Wildberries faces over 1 billion euro losses after Ukrainian drone attacks

Ukrainian drone strikes on the warehouses of Russian e-commerce giant Wildberries could inflict direct losses of over 1 billion euros, with the worst-case scenario reaching up to 2 billion euros, according to independent Russian publication "The Bell." The company might not see any profit for the next few years, as its turnover decreases and sellers increasingly move to competing platforms.

A significant factor contributing to the potential scale of losses is that only about 10% of the goods offered on the Wildberries platform were owned by the company itself. "The Bell" predicts that Wildberries will remain unprofitable for several years. This outlook is based on a shrinking turnover and a migration of sellers to other platforms, which severely impacts the company's financial stability.

Sources indicate that the company will need to take on new debts, adding to its existing debt of over 1.3 trillion rubles (nearly 14 billion euros) accumulated by the end of 2025. A decrease in turnover by at least a quarter would not only significantly worsen Wildberries' operational performance but also threaten its entire business model, another source told "The Bell."

The platform's business model involves collecting payments from buyers immediately, which then become working capital, while sellers receive their funds much later. When turnover declines, new revenue streams are insufficient to cover expenses, leading to losses and further delays in payments to sellers. This situation is described as a "pyramid" that begins to collapse when turnover decreases, as accumulated expenses can no longer be covered by new cash flows.

"The Bell" reports that Wildberries' turnover has already decreased by a quarter due to sellers leaving, many of whom instantly lost hundreds of billions of rubles worth of goods. This has broken the financial backbone of Tatiana Kim's business empire. While the Russian authorities are unlikely to let the company fail or go bankrupt, questions remain about the source of funds for its potential bailout.