Thu, 24 Jun 2021

A mother of four and former English language teacher, Tatyana Bakalchuk set up a Russian version of Amazon from scratch and, in 2021, became Russia's richest woman. Sounds like yet another success story from a glossy magazine about a "self-made woman", doesn't it? The trouble is, things aren't quite what they seem. Here is our account of how Bakalchuk created her unreal wealth.

"It is autumn 2004 and it's raining. Tatyana Bakalchuk, an English language teacher, travels the length of Moscow by public transport - first by metro, then on the bus, then 10 minutes on foot - to collect yet another 20 kg parcel of clothes from Germany," began a 2012 article about the future billionaire and owner of the Wildberries online retailer, who launched her business while on maternity leave and who, in 2021, would end up becoming Russia's richest woman.

In terms of business growth in the year of the pandemic, she came second among the billionaires around the world. It made her the only female entrepreneur in Russia to make it into the top 50 wealthiest people in history. An absolutely unique case for Russia - a woman without previous business experience, state support, start-up capital or powerful partners has created a global company, survived several financial crises and is now competing with Amazon. This is what was said about Bakalchuk for a long time.

In actual fact, her story is much more complex and nuanced. So how did she become Russia's richest woman?

A flat piled high with boxes

In 2004, Tatyana had her first child and almost immediately decided to start her own business. Before she went on maternity leave, she had worked as an English language tutor, while her husband Vladislav was a radiophysicist. That was the story.

Her choice fell on online shopping - Tatyana decided to resell clothes from the German online catalogues Otto and Quelle in Russia. "There was no possibility to invest - there was only enough money to develop the website," she would say later. Moreover, a full-fledged online market did not, as such, exist then in Russia: Only small electrical items, household goods and books were sold via the internet - in other words, things that required no trying-on or close inspection. Before Wildberries, practically no clothing was being sold on the internet in Russia.

Before Wildberries, practically no clothing was being sold on the internet in Russia.

Before Wildberries, practically no clothing was being sold on the internet in Russia.

Legion Media

Initially, their office was their flat, which was completely cluttered with boxes of merchandise. Tatyana was the business's first call agent, as well as its courier, administrator and owner.

Acquaintances tried to dissuade the young mother, telling her that nobody would order clothes on the internet, because people needed to try them on. But Bakalchuk took a gamble by abolishing prepayment (until then, the Russian online market had operated only on the basis of prepayment) and setting a single mark-up for everyone. This was sufficient to ensure that the company "grew faster and faster".

A year later, Tatyana had already rented out a proper office and begun to actively expand. In addition to clothes from the catalogues, the online store started offering top European brands. She recruited relatives as employees: "First, I invited my younger sister and then a woman who worked for [her husband] Vlad. But the orders were growing and growing and we couldn't cope, so I put the word out among people we knew and our relatives. My dad was already retired, but returned to work when we registered as a limited liability company. My aunt became our accountant. Almost all our relatives came to our rescue."

In terms of business growth in the year of the pandemic, she came second among the billionaires around the world.

In terms of business growth in the year of the pandemic, she came second among the billionaires around the world.

TASS

"From the very beginning, Wildberries had this idea to build their business like a family and many of its top managers were nurtured within the company," according to Alexander Ivanov, president of the National Association of Distance Trading.

The next revolutionary move was free delivery and collection points with fitting rooms all over the country - no-one had done the latter in Russia before. As a result, Wildberries started growing faster than the market. In 2015, its revenue amounted to 29.5 billion rubles (approx. $450 million) and, by 2019, it had reached 117 billion rubles (approx. $1.5 billion). At the same time, Tatyana Bakalchuk remained one of the most reclusive businesswomen in Russia, immensely reluctant to have any contact with the media. Until recently, nobody knew how, as a woman with no business experience, she had managed to build such a sophisticated and successful online empire.

The queen of second-hand - and her complicated relatives

"I don't have a background in maths or economics and I didn't do any preliminary calculations. I just got the idea and launched the business," Tatyana likes to say. But, as journalists managed to establish in 2020, there had been a plan all along and the account of the "woman without a business background" is just a nice fairy tale.

Bakalchuk took a gamble by abolishing prepayment and setting a single mark-up for everyone.

Bakalchuk took a gamble by abolishing prepayment and setting a single mark-up for everyone.

Maxim Blinov/Sputnik

When Tatyana decided to open her business, her husband Vladislav Bakalchuk was already an experienced entrepreneur, rather than an ordinary radiophysicist. The website of the Wildberries online store, which there had allegedly been only just enough money to set up, was created by the company he owned. Vladislav had become a businessman in the late 1990s, initially selling computers, and then setting up the internet provider UTech and, later still, the provider iFlat. Sources in the company say that he made the key decisions within Wildberries. Among Vladislav's relatives is Israel-based Yona Bakalchuk, who has worked for the international IT company Matrix Global Services for the last 20 years, where he is Strategic Sales Director. Its customers include the Israeli Ministry of Defense and the General Staff of the Israel Defense Forces (Tzahal).

Bakalchuk herself is of Korean origin (her maiden name is Kim). Her sister, Marina Andreyeva (Kim), who also worked at Wildberries, names a niece of Sergei Tsoy, the vice president of state oil corporation Rosneft, as one of her relatives, while journalists describe his wife, Anna Kim (a popular singer in Russia, known under the pseudonym of Anita Tsoy), as a "family friend of Rosneft chief Igor Sechin". Yekaterina Tsoy, the younger sister of Yury Tsoy [Sergei Tsoy's nephew] backed the Wildberries partnership project, while yet another relative of Bakalchuk, Nadezhda Vorontsova (Tsoy), obtained a state grant worth 150 million rubles for the venture.

Sergey Tsoi and Anita Tsoi

Sergey Tsoi and Anita Tsoi

Anatoly Lomohov/Global Look Press

What is more, sources affirm that even before the launch of Wildberries, Bakalchuk was engaged in selling second-hand clothes from Europe in one of the capital's shopping centers. It advertised itself as a store with 1,000 items of pre-owned clothing.

The Bakalchuks deny that the Tsoy or Kim families were financially involved in any way in the development of their business. But Tatyana admitted in a recent interview: "The self-made woman story is much in demand as a role model in the business world." Moreover, this was a deliberate calculation - as demonstrated by their hiring of professional PR people.

'Self-made' women sell well

The Bakalchuks decided to enlist PR experts after problems started with suppliers. Rumors began doing the rounds that Wildberries was going bust. The head of one large supplier wrote as follows: "Wildberries have got people hooked on discounts: No-one is buying anything at full price. It's like [retail discounter] Offprice - but online. It was predatory pricing that allowed them to overtake everyone else. But this predatory pricing has been at our expense."

Press service Wildberries.ru

The attitude of suppliers had to be assuaged and the PR people decided to position the company via a convenient backstory: that of a former English language teacher who launched her business shortly after the birth of her child [subsequently, Tatyana was to have three more children] and turned it into Russia's most successful e-commerce company. After that, a big article devoted to Tatyana and her business appeared in Forbes magazine and the strategy paid off. The report about the hitherto unknown businesswoman attracted a good deal of attention and there was no way of calling off the journalists. Tatyana gradually started to become a familiar face on the social scene.

Money from crises

This, however, was not the only factor that contributed to the growth of her capital and to the fact that Bakalchuk's personal wealth has passed the billion dollar mark in 2021. Crises are what she has made her money from.

"Clearance purchases" became the company's working business model.

Elena Voskresenskaya (CC BY-SA 4.0)

The businesswoman signed her first big direct contract with a manufacturer in 2009 - with Adidas, which had built up large amounts of unsold stock at its warehouses because of a drop in demand. Wildberries obtained credit and purchased 3,000 pairs of an identical model of trainers. "Clearance purchases" became the company's working business model. It bought up from manufacturers anything that was failing to sell for one reason or another (faulty goods, low quality or weak demand). To this end, representatives specially traveled to Europe in the hunt for bargains. This was accompanied by a spate of complaints from Russian buyers unhappy with the quality of the merchandise, but the company still made a profit.

Bakalchuk's wealth increased by 1,200 percent to $13 billion in 2021.

Bakalchuk's wealth increased by 1,200 percent to $13 billion in 2021.

Anton Novoderezhkin/TASS

The second world crisis came with the coronavirus pandemic, when online shopping came to the fore all over the world. Wildberries took on 15,000 extra staff (the company had 53,000 permanent and temporary employees as of the end of May 2020), and also inaugurated sales in nine countries of the Commonwealth of Independent States and Europe. As a consequence, Bakalchuk's wealth increased by 1,200 percent to $13 billion.

The export turnover of Wildberries also grew - by 89 percent. Among the top items exported from Russia have been medical masks, sugar-free pastila confectionery, peanut butter, diapers, T-shirts and the book, "History of Russia for Children".

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