Wildberries is losing money and could sink deeper into the red
Following the attacks on Wildberries’ warehouses in Russia, the country’s largest marketplace has faced serious financial problems. The company’s revenue has already fallen by at least a quarter, and direct losses could exceed 100 billion rubles. Ukraine’s Foreign Intelligence Service warns that the current problems may be just the beginning of a prolonged downturn for the company.
The strikes on Wildberries’ warehouse infrastructure have dealt a serious blow to the company’s business model. This is Russia’s largest marketplace, through which goods worth approximately 3% of Russia’s GDP are sold each year. Now the company is forced to reckon with significant losses. According to estimates by Ukraine’s Foreign Intelligence Service, Wildberries’ direct losses could exceed 100 billion rubles.
Under a pessimistic scenario, this amount could rise to 200 billion rubles. At the same time, the company’s total financing needs are already estimated at approximately 1.3 trillion rubles. In fact, Wildberries may need such a massive amount in loans simply to maintain its solvency and continue operations. The marketplace’s revenue has already fallen by at least 25%. This is particularly painful for the company, as its business model has relied on a constant flow of cash for many years.
How the Wildberries Model Worked
Wildberries’ problem isn’t just its destroyed warehouses. The blow has struck the very mechanism that allowed the company to maintain a high cash flow. Previously, buyers paid for goods immediately. The seller, however, did not receive their money at that very moment, but rather several weeks later. During that entire time, the funds remained in Wildberries’ working capital. The company could use them for day-to-day operations and maintain a high volume of transactions.
This scheme works as long as turnover continues to grow. When sales begin to fall, the situation changes. Less new money comes in, but expenses don’t disappear. As a result, it becomes increasingly difficult to cover accumulated liabilities, and losses mount. That is precisely why the report compares this model to a financial pyramid scheme. If the inflow of new funds dries up, the system—which previously functioned thanks to constant revenue growth—begins to break down significantly.
The report warns of a prolonged downturn
Wildberries’ current drop in turnover may be far from a temporary phenomenon. The company has already faced the consequences of warehouse issues, and it may take a long time to restore sales to their previous level. “The marketplace’s revenue continues to fall, and this is only the beginning of a prolonged downturn: after such a blow, the company will remain unprofitable for years to come,” the Foreign Intelligence Service stated.
In other words, the problem may turn out to be much deeper than just damage to warehouse facilities. If sales continue to decline, Wildberries will have to seek new sources of funding to stay afloat. And in this regard, the company cannot rely solely on its own resources.
Russia is preparing aid for businesses
Russian authorities have already begun discussing possible support for sellers operating through Wildberries. Among the options being discussed are tax breaks and subsidized loans. In addition, the marketplace itself may be allowed to use the warehouse facilities of “Russian Post.”
For Wildberries, such assistance could be crucial, as the company needs to restore its logistics and support sellers who depend on the marketplace. However, there is a problem—the Russian budget has increasingly less money available for large-scale support.
The Kremlin Is Short on Cash
Russia’s own financial situation makes it difficult to help large businesses. This is especially true for low-interest loans that the state could provide to Wildberries. According to Ukrainian intelligence estimates, the Russian government effectively lacks sufficient funds to provide preferential financing to the company without issuing additional currency.
In other words, the Kremlin will have to either find money in the budget, seek other sources of financing, or increase the money supply. At the same time, the Russian federal budget deficit is already very large.
According to the Russian Ministry of Finance, it reached 5.7 trillion rubles in the first half of the year. Russian analysts predict that by the end of the year, the budget “hole” could grow to 7 trillion rubles. The Central Bank of Russia is projecting an even worse scenario. According to its estimates, the deficit could exceed 8 trillion rubles.
What This Means for Wildberries
For the company, the situation presents several challenges at once. It needs to rebuild its warehouse infrastructure, support sellers, ensure logistics, and at the same time offset the drop in revenue. At the same time, Wildberries’ financial model itself is highly dependent on a constant flow of funds. If sales remain low for an extended period, it will become increasingly difficult for the company to cover its expenses.
Direct losses could reach 100–200 billion rubles, and the funding need is already estimated at 1.3 trillion rubles. Against this backdrop, assistance from the Russian government could become a critical factor for the marketplace’s survival. But the Kremlin itself faces a serious budget deficit. Therefore, Wildberries will have to operate under very difficult conditions in the near future. If revenue continues to fall, the company’s problems could turn from a temporary crisis into a long-term financial struggle.
Authorities in Russia’s Voronezh Region have reported that a large Wildberries logistics center—which served as a key hub for the movement of goods and cargo in the region—has been struck.
On the night of August 11, drones struck the Wildberries logistics hub in the village of Aleksandrovka in the Novousmansky District of the Voronezh Region of the Russian Federation. A large Ozon warehouse is located nearby, which may also have been hit.
