(Aug 4): Russia is weighing support for retailers after Ukrainian strikes caused billions of dollars of estimated losses at warehouses owned by Wildberries, the country’s answer to Amazon.
The support package under discussion would give affected sellers up to a year of loan-payment holidays while allowing banks to restructure the debt without setting aside additional reserves, a person familiar with the matter said, asking not to be identified because the discussions are private.
Other options include subsidised working capital loans through state backed microfinance institutions, temporary tax holidays or lower simplified tax rates, as well as access to storage facilities operated by state-run Russian Post and other logistics hubs. Keeping storage outside of Russia is also an option, another person said. The decision on which measures will be implemented hasn’t been made yet.
Ukrainian drones began targeting warehouses operated by Wildberries in mid-July, with more than a dozen facilities from southern Russia to the Urals affected. The attacks have killed several people and injured dozens more, while Wildberries has lost at least 17% of its warehouse capacity and sellers on the platform have suffered losses approaching 280 billion roubles (RM14.29 billion), according to Russian media estimates based on expert analysis. The figure excludes losses incurred by the marketplace itself.
At least three warehouses were targeted in overnight attacks on Tuesday. Firefighters extinguished a blaze at a warehouse in Krasny Bor in the northwestern Leningrad region, Governor Alexander Drozdenko said in a Telegram post. He earlier said the warehouse belonged to Wildberries. Food retailer Lenta PJSC also reported that its distribution center in the same area caught fire, according to local news outlet Fontanka.
Debris from a Ukrainian drone also damaged the wall of a Wildberries warehouse in Russia’s Tver region, acting governor Vitaly Korolev said. A storage facility was also hit in Chekhov in the Moscow region, governor Andrey Vorobyov said, without identifying its owner. Wildberries operates a warehouse in the area.
Aiding large retail hubs could add another burden to Russia’s economy as the government grapples with a widening budget deficit. The war has already affected Russians’ daily lives as households contend with gasoline shortages, internet shutdowns and increasingly frequent drone and missile alerts far from the front line.
The Russian government press service didn’t immediately respond to a request for comment on the rescue package. Kremlin spokesman Dmitry Peskov said earlier that the government remains in close contact with the company as it assesses the situation.
Weeks before the attacks, Wildberries, which last year processed merchandise worth the equivalent of nearly 3% of the country’s gross domestic product, and rival Ozon IPJSC shifted liability for force majeure losses, including drone strikes, to sellers.
Even with Wildberries voluntarily offering limited compensation, the scale of the losses has left the government scrambling to develop support measures for affected merchants.
Deputy Prime Minister Alexander Novak last week ordered ministries to prepare support measures for Wildberries sellers whose goods were damaged in drone attacks on the company’s logistics hubs. The proposals are due by Aug 10.
Wildberries responded by introducing additional support measures for affected merchants, including automatic three-month payment holidays on loans issued by WB Bank and WB Finance. The company is also reorganising its logistics network, using thousands of sorting centres across Russia and rerouting shipments to minimise delays and maintain service quality, billionaire founder Tatyana Kim said last week.
The e-commerce giant has also suspended its investment programme, the Izvestia newspaper reported last week, citing unidentified people familiar with the matter.
Concerns over warehouse safety have already spread beyond Wildberries. Ozon said last week that damage to infrastructure from external attacks remains one of its key operational risks. The company said it’s implementing measures to mitigate those risks as much as possible, taking into account available technology and legal requirements. Retailers from X5 Retail Group to Lenta are assessing how to redesign their logistics networks to address the new threats, people familiar with the matter said in July.
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