X5 and eHouse Create Joint Venture to Capitalise on Internet Retailing

Internet retailing in Russia got a big boost this week as X5 Retail Group announced a joint venture with eHouse Holding to develop online sales of non-food products. X5, already Russia’s largest retailer by volume, has acquired a 51% stake of eHouse web portals Bolero.ru and 003.ru for USD 1 million, with a five-year option to purchase the remaining 49%. As part of the deal X5 gains the rights to the portals and their equipment, software, databases, and business infrastructure. X5 will also take on the portal’s employees, a call centre, and leasing rights of an eHouse distribution facility.

eHouse Holding
Founded in the spring of 2000, eHouse Holding is Russia’s largest internet based retailer operating 25 individual web portals including such well-known names as Megashop.ru, Aromat.ru, OrangePC.ru, and ADT Web Solutions. The individual web sites offer a complete range of products and services from computers and electronics to travel, books, insurance, and perfume.

Bolero.ru was founded in 1999 and is the second most popular online retail site in Russia. The site sells books, multimedia entertainment products, software, and a selection of gifts.

003.ru was founded in 2003 and sells consumer electronics and household appliances, with one of the largest turnovers in the industry. Together the sites claim roughly 70,000 daily visitors.

X5 Retail Group N.V. (www.x5.ru)
X5 Retail Group N.V. is Russia’s largest food retailer in terms of sales. The Company was created as a result of a merger between Pyaterochka (soft discounter chain) and Perekrestok (supermarket chain) on 18 May 2006.

The largest retail company in terms of sales in Russia, X5 develops soft discounters, supermarkets and hypermarkets. It operates in 22 regions in Russia, Ukraine and Kazakhstan with a market strategy to simultaneously develop its three retail formats. X5 competes with international chains inside Russia and has acquired many small-to-medium enterprises in its effort to expand its portfolio.