Ukraine’s raid on Russian warehouses has produced grim images, with huge plumes of black smoke rising above fires raging at the sites of Wildberries, the country’s largest online retailer, the equivalent of Amazon.
Kyiv warplanes began hitting sites over the weekend in Elektrostal, just east of Moscow, in the Tambov region, killing eight people and injuring many others. Two other Wildberry warehouses — in southern Krasnodar and Stavropol regions — were attacked and burned early Wednesday. One person died and 14 were injured.
The strikes are part of Kyiv’s air campaign inside Russia, which aims to cripple its wartime economy and make its citizens feel the consequences of the Kremlin’s attacks on Ukraine.
A look at Wildberries and how they became a target during the war:
Wildberries was launched in 2004 by Tatyana Kim, a teacher and young mother at the time, specializing in clothing sales.
Since then, the platform with its distinctive purple logo has become an industry leader and household name, allowing businesses large and small alike to sell their goods to customers nationwide by storing, shipping and delivering their inventory. In April, Forbes Russia estimated Kim’s wealth at $8.1 billion.
The market includes all kinds of goods — clothes, books, cosmetics, toys, electronics, household goods, sports goods and much more. There is an “E-Pharmacy” page and a travel section where users can book flight tickets or hotels.
In 2021, Kim found a small bank and turned it into what is now Wildberries Bank, but that institution has since been sanctioned by the UK and the European Union.
Last year, Kim said the company has more than 200 facilities of more than 5.2 million square meters (55 million square feet), with plans to grow by 2026, including warehouses planned in Belarus and Kazakhstan, where Wildberries already operates.
About 500,000 to 800,000 retailers are involved with Wildberries, estimated Sergey Semko, lead analyst for Data Insight, a Moscow-based company that analyzes online sales in Russia.
Berries currently account for 52 percent of all online orders in Russia, Semko told The Associated Press.
Kyiv says the hit facilities supply Russian troops
Although Ukrainian President Volodymyr Zelenskyy did not specifically name Wildberries, he said the facilities his country attacked were involved in supplying gear and other technical equipment to the Russian military.
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Kremlin spokesman Dmitry Peskov said Tuesday it was “not a crime” and accused Kyiv of continuing “targeted strikes.”
An AP search of the Wildberries website showed items that could be used for both civilian and military purposes, such as body armor, helmets, radios and other electronics. Some of them were even marked as “vetted in SVO” or “selection of SVO fighters” – a Russian acronym for “special military operation,” the term the Kremlin uses for the war in Ukraine.
Wildberries did not immediately respond to a request for comment.
Russia regularly attacks Ukrainian facilities and trade facilities, including several that were hit last week.
This attack is hurting Russian small businesses
This attack caused a lot of damage to small businesses in Russia, said Semko.
Online retailers such as Wildberries and competitors Ozon and Yandex Market have enabled local artisans and entrepreneurs to sell their goods across Russia’s vast territory, he said.
Since Saturday, people have taken to social media to say that the list of their businesses that was kept by Wildberries in the attacked areas has been destroyed, crying tears of loss.
The magnitude of the damage in the last four areas is difficult to estimate.
Wildberries said it took three days to put out the fire at the Elektrostal facility, a key distribution center in Moscow, but the facility in Kotovsk, Tambov region, is expected to be operational on Thursday. Both Kim and the company are unclear about the extent of the damage.
Peskov said on Tuesday “the situation is difficult due to the loss of the company itself and representatives of small and medium-sized businesses.”
To support the sellers, Wildberries offered discounts on storage fees, free transfer of goods to other centers, discounted loans at Wildberries Bank and other measures.
Many wondered if they would be compensated for their losses. Earlier this month, the company changed its vendor policy and is now exempt from liability for damaged stock due to “force majeure,” which includes drone attacks.
Late Wednesday, Kim said the company began paying vendors whose property was vandalized at the Elektrostal site. “First of all, we want to support small and high-risk entrepreneurs – there are more than 88,000 of them. Funds will appear in the balance of merchants within 24 hours,” he said.
Semko cautioned that there is not enough information to test but estimated that the four hit sites make up about 12 percent of Wildberries’ storage space. He said the loss of goods could reach three million dollars.
Those losses come on top of rising taxes, the fuel crisis and additional regulatory hurdles that Russian small businesses are facing this year, he said.
“It’s almost a perfect storm,” Semko added.
The strikes also tarnished Russia’s image
Russia’s online retail sector has grown rapidly since 2022, said Chris Weafer, CEO of Macro-Advisory Ltd. Consultancy. It accounts for about 20 percent of all retail sales in Russia, and “that’s up from less than half of that five years ago,” he told the AP.
After many Western companies withdrew their business from Russia because of the war in Ukraine, Wilbderries and Ozon were able to find products that were no longer available in supermarkets by importing the same from Asia, the United Arab Emirates or Turkey, which led to the rapid growth of the Internet business, said Weafer.
He estimated that Russia’s e-commerce sector could be worth about $150 billion, with online sales about $80 billion-$90 billion of that.
The raids on warehouses have added to the pain of small businesses, which in recent years have “struggled very badly,” said Weafer, while perhaps causing only “relatively small” damage to the industry and the economy as a whole, which he described as effectively, but stable.
Rather, he said, it was about “undermining public morals, and getting people to talk more” about the war and question the actions of the Kremlin.
Ever since Russia invaded Ukraine in 2022, people seem to be wary.
“It was a long shot,” Weafer said. But that has changed this year, with frequent strikes at oil refineries in parts of Russia leading to massive fires, and now Wildberries, he added.
“Now there’s a lot of awareness, but there’s also a lot of discussion, and a lot of people are asking what’s happening and why it’s happening and the conflict is taking so long,” he said. “It brings it home.”
