the product selection and purchase process), and the refinement of platform business models are analyzed by Gorelova T.P. (Gorelova, 2024) and Markova V.D. (Markova, 2019). The risk of multidirectional influence by digital platforms on productivity, employment, and inflation is examined by Shelepov A.V. (Shelepov, 2023) and Usmanov M.M. (Usmanov, 2023). A substantial body of research is dedicated to the development of e-commerce in China. In particular, a comprehensive analysis of the history of digital trade formation and the factors behind the rapid breakthrough of e-commerce in the PRC is presented by Pikover A.V. (Pikover, 2022), Glovenchik G.G. and Yanhai He (Glovenchik, Yanhai, 2021), and Pogodin S.N. and Yagya T.S. (Pogodin, Yagya, 2022). Issues of state regulation of platforms have been studied by Sakharov A.G. and Shelepov A.V. (Sakharov, Shelepov, 2024), as well as Larionova M.V. and Doronin P.A. (Larionova, Doronin, 2024). Prospects for Russia-China cooperation in the digital economy are considered by Zubenko V.V., Zubenko V.А., Sun Y. (Zubenko, Zubenko, Sun, 2023). However, questions concerning the operations of Russian and Chinese marketplaces and other e-commerce platforms remain insufficiently addressed. Theories of Digital Platform Development The specifics of platform economy functioning are analyzed in detail in the works of J. Tirole and J. Rochet (Rochet, Tirole, 2003), D. Evans (Evans, 2011), and B. Caillaud and B. Jullien (Caillaud, Jullien, 2003). The technological transformation of interaction models between producers and consumers, as well as between various market participants, leads to the emergence of new business models. Digital platforms, which represent physical or virtual spaces where different categories of customers (platform sides) meet, become key elements of the economy. According to theory of Multi-Sided Platforms, digital platforms facilitate interaction and reduce transaction costs for market participants by connecting two or more customer categories. It is digital platforms that transform existing economic sectors or create entirely new industries (e.g., delivery services, the peer-to-peer economy, etc.) or business models (online advertising, personalized services). There is a vast variety of digital platforms. For example, matching platforms, multimedia services, payment systems, computer platforms for developing and acquiring software products, and platforms for providing government or educational services are distinguished (Antipina, 2020). The Russian leaders in the platform economy are predominantly marketplaces: Wildberries, Avito, and Ozon[57]. Moreover, the four largest e-commerce operators hold an 81% share of Russia’s online retail market[58]. Another feature of digital platforms is their ability to create network effects, which manifest in the consumer value of a digital platform changing depending on the number of sellers and buyers conducting transactions through it. In other words, there is a risk that digital platform operators will strive for maximum capture of various market segments. The theory of network effects, developed with contributions from M. Katz and C. Shapiro (Katz, Shapiro, 1992), precisely explains the reasons for increasing market monopolization. Digital technologies create opportunities for building large-scale platforms that unite a large number of users and provide them access to various products and services. The value of the product or service increases with the number of users. Due to network effects and economies of scale, users of such digital platforms benefit from the presence of other users on the same platform, even if there is no direct contact between them. The principles of network effects theory find confirmation in practice. For instance, from July 2023 to June 2024, Wildberries, Ozon, Yandex Market, and Megamarket accounted for about 5 billion orders. Credit organizations owned by Yandex, Ozon, and Wildberries have sharply increased their share of electronic payments. By 2024, banks within these ecosystems already accounted for 40% of such payments, whereas three years ago their share was twenty times smaller4. Proponents of the theory argue that network effects allow companies to expand at an unprecedented exponential speed, building connections with all users and driving profit growth through economies of scale. Furthermore, as interconnectivity grows, the ability to access resources at any moment becomes valuable. The lack of necessity to own all resources required for commercial activity leads to significant changes in the institutional environment and transaction costs. In the Russian Federation, the definition of a network effect was provided in Article 4 of the Federal Law “On Protection of Competition”5 as amended on July 7, 2023. The law prohibits monopolistic activities by an economic entity owning a digital platform (Article 10.1) and lists criteria for determining whether an e-commerce marketplace is abusing its dominant position or not. In December 2023, the Federal Antimonopoly Service (FAS) of Russia established the “collective dominant position” of Wildberries and Ozon, which together held an 80% market share6. Specifically, FAS head M. Shaskolsky noted that numerous complaints from consumers and companies regarding marketplace activities have been received, concerning inflated logistics costs, imposition of unfavorable terms, and penalty charges7. Given the current moratorium8 on inspections of IT companies, the FAS is forced to limit itself to requesting that companies rectify identified violations. 4 TsB zaiavil o rezkom roste «nebankovskikh» bankov na rynke elektronnykh deneg [The Central Bank announced a sharp increase in “non-bank” banks in the electronic money market]. (2024, October 16). RBC Finansy. Retrieved November 25, 2024, from https://www.rbc.ru/finances/16/10/2024/670fa2379a7947b78c2882d4 5 O zashchite konkurentsii [On Protection of Competition] federal’nyi zakon No. 135-FZ ot 26 iyulya 2006 g. (red. ot 10 iyulya 2023 g.) [Federal Law No. 135-FZ of July 26, 2006 (as amended on July 10, 2023)]. (2023). Oficial’nyi internet-portal pravovoi informatsii. Retrieved November 20, 2024, from https://www.mos.ru/upload/documents/files/8692/Federalniizakonot26072006N135- FZ(redot10072023.pdf 6 FAS priznala Ozon i Wildberries kollektivnymi monopolistami [FAS recognized Ozon and Wildberries as collective monopolists]. (2024, January 24). RBC. Retrieved November 20, 2024, from https://www.rbc.ru/business/24/01/2024/65b0f87b9a794746623673d9?from=from_main_6 7 Ibid. 8 The moratorium is in effect on the basis of Decree of the Government of the Russian Federation No. 448 dated March 24, 2022 “On the Specifics of Exercising State Control (Supervision), Municipal Control in Relation to Accredited Organizations Operating in the Field of Information Technology, and on Amending Certain Acts of the Government of the Russian Federation” and implies a three-year moratorium on inspections. Retrieved November 11, 2024, from https://www.consultant. ru/law/hotdocs/74234.html Thus, the principles of platform economy and network effects theories currently reflect quite comprehensively the impact of technological changes on market mechanisms. However, the question of parameters for enhancing competition between platforms and marketplaces, as one of their varieties, remains largely unresolved. Key Performance Results of Major Russian Marketplaces Ozon, Wildberries, Yandex Market, Megamarket, and Avito are the largest and most popular e-commerce platforms in Russia, specializing in the trade of goods and/ or services. The volume of online trade in Russia for the first nine months of 2024 amounted to 6.2 trillion rubles, exceeding the figure for the same period in 2023 by 43%. Notably, 97% of the total trade volume comes from purchases on Russian online stores and marketplaces, with cross-border trade accounting for only 3%[59] during this period. Expert estimates suggest that by 2030, the share of e-commerce in total retail will exceed 30%, and reach 50% in the non-food segment. Russian marketplaces have demonstrated impressive growth rates in recent years. Wildberries’ revenue for 2023 reached 538.7 billion rubles, a 69.8% increase over 2022, while net profit amounted to 18.9 billion rubles, showing an 87% year-onyear growth. In June 2024, Wildberries announced a merger with Russ, the leader in outdoor advertising, to create a digital marketing platform and payment system. For this purpose, the parties established a joint legal entity - LLC “RWB”[60][61]. Over the first nine months of 2024, the turnover of the combined RWB company grew by 67%. The growth in turnover for all sellers was 63%, and averaged 27% per seller. According to Ozon’s Q3 2024 report, revenue grew by 41% to 153.7 billion rubles. Revenue from service sales increased by 47% year-on-year to 96.3 billion rubles, with advertising revenue specifically growing by 82% to 35.5 billion rubles. The quarterly loss decreased by 97% year-on-year to 740 million rubles. The company attributed this partly to a one-time insurance compensation payment of 6.4 billion rubles received for damages from a major warehouse fire in summer 2022. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) reached a record high for the company, exceeding 13 billion rubles[62]. The average annual turnover per region for Ozon in 2023 grew by 2.1 times. The accelerated sales growth is linked to the active onboarding of new customers from towns with populations under 10,000. The base of active buyers from small towns grew 10 times faster than the platform’s total buyer base: in 2023, their number increased by 3.2 times, while Ozon’s overall customer base grew by 31%[63]. Ozon Fintech (a subsidiary of the Ozon marketplace) issued over 100,000 loans to the company’s sellers and buyers. Plans for 2025 include launching lending services for legal entities - both marketplace sellers and any other clients[64]. Revenue in Yandex’s e-commerce segment grew by 37% year-on-year in 2024. The largest contribution came from e-commerce services, where revenue increased by 45% driven by growth in key operational metrics and higher advertising revenue: specifically, Yandex Market’s advertising revenue grew 2.5 times compared to the previous year. The number of active buyers on Yandex Market reached 18.2 million, with 90.7 thousand active sellers. Third-party sellers accounted for 94% of the turnover on Yandex Market, increasing compared to the same period in 2024[65][66]. Yandex Market has begun testing commercial cargo delivery using unmanned trucks. An autonomous truck completed its first delivery from Moscow to Tula[67]. The marketplace “SberMegamarket” underwent rebranding in 2023, updating its name to simply “Megamarket”. In 2023, the platform’s turnover increased fivefold compared to the entire 2022 results, reaching over 312 billion rubles. Warehouse infrastructure was also expanded: the number of sellers joining the platform doubled compared to the previous year, and the product range more than doubled - from 30.9 million to 66.3 million items[68]. Megamarket also announced the launch of a new travel division. The company, together with partners Travelata and Otello, is building a comprehensive service where visitors can select and pay for tours, choose and book hotels, and purchase goods for trips and flights. Revenue for Kekh Ecommerce LLC (the main legal entity of the Avito classifieds service) amounted to 100.9 billion rubles in 2023, according to the company’s report. This represents a 56.7% increase compared to 2022. Kekh Ecommerce’s net profit reached 39.3 billion rubles, compared to a profit of 11.9 billion rubles in 2022[69]. Over 35 million people made purchases on Avito in the first nine months of 2024. Avito is the market leader in the number of C2C transactions, with 230 million active listings and a monthly audience exceeding 72 million users. Avito is transitioning from an advertising model to a transactional one, with the “Avito.Dostavka” platform forming the foundation for this development. Currently, over 80,000 pickup points and parcel lockers operated by major logistics companies are available nationwide, where buyers can collect their platform purchases. Avito has amassed a significant volume of data used to analyze user behavior, identify trends, and understand needs. An artificial intelligence (AI)-based recommendation system helps users choose the most suitable product, service, or contractor. Avito is also launching a fintech platform. Within this service, users are expected to gain access to a wide range of financial services offered by partner banks. To achieve this, Avito is considering obtaining a Financial Platform Operator (FPO) license[70]. The “Avito.Puteshestviya” (Travel) service launched the ability to book rooms in over 13,000 hotels across Russia. Previously, the service only offered short-term private accommodation rentals[71]. The “Avito.Auto” platform launched a dedicated section for searching and purchasing new cars[72]. The catalog featured over 160,000 cars from dealers across various regions of the country in September 2024. Russia’s largest marketplaces demonstrate growth in the number of sales and increasing revenue. Their activities are also expanding into new market segments such as advertising, tourism, and property rentals. A key emerging direction is the provision of financial services based on new methods of borrowing and investing funds. Some Features of Marketplace Development in China China is the global leader in e-commerce (Vlasenko, Glovenchik, 2022). Technically the first Chinese internet company (Machinery Plant Electronic Commerce Co.) in a B2C form, appeared in 1996. Though web-sites with certain elements of e-Commerce started to emerge one year later from the moment when China was connected to Internet in 1994. Around the same time, state authorities began actively regulating this industry, with the Ministry of Commerce of the People’s Republic of China playing a key role. For instance, the “Internet Society of China”[73] was established in 2001. In 2008, the “Golden Shield” system (firewall) began operating to ensure security (Chandel et al., 2019), and in 2006, a special agency for internet oversight was created. The first Five-Year Plan for E-commerce Development was adopted for 2006-2010, with key goals of popularizing the internet and increasing the number of users. During the second plan (2011-2015), the emphasis shifted to developing internet applications, formulating technical standards, and creating favorable conditions for the industry’s growth. The subsequent “five-year plan” (2016-2020) focused on the digitalization of industrial enterprises and reducing the state’s role in e-commerce development. Essentially, state regulation was meant to concern only maintaining fair market competition. The key task for 2021-2025 is the integration of e-commerce with all other sectors of the economy, as well as expanding access to e-commerce services in rural areas and increasing cross-border transactions[74]. According to the latest data, the share of online purchases in total retail sales reached 37% in China, compared to 22% in the US and 16% in Western Europe[75]. China’s largest marketplaces hold significant market shares. For example, Alibaba and its associated platforms account for 50.8% of the Chinese market, JD.com holds 15.9%, and Pinduoduo 13.2%[76]. The leadership of the PRC places important emphasis on combating monopolization in the e-commerce market. In 2021, the State Council of the PRC adopted a document titled «Antitrust Guidelines for the Platform Economy» (Chinese: 国务院反垄断委员会关于平台经济领域的反垄断指南), which, according to Alexeenko A.P. and Sun Qi (Alexeenko, Sun, 2022), has no direct equivalent elsewhere in the world. This document defines concepts such as a digital platform’s market dominance, the abuse of such a position, and addresses issues of using consumer data collection to manipulate supply and demand[77]. Evidence of the Chinese leadership’s serious commitment to combating the dominant position of marketplaces was the imposition of a fine of US$2.75 billion on Alibaba Group Holding Ltd, amounting to 4% of its domestic sales[78]. Table provides brief characteristics of the most popular trading platforms in China. The largest marketplaces in China Сharacteristics Marketplace Taobao JD.com Pinduoduo Established 2003 2004 2015 Owner Alibaba Group Lio Qiangdong (founder), 15% Tencent Colin Huang (founder) USP China’s largest online shopping platform China’s largest B2C platform Social commerce/Group buying platform Business C2C, individual sellers, small businesses B2C, high-quality products, fast delivery B2C, low cost products, large discount Number of products More than 1 billion More than 10 million More than 10 million MAU (Q4/2024) 921 million MAU 521 million MAU 637 million MAU Source: compiled by the author based on Western vs. Chinese E-Commerce (2025 version). China Gravy. Retrieved January 17, 2025, from https://chinagravy.com/western-vs-chinese-e-commerce/ Chinese trading platforms are constantly implementing new business models to expand sales volumes. For example, shopping via smartphones and through social networks, as well as using messengers, have gained particular popularity. Marketplaces are actively building extensive ecosystems around themselves, which include the entertainment industry to stimulate sales, their own extensive delivery systems - including international shipments - and mobile payment systems such as Alipay or WeChat Pay. According to data from the National Bureau of Statistics, the volume of online sales in the first 11 months of 2024 amounted to $1.92 trillion, which is 7.4% more than during the same period in 2023[79]. Revenue for companies in the e-commerce segment is expected to reach approximately $2.02 trillion, with forecasted values for 2025 at $2.22 trillion and $2.76 trillion by 2028[80]. Nevertheless, there is an increasing risk of so-called “price wars” between key marketplaces, where companies aim to attract as many buyers as possible by holding special sales events, often at the expense of their own revenues. Conclusion Digital platforms are an integral part of the development of the modern economy, enabling a significant reduction in various transaction costs, improving supplier visibility and their ability to enter new markets, as well as finding new consumers, thereby fully realizing their economic potential. The rapid development of several major marketplace operators in Russia and the creation of ecosystems based on them has already led to increased monopolization of the online retail market. In the future, we can expect these companies to expand their functionality. An analysis of the main directions and results of the activities of the largest marketplaces confirms the thesis that digital platforms have gained the ability to manage goods and services markets. The growth in e-commerce volumes, the number of sellers and buyers from EAEU member countries trading on Russian digital platforms indicates the expansion of sales markets and the increase in cross-border operations within the EAEU region. Electronic trading platforms are making new domestic and international markets accessible to small businesses, which are much less constrained by existing vertical relationships with retail retailers or intermediary sellers. To protect national interests, it is necessary to encourage the functioning of domestic digital platforms in neighboring countries, ensuring controlled access to the Russian market and strengthening integration cooperation among states. Therefore, at the level of the integration entity, comprehensive programs need to be implemented to develop and improve state policy measures for creating new opportunities for economic growth and harmonizing the requirements and rules for electronic trading platforms across all EAEU member countries. The experience of China, as a global leader in e-commerce, can also be applied in Russia. This referes not only to studying the business development strategies of Chinese trading platforms but also to approaches to state regulation of this sector. In particular, the Chinese government actively pursues policies aimed at maintaining fair competition in the market and combating monopolization amid the increasing digitalization of the economy.

About the authors

Marina A. Krasheninnikova

Moscow State Institute of International Relations (University) MFA of Russia

Email: neomarinka@gmail.com
Phd student of the Department of Integration Studies of the Eurasian Studies Institute 76 Vernadsky prospect, Moscow, 119454, Russian Federation

Anna N. Tsibulina

Moscow State Institute of International Relations (University) MFA of Russia

Author for correspondence.
Email: a.tsibulina@inno.mgimo.ru
ORCID iD: 0000-0002-8980-3058
SPIN-code: 8328-8882

PhD in economics, Associate Professor of the Department of Integration Studies of the Eurasian Studies Institute

References

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