Ukraine hits more outlets of Russia's largest online marketplace to bring the war home

Audio By Carbonatix

Ukraine's attacks on the sprawling Russian warehouses have produced stark images, with massive pillars of smoke rising above fires that raged at facilities of Wildberries, the country’s biggest online retailer and its equivalent of Amazon.

In under two weeks, Ukraine has struck over a dozen of the retailer’s depots, part of Kyiv’s aerial campaign aimed at undermining Russia’s war effort, hurting its economy and making people feel the consequences of the Kremlin’s all-out invasion of Ukraine.

Kyiv’s drones first hit the sites in Elektrostal, just east of Moscow, and in the Tambov region July 18. Strikes followed on facilities across western and southern Russia, as well as Russian-held Crimea. A total of nine people have been killed and scores were injured.

A look at Wildberries and how it became a wartime target:

Wildberries was launched in 2004 by Tatyana Kim, a teacher and a young mother at the time, focusing at first on selling clothes.

Since then, the platform with its distinct purple logo has become an industry leader and household name, allowing big and small businesses alike to sell their goods to customers across the country by storing, shipping and delivering their inventory. In April, Forbes Russia estimated Kim's fortune at $8.1 billion.

The marketplace features clothes, books, cosmetics, toys, appliances, household items, sports gear and much more. There’s an “E-Pharmacy” page and a travel section for booking plane tickets or hotels.

In 2021, Kim acquired a small bank and turned it into what now is Wildberries Bank, but that institution has since come under sanctions by the U.K. and the European Union.

Kim said that last year, the company had more than 200 logistics facilities, with plans to expand to Belarus and Kazakhstan, where it already operates. It's also in Crimea, which was illegally annexed by Russia in 2014.

An estimated 500,000 to 800,000 sellers are involved with Wildberries, said Sergei Semko of Data Insight, a Moscow-based company that analyzes online retail in Russia.

Wildberries accounts for 52% of all online orders in Russia, he told The Associated Press.

Shoppers interviewed July 23 by AP in Moscow praised its convenience. One said she would continue to use Wildberries, even if it cost more after the attacks.

“Well, if they raise the prices, I don’t mind. It still saves me time, and time is even more valuable,” said Irina Potapova.

While Ukrainian President Volodymyr Zelenskyy did not name Wildberries directly, he has said the attacked facilities were involved in supplying gear and technical components to Russia's military.

Kremlin spokesman Dmitry Peskov said July 21 that “it is not the case” and accused Ukraine of striking civilian targets. Russia regularly attacks Ukrainian logistics and retail facilities.

An AP search of the Wildberries website showed goods that could be used for both civilian and military purposes, such as body armor, helmets, radios and other electronics. Some were even marked as “tested in the SVO” or “SVO fighters’ choice” — a Russian acronym for “special military operation," the term the Kremlin uses for the war in Ukraine.

Kim responded Friday in a statement that said other online sellers offered the same goods, adding there was “no logic, common sense, or rationality” to the attacks, which she said aimed to “trigger panic and shock" among Russians.

The July 18 strikes began a series of attacks on Wildberries facilities that now total 16 in under two weeks.

Sites were hit last week in the southern Krasnodar and Stavropol regions, St. Petersburg, the adjacent Leningrad region and Simferopol in Crimea.

On Thursday, a Wildberries depot burned in the Penza region southeast of Moscow, with four people injured and 200 workers evacuated, said Gov. Oleg Melnichenko. Wildberries said another warehouse in Sarapul in the Udmurtia region was attacked by a drone but all workers got out safely.

On Friday, Wildberries said a logistics facility in Volgograd was hit, and Russian news outlet Astra reported a company depot was set ablaze in Zelenodolsk, near Kazan in the Tatarstan region.

The attacks have dealt a massive blow to many small Russian businesses, Semko said.

Wildberries and its online competitors Ozon and Yandex Market allow craftsmen and entrepreneurs to sell their goods across Russia’s vast territory, he said.

People have taken to social media to say inventory for their businesses that was stored in the stricken Wildberries facilities had been destroyed, tearfully recounting their losses.

The extent of the damage is unclear. Wildberries said it took three days to extinguish the fire in Elektrostal, a distribution hub for Moscow, while the Tambov region site only resumed operations five days later. After an attack in Ryazan, Wildberries said most of the goods were saved.

Kim said Friday that Wildberries has been “reinforcing and strengthening" defenses at its sites and was able to repel most of the attacks.

To support the sellers, Wildberries offered discounts on storage fees, free transfer of goods to other sites, discounted loans at the Wildberries Bank and other measures.

Many still wondered if they would be compensated. Earlier in July, Wildberries changed its seller policy, exempting it from liability for stock damaged because of a “force majeure” that includes drone attacks.

Since the infitial attacks, Kim said Wildberries began reimbursing sellers. “First and foremost, we want to support the smallest and most vulnerable entrepreneurs — there are more than 88,000 of them," she said.

Wildberries said Thursday it distributed a second tranche of reimbursement to over 97,000 businesses, and Kim added Friday a “unified assistance system” of payouts was being developed.

Semko cautioned there isn't enough data to make an assessment, but he estimated the stricken facilities in the Moscow, Tambov, Krasnodar and Stavropol regions accounted for about 12% of Wildberries’ total warehouse space. He said the losses of goods stored there could be as high as $3 billion.

Those losses, amid increased taxes, a fuel crisis and more regulatory hurdles, have created “almost a perfect storm” for many small businesses this year, he said.

Russia's online retail sector has grown rapidly since 2022, said Chris Weafer, CEO of Macro-Advisory Ltd. Consultancy, accounting for about 20% of all retail sales, and “that comes from about much less than half of that five years ago.”

After Western brands withdrew amid the war, Wildberries and Ozon sourced similar products from Asia, the United Arab Emirates or Turkey, leading to the rapid growth in online business, Weafer said.

He estimated Russia's e-commerce sector to be worth around $150 billion, and online retail around $80 billion to $90 billion of that.

The warehouse attacks add to the pain felt by small businesses, which in recently are “struggling very badly,” Weafer said, while probably causing only “relatively slight” damage to the industry and the economy in general, which he described as effectively stagnant but stable.

Rather, he said, it's about “undermining public morale, and getting people to talk much more” about the war and question the Kremlin's actions. Since the fighting began, Russians appeared largely complacent about it.

“It was something that was happening a long way off,” Weafer said. But that has changed this year, with attacks on Russian oil refineries and now Wildberries, he added.

“There is now much more awareness, but there’s also much more discussion, and more people are questioning what’s going on and why is it happening and the conflict lasting so long,” he said. “It brings it home.”