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Text | Riding a Whale to the Sea, Author | He Xuyang

After more than three months, Ozon finally returned the money, and some Chinese sellers breathed a sigh of relief.

In March this year, Russian e-commerce platform Ozon issued a delayed payment notice: due to new bank regulations affecting the payment process, there may be a delay in the arrival of funds in the seller's account. But it did not say how long the delay would last.

In April, when the sellers asked the platform again about the progress of the payment, Ozon responded that it was uncertain when the payment would be made and that the payment on April 15 might be delayed. A large number of sellers were worried about whether the platform was in financial crisis, and some even speculated that the platform was going to run away with the money.

In order to dispel the sellers' doubts, Simon Huang, president of Ozon Greater China, recorded a video to tell sellers that the delay in payment was due to the bank's compliance review process, and that the delay had nothing to do with Ozon's financial situation and the company's operations were not affected. At the same time, Ozon provides additional benefits to affected sellers, including free advertising rewards and additional product discounts, to help sellers increase exposure and sales in the next sales cycle.

These measures have temporarily alleviated the concerns of merchants. Since June, some sellers have received payments, but the amount of payments is uncertain. Some have received all of them, some have only received one or two installments, and some have not received any yet.

Why did Ozon delay the payment for so long? What is the probability of this happening again in the future? In the future when international geopolitical relations remain tense, what risks should we guard against in cross-border transactions with Russia?

Liquidity, the lifeblood of sellers

According to Ozon's official statement, the delay in repayment is due to the bank's review process. But sellers are not completely convinced.

The seller coldly told Qijingchuhai that the reason why Ozon sellers have not been able to get their money back is generally recognized in the industry because Russia is subject to sanctions from Europe and the United States, and some banks have been kicked out or are worried about being kicked out of the international settlement system SWIFT.

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication, and its Chinese name is "Society for Worldwide Interbank Financial Telecommunication". Its main function is to help global financial institutions communicate and exchange financial messages securely, allowing global transactions to operate. If a country is separated from SWIFT, it will become difficult to operate in the global market.

Take Ozon as an example. After Russian buyers purchase Chinese goods, Russian banks will send a standardized payment instruction to Chinese banks via SWIFT. The instruction includes the amount, currency type, beneficiary account information, etc., and convert the corresponding amount of rubles into RMB in the foreign exchange market. Chinese banks receive the payment instructions sent by Russian banks via SWIFT, and after confirming the authenticity and integrity of the instructions, they deposit RMB into the seller's account.

Now, some Russian banks have been excluded from SWIFT, and a large amount of foreign exchange reserves have been frozen. Chinese banks also dare not accept funds from other channels in Russia, after all, it is easy to be sanctioned.

Ozon's turnaround in receiving payments came in June, which to some extent confirmed the speculation of Chinese sellers - the Moscow Stock Exchange of Russia issued an announcement on June 12, announcing that it would no longer use US dollars and euros for transactions from the next day. In addition, financial instruments settled in US dollars and euros will no longer be used in stock and currency markets and standardized financial derivatives markets. Many Chinese sellers finally saw hope of receiving payments.

Later, Ozon launched the latest GEP (Global E-Payment) payment method, and has been issuing payments in succession. Many sellers have confirmed that they have received the payment.

According to GEP's official introduction, the core of its operation is to build a local payment network and expand small currency collection services. In fact, GEP operates independently of the Swift system, mainly covering Southeast Asia, Russia and their other partner countries, which allows them to continue to handle international payment business under the sanctions of Swift. But it is worth noting that GEP is an international cooperative financial organization, jointly managed by financial institutions in many countries, so there is a high probability that it will be constrained and affected by international political and economic sanctions.

That said, the same problem is likely to occur again.

In the cross-border circle, the problem of collecting payments is a long-standing and widespread problem. Given that international payment links generally involve complicated handling fees, exchange rate differences, and timeliness of payment, cross-border sellers often face risks such as long collection cycles and high payment risks.

For example, in March 2023, according to technology media Engadget, the unexpected collapse of Silicon Valley Bank, the second largest bank in the United States, had a huge impact on the e-commerce industry, causing the e-commerce platform Etsy to have tight cash flow and fall into difficulties. Sellers also received emails about delayed payments.

Liquidity is crucial to the daily operations of sellers. Delayed payments from the platform will prolong the time it takes to recover funds, which will put a lot of pressure on daily operations. Especially for small sellers with tight cash flow, this delay may lead to a break in the capital chain, thus affecting the normal operation of the business.

One solution is to launch a loan program. For example, e-commerce giant Amazon has partnered with financial services company SellersFi to provide qualified sellers with a credit line of up to $10 million. Poland's e-commerce platform Allegro, the UK's OnBuy, and giants such as Walmart have also launched loan programs with their own characteristics. These measures provide sellers with more flexible and convenient channels for obtaining funds, thereby gaining more opportunities to develop their business.

Another solution is to provide multiple payment methods. For example, Ozon hopes to provide sellers with multiple payment options through a multi-wallet payment solution, and can flexibly switch between different options, thereby improving the stability of the payment process and enabling sellers to smoothly collect payments.

30,000 yuan to open a store, double the profit: Russia's gold rush

Before it delayed payment, Ozon was a hot spot for Chinese e-commerce people.

The sanctions that began in 2022 have caused a large number of European and American companies to withdraw from Russia, and Chinese sellers have targeted various consumer goods markets such as clothing, luggage, home appliances, and digital products, and have entered in a big way. According to data from Russian Standard Bank, from January to March this year, nearly 90% of smartphones sold in Russia were Chinese brand phones. Among them, Xiaomi surpassed Samsung in 2023 and remained at the top of the list. It is estimated that Xiaomi phones currently have more than 30 million users in the Russian market, while the current total population of Russia is about 120 million. In other words, on average one in four Russians is a user of Xiaomi phones.

In addition, Chinese cars have already occupied more than half of the market share in Russia. According to data from the Russian Association of European Enterprises, this year's Russian car sales increased by 75% year-on-year to more than 700,000 vehicles. Among the 130,700 new cars sold in Russia in June, 53.1% came from China.

One wealth-making myth after another emerges in cross-border trade with Russia.

At the same time, due to the intensified competition on platforms such as AliExpress and Temu, the sellers’ income has dropped significantly. The Russian local platform Ozon, which has been neglected, has returned to the sight of Chinese sellers.

Ozon's biggest advantage is that it has a low entry barrier. With only 30,000 to 50,000 RMB in start-up capital, one can start a business. Ozon seller Yang Xuan told Qijingchuhai that Russian e-commerce is still in its infancy, a bit like Taobao more than a decade ago, where sellers don't even know what a make-up order is, nor do they know how to increase sales.

Mumu is an example of a man who went from being a know-nothing to making his first pot of gold on Ozon. He listed more than 200 SKUs on Ozon, and after that, he did not spend money on buying traffic. On average, he could get more than ten orders a day through pure natural traffic, while on other e-commerce platforms, he could only get three or four orders a day at most.

Mumu told Qijingchuhai that this is not an exaggeration. During the epidemic and when the Russia-Ukraine conflict just started, his friend found a way to sell bulletproof helmets and some military supplies on Ozon. A bulletproof helmet sold for more than 300 yuan, and the profit margin could reach 100%.

An Ozon official said in an interview with the media that by the end of 2023, the number of sellers on the Ozon platform will have reached about 500,000, of which more than 100,000 are Chinese sellers, accounting for at least 20%. Most of these 100,000 Chinese sellers sell electronic products such as mobile phones, computers and video cards. At the same time, Chinese sellers also account for the largest share in the three major categories of clothing, household goods and children's products.

Now, after experiencing the "shock" of delayed payment collection, is Ozon still worthy of sellers' continued bets? How many sellers will leave?

The payment collection crisis is a time bomb, do you want to take a chance?

Currently, the attitudes of Ozon sellers can be divided into three groups.

The first group is the pessimists. Most of these merchants have not received any payment or have only received a small portion of it, and their capital chain has been broken, so they have to adjust their strategies. They are pessimistic about the Russian market, the prospects of Ozon, and whether they can get payment in the future.

Seller Xiaori told Qijingchuhai that he had finally made a single product the second best seller in Ozon, but his boss said he would no longer make this product due to payment issues, and he was in tears. Under his post on Xiaohongshu, someone complained that the company had laid off an entire department due to payment issues.

｜A Xiaohongshu blogger said that due to the problem of payment collection, the boss suspended the sales of the second-ranked goods

Sellers who are thinking long-term are most worried about Ozon's delay in payment, which will screen out a group of small and medium-sized sellers with insufficient funds, stifling entrepreneurial opportunities on Ozon. Only large sellers can afford it.

In addition to the delayed payment, Ozon will impose sales restrictions on sellers on the platform in the three categories of electronics, cars and motorcycles, and DIY tools from June 26. Since most Chinese sellers are concentrated in the fields of computers, mobile phones, and video cards, this bad news makes the situation worse for sellers who cannot receive payment.

｜Ozon officially announced that it would impose sales restrictions on three major categories

The second group is the optimists. They believe that the greater the risk in the Russian market and Ozon, the greater the opportunity. Due to the payment collection problem, there are fewer and fewer sellers on Ozon, which is a good opportunity to establish a first-mover advantage, just like buying stocks at the bottom. If the payment collection problem is not solved, sellers will flood in and the entire market will be more competitive.

Mumu discovered that although Ozon has banned the sale of electronic products, cars and motorcycles, and DIY tools, it has not banned all of them. Some sensitive categories on the banned list can still be sold. And even if these three categories cannot be sold, fashion, household daily necessities, children and pets can still be sold, so there are still opportunities.

Another seller, Lao Xu, also told Qijingchuhai that many peripheral products in the three major categories can indeed still be sold, including electronic products such as USB flash drives, filming gimbals, mobile phone cases, projectors, and automobile and motorcycle products such as helmets, seats, and heaters. The key requirement is that they are light and small.

In addition, Ozon is also taking some actions to give these sellers new hope.

Recently, the official public account released the latest statement, which, in addition to requiring sellers to bind the new payment method GEP in the backend, plans to complete the entire payment test plan in July, and stated that factors such as the seller's payment account KYC verification status and e-wallet association status are very critical to the successful completion of the payment test plan.

｜Ozon officials said they plan to complete the entire payment test plan in July

Lao Xu explained that the reason why some sellers have not received any payment after binding GEP may be because the factors mentioned by the official have not been met. And the meaning of "planning to complete the entire payment test plan in July" may be that all overdue payments will be paid off in July.

But no matter what, the consensus everyone needs to reach is that high risk is the characteristic of the Russian market itself. If you want stability, you should focus on the domestic market and accept the reality that profits are not that high.A TikTok influencer said, "Since 2022, Russian e-commerce has been unstable. That year, I experienced a huge exchange rate fluctuation, from 1:11 to 1:29, and then to 1:9. The roller coaster exchange rate caused pessimists who were eager to cash in to fall, and made optimists who stayed put to make a fortune."

"Crisis is an opportunity amidst danger... Counting from the past, a group of market speculators were screened in 22 years, a group of e-commerce brick-moving workers were screened in 23 years, and a group of market pessimists were screened in 24 years. A group of people leave every year. The bosses in the future are more powerful, and the teams in the future are more powerful!... If you can't improve your cognition, don't do it anymore."

The third type is the compromise faction, which advocates analyzing specific issues based on specific circumstances.

A service platform that is familiar with Ozon's agency operations and organizes a large number of merchants is constantly advising sellers to be more calm. For large sellers who have already placed orders on Ozon, they suggest suspending their business and resuming operations when Ozon can return the money normally. As for the Ozon return that has not yet been received, it can be regarded as deposited in the bank, after all, the return rate is definitely higher than that of the bank.

However, even in such a turbulent environment, many sellers still want to enter Ozon. "We sell outdoor products for $2,000 a day on Amazon, and the profit is about 30%. But the quantity is too small, and we can't do TEMU as well as the factory. Besides, it's not a small product, so the loss will be very large if it comes to returns and after-sales service." A seller said in the seller communication group that he really wants to do Ozon, after all, the sales are fast and the market capacity is large.

But the issue of payment collection is a key factor that must be considered.

Of course, the current progress shows that the entire Russian cross-border transaction chain is trying to solve the problem.

Many local banks have begun to accept payments from Russia. In July, three new banks were added, provided that local enterprises open accounts. These banks include Harbin Bank, Longjiang Bank, Heihe Rural Commercial Bank, Manchuria Bank, Jilin Bank, Changchun Rural Commercial Bank, Changchun Development Bank, Yanbian Rural Commercial Bank, Qingdao Rural Commercial Bank, Tianjin Rural Commercial Bank, etc.

Of course, some banks can open accounts in other places and refund taxes. You only need to go back to the company's location to handle the refund. These include Hunchun Bank, Suifenhe Rural Commercial Bank, Dongning Rural Commercial Bank, Dunhua Village Bank, and Changchun Rural Commercial Bank.

Students who pay attention will find that these are basically small local banks. A person in charge of cross-border finance and taxation institutions told us that these banks mostly only serve local companies and require the companies to have exported more than 40 million last year.

None of this is easy. In the foreseeable future, the uncertainty of Ozon's payment collection will be a "new normal"."Either you have a gambler's mentality, or you have a lot of money," said an old seller who switched from Russia's Ozon to Titok Southeast Asia.

(Leng Leng, Mu Mu, Xiao Ri, and Yang Xuan are all pseudonyms.)