Have you ever heard of Wildberries?
This is one of the biggest e-commerce stores in the world. It was founded in Russia in 2004 by Tatyana Bakalchuk, an English teacher.
She and her husband own 100% of the company.
Read on to find out how she scaled her $700 website to acquire a $13.2 billion fortune.
Information about Tatyana Bakalchuk and Wildberries is not only scarce but contradictory. The sources about her story aren’t the most trustworthy either, from Chinese newspapers to state-ran Russian media.
Bakalchuk herself only started giving interviews when she became a billionaire in 2019.
As such, there may be missing elements in the story we will never know about, or mistakes regarding the chronological order of facts.
In anyways, what we do know about Bakalchuk is that she created Wildberries after she gave birth to her first child in 2004.
While some pretend that she built the business from scratch, Russian sources mostly explain she was already reselling clothes at the beginning of the 2000s in a giant shop in a mall.
At the time, her suppliers were German retailers Otto and Quell. They were selling her their unsold inventory that she sold back in Russia for a profit. It worked well.
So, why did she only start selling online in 2004 while Amazon and Alibaba had started 10 and 5 years earlier?
Because she was stuck at home to take care of her child. Frustrated not to be able to buy clothes online, she decided to offer that service herself.
At the time, e-commerce in Russia was mostly concerned with electronics, books, and household goods. No one wanted to sell clothes because everyone thought customers wouldn’t buy them as they’d want to try them on first.
But Bakalchuk didn’t listen to the naysayers.
She just launched.
This is where it becomes blurry.
While some attribute all of the merits to Tatyana, “the self-made woman scaling her $700 business out of a small Moscow apartment”, others explain she was connected to rich and powerful people that helped her behind closed doors. Tatyana herself admitted selling the “self-made woman” image since the media liked that.
The truth though seems to be more complex than that.
The first object of mystery is her husband, Vlad. Sources each explain that he was a computer salesman, radiophysicist, IT technician, or even, entrepreneur, having owned and sold Internet providers Utech for $7.5 million in 2007, and iFlat for an undisclosed amount. It seems that it was one of his companies that set up Wildberries.
The second object of mystery is the ties that Tatyana maintains with powerful families: the Tsoy, linked to state-owned energy company Rosneft, and the…Bakalchuk, on her husband’s side, linked to an Israeli defense contractor.
In anyways, Wildberries took off pretty quickly and Bakalchuk soon started hiring family members to help her deal with the orders.
Innovations and Bold Moves
Wildberries didn’t grow out of nowhere. Its success can be explained by several bold moves and innovations Tatyana made to better serve her customers.
In 2006, her German supplier Otto sought to enter the Russian market by itself which forced Tatyana to seek new brands to offer. More choices attracted more customers. She subsequently added household products to clothes.
In 2008, she saw a new opportunity in the Western financial crisis and purchased unsold inventory from struggling Western brands. For example, she bought for one million dollars Adidas’ unsold inventory of shoes and sold it over two years on Wildberries.
She also innovated.
The first innovation she introduced was the abolition of prepayment. Customers could order anything on Wildberries and pay after they had received the goods.
This led many women that weren’t working to order clothes online that husbands had to subsequently pay for.
The second innovation was to build a network of delivery points in the country, to which she added fitting rooms, the third innovation. Customers could try on the clothes and buy them, or send them back for free if they didn’t fit.
Her fourth innovation was to enable clients to order several clothes sizes and only keep and pay for the one that suited them best.
Finally, when her competitors became more aggressive, she ditched her logistics partner to take care of delivery herself and made it free.
In 2017, Wildberries became the number one e-commerce store in Russia ahead of Ulmart, the oldest and traditional leader.
The Road to 13 Billion Dollars
In 2019, Tatyana’s fortune was around one billion.
How did she increase it by 12 000% in just two years?
Thanks to three other bold moves – and one lucky event.
According to her own interview, Tatyana only realized the potential of her company when she became a billionaire. As a result, she became extremely aggressive in growing the hell out of it.
First, she expanded the range of products and today sells more than 40 000 brands and many more products. From clothes to smartphones to makeup and toys for children….she sells almost everything.
Second, she expanded out of Russia and now sells in 9 countries.
During the pandemic, Wildberries doubled its sales volume while growing its export volumes in foreign countries by 89%.
Finally, in February 2021, she bought 100% of a small Russian bank.
While the information is unclear, it seems that this purchase is what helped her catapult her wealth to that level.
Such a nice story wouldn’t be complete without its range of controversies.
In 2017, Wildberries received around 30 complaints from suppliers due to unpaid deliveries, among other things.
In 2019, Wildberries suppliers filed 37 complaints; in 2020, 91, and in 2021, 148 complaints were already filed.
In 2020, Wildberries pushed its suppliers to the brink of bankruptcy on Black Friday after imposing considerable discounts on them.
In 2021, Rovio sued Wildberries for copyright infringement after it sold Angry Birds-themed clothes.
In February of the same year, Ukraine imposed sanctions on Wildberries after the company was accused of selling Russian military uniforms and anti-Ukrainian literature.
In August, Wildberries imposed a 2% fee on customers buying with Visa and Mastercard, a move that remains incomprehensible by industry experts.
Finally, it seems that Wildberries’ treatment of their employees is even worst than Amazon’s. And unlike the US giant, customers frequently complain about defective and low-quality products.
But the strangest of all that is Tatyana’s behavior towards the media.
The lawsuits filed against Wildberries in 2017 gave birth to rumors that Wildberries was going bankrupt. As a result, new brands didn’t want to deal with the company to sell their products on the platform. Managers complained about how difficult it was to negotiate and suggested that Tatyana goes on a PR world tour.
After months of thinking, Bakalchuk agreed. She started giving interviews on Youtube and to prestigious publications like Forbes and the Financial Times. The image of the struggling stay-at-home mum building a website to survive was born and considerably helped Wildberries’ image.
She wasn’t going bankrupt anymore. She was a businesswoman.
There are several lessons to Tatyana Bakalchuk’s story.
First, one of the best ways to build a business is to solve a problem you have yourself. In an almost 8-billion people world, chances are that you are not alone to have this problem.
Second, who you know is still very important. Interviews given to Russian media by early Wildberries employees explain how the most difficult tech and economics problems the company solved were taken care of by Vlad thanks to his math and IT expertise. Tatyana herself explained that without Vlad, she would have had to talk to investors.
Speaking of investment, there remain some grey areas regarding state loans given to Wildberries to develop and scale their operations.
Third, customer care remains crucial. Wildberries managed to become number one because they gave customers what they wanted: free delivery and fitting rooms, among other things.
Finally, what really enabled Tatyana Bakalchuk to become so rich is her mindset. It is only when she realized the potential of Wildberries that she 10X-ed her company – and her fortune at the same time.
To finish, I’d like to highlight that Tatyana Bakalchuk’s fortune of 13.2 billion dollars (according to Forbes) is in my opinion, greatly exaggerated.
Wildberries’ sales volume stands at “only” $6 billion dollars and nobody knows what are their net profits.
As the pandemic is being phased out, online retailers will never sell as much as they did when all of the other shops were closed. We can therefore expect a huge drop in online sales for next year.
Furthermore, Bakalchuk recently bought a bank, an odd-move as her company seeks the greatest and fastest expansion of its history. At the same time, Tatyana became a member of the board of VTB Bank, yet another role to fulfill.
One would think that as one’s company is planning rapid expansion, one should focus on the business instead of spreading one’s attention around.
Time will eventually reveal the motivations behind these strange moves.
For more articles about billionaires, head to auresnotes.com.