By Ani Avetisyan
Wildberries, Russia’s biggest trade retailer, met a warm welcome from Armenian consumers when it first started its deliveries in 2021. Initially seen as yet another platform for online shopping, Wildberries made it to the list of the top 10 largest taxpayers in Armenia in just two years, paying over $67 million in taxes last year.
Wildberries is an online store launched in Russia in 2004 by the country’s first female billionaire, Tatiana Bakalchuk. It currently operates in Russia, Armenia, Azerbaijan, Belarus, Kazakhstan, Uzbekistan and Kyrgyzstan. The platform allows the manufacturers to register and sell their goods where the company operates.
Wildberries Armenia was established in 2018, with its first delivery points opened in 2021, without anticipating the furore it would make in the Armenia retail market.
In 2022, direct sales from Armenian manufacturers started selling local products through Wildberries.
Wildberries is paying Value Added Tax (VAT) – a tax added to most goods sold in Armenia – to the Armenian budget as an online trading platform, a relatively new regulation introduced by the government. According to the Armenian Minister of Economy Vahan Kerobyan, this eliminated the advantage of online platforms over offline trade companies and made the competition more fair. Moreover, Kerobyan stated that Wildberries was in a disadvantaged position as it has to pay VAT, while many small businesses enjoy VAT exemption.
Armenian manufacturers, however, were not satisfied with the changes, demanding the closure of Wildberries in Armenia. They believe it hinders local offline trade. Along with the convenience of online shopping, Wildberries offered significantly lower prices than those in Armenia, triggering outrage from local businesses.
Armenian entrepreneurs claimed that the Russian company is causing significant harm to Armenia’s economy. They claimed over 130 thousand local small businesses might end their operations due to Wildberries.
The complaints about the platform and the problems it caused to the local business emerged as the company had a “technical” issue, which allowed people in Armenia to order goods at Russian market prices, significantly cheaper than the same prices cost in Armenia. After a few months, the company fixed the glitch, returning goods to Armenian market prices, but many still choose Wildberries over local manufacturers and stores.
The Armenian government refused to intervene in the conflict, with Vahan Kerobyan saying that the government operates “in conditions of free market competition,” advising the companies that work with “traditional” and “inefficient” to move to use new technologies for advancing their businesses.
The Armenian government has previously supported the company’s operation in Armenia, with the country’s president meeting with the leadership of Wildberries in July last year to discuss the “development of e-commerce” in Armenia.
The company also appeared to avoid paying taxes, yet the State Revenue Committee announced that the company paid an additional $7 million to the Armenian budget, including the charges for violations.
