EBay plans to expand in Russia despite sanctions

MOSCOW Wed Jul 23, 2014 7:45pm IST

Aerial view of German ebay headquarters in Kleinmachnow July 20, 2014. REUTERS/Axel Schmidt

Aerial view of German ebay headquarters in Kleinmachnow July 20, 2014.

Credit: Reuters/Axel Schmidt

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MOSCOW (Reuters) - Internet auction site eBay Inc (EBAY.O) said it planned to expand in Russia, still its top priority among emerging markets even though the country faces increasing Western sanctions over the Ukraine crisis.

The United States last week imposed a new round of sanctions on Russia, its toughest since the beginning of the Ukraine crisis, and has put pressure on the European Union to ratchet up measures to punish Moscow over the downing of a Malaysian airliner, which Kiev and the West blame on pro-Russian rebels.

EBay's statement also came even though Russia recently passed a law forcing Internet companies to store personal data of Russian citizens on servers in Russia and as the government prepares to lower the threshold for duties on cross-border parcels to support local online retailers.

EBay Vice President Wendy Jones, who oversees its global expansion, told a news conference in Moscow on Wednesday that the company still hoped to grow aggressively in Russia. She was signing a memorandum of understanding with the head of Russian Post.

"Russia was ... and remains today eBay marketplace's number one priority for global expansion, and that's why we are here today to continue to accelerate and improve the services that we are able to offer to our customers," Jones said.

The memorandum aims to help reduce delivery time - one of the main issues for eBay's Russian customers buying abroad, starting with orders coming from China and then facilitating imports from the United States, Britain and Germany, Jones said.

The company also aims to provide delivery support to its Russian sellers ahead of a launch in September of a marketplace on which Russian merchants can sell online. EBay and Russian Post also agreed to integrate their IT systems to improve the tracking of orders.

"We want to grow a domestic business here as well as continue to accelerate growth of imports. We have big ambitions for the market," Jones said.

In 2012, eBay's Russian sales grew 45 percent to $425 million, and it counted close to 1 million customers.

"We have accelerated our growth, and ... last year we doubled our buyer base here in Russia," Jones said.

Russia is part of eBay's strategy to expand its global footprint by growing in emerging markets. The company said last year it was aiming to increase sales in markets including Brazil, Russia, India and China by four times its current levels in three years. By the end of 2015, as much as 25 percent of eBay's active users and more than 12 percent of its global sales should come from those markets, it said last year.

When asked whether Western sanctions against Russia would impact eBay's emerging markets goals, Jones said:

"I think those numbers are overall our ambitions for ... emerging markets, and I certainly don't think that specifically will impact these ambitions."

(Reporting by Maria Kiselyova and Anastasia Teterevleva; Editing by Lidia Kelly and Jane Baird)

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