Russia's Amazon Gets Hit Again

Moscow Region Governor Andrei Vorobyev's official telegram channel via AP

Two days ago, Ukrainian drones attacked two large warehouses belonging to the Russian version of Amazon, which is called Wildberries. One of those warehouses, located east of Moscow, looked like a total loss.

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Overnight, Ukraine struck more of Wildberries' warehouses.

Ukrainian drones have hit warehouses of Russia's biggest online retailer again, killing one person and injuring another 14, local officials say.

They say logistics hubs run by Wildberries in two south-west cities in the Krasnodar and Stavropol regions were struck overnight, triggering the evacuation of employees...

Several hours after the latest attacks, a range of military gear - including body armour and drone components - was widely available on Wildberries' website, a quick search by the BBC showed.

Serhii Kuzan, chairman of the Ukrainian Security and Cooperation Centre, has described Wildberries as a "vital component" of Russian logistics, adding that the firm's website is being used by Russian volunteers to buy military equipment.

As I've said before, I think the primary goal here is the damage the Russian economy, which is already pretty shaky, and to have an impact on the psychology of the war. Over the past four years we've seen that Russians insulated from the impact of the war go on as if nothing is happening. But now that there are long gas lines everywhere and clouds of black smoke over major cities, people are starting to feel differently.

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The strike on the warehouse in Krasnodar looks like another total loss.

You can see this column of smoke for miles.

And best I can tell, this is the other warehouse in Nevinnomyssk. Nothing is going to be coming out of here but ashes.

Here's what it looked like after the fire was put out.

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Similar to Amazon, sellers on Wildberries can keep their inventory at the warehouse for quick shipment (Amazon calls it FBA, fulfillment by Amazon). But when the warehouse goes up in flames all of that inventory is gone and neither Wildberries nor Russia will help make the seller whole. And it appears Wildberries also won't let sellers remove their goods from the warehouse, at least not quickly.

He says he tried to remove his 77,000 units of inventory after the previous Wildberries warehouse fire in Moscow region, but Wildberries did not allow him to take the goods out.

Similar story here. If you want to get your inventory back before it burns...good luck with that.

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After several Wildberries warehouses burned, Russian sellers are rushing to pull their inventory out of the remaining, still untouched hubs. But many say Wildberries is simply not giving it back.

The company now does not allow sellers to directly retrieve their own goods from its warehouses. Instead, they are pushed into a return system through pickup points, and sellers increasingly accuse Wildberries of deliberately making even that route unusable.

More and more sellers accuse Wildberries of effectively holding seller inventory hostage inside its own logistics system.

Forbes estimates the total loss, not including the warehouses, is already into the billions.

Sellers' losses from the Ukrainian Armed Forces' attacks on Wildberries warehouses in Krasnodar and Nevinnomyssk could amount to approximately 100–120 billion rubles if they were fully loaded and most of the merchandise stored there was destroyed, Sergei Semko, a leading analyst at the research agency Data Insight, told Forbes.

That works out to about $1.4 billion US plus the cost of rebuilding the warehouses which will be hundreds of millions more in U.S. dollars. In total the warehouses destroyed so far represent about 5 percent of the total warehouse space held by the company.

According to Semko, Krasnodar and Nevinnomyssk form a key part of Wildberries' southern logistics hub. The marketplace's warehouses in these cities total approximately 270,000 square meters. This represents approximately 5% of Wildberries' entire warehouse infrastructure, but for southern Russia, their importance is significantly higher than the average, the expert noted.

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So for the rest of the country this may not have an impact at all, but for southern Russia, this is going to have a major impact. In any case, there's no reason to think this is the end of this particular focus. If Ukraine keeps targeting these warehouses the same way they've targeted Russian tankers and oil refineries, this could be just the start.

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