Exist'entia railway in the auto parts market

A moment of surrealism. An abandoned railway crossing in a remote Siberian village. Almost the middle between Vladivostok and Moscow. Double red traffic light blinks dimly. The sound signal has not been working for a year now. Towards each other, dissecting snow dust, goods are approaching. One of them consists almost entirely of ZhelDorExpedition containers. On some, the Exist.ru logo is visible. The other composition belongs to the HCV group and everywhere their brand flaunts there, as well as the IsNext.ru emblem. Both carry all kinds of auto parts to warehouses and from warehouses - orders in online stores. Somehow miraculously lost in Siberia, Vladislav Domoratsky stops at his car before this move. Looks at such a railroad coincidence. And at the moment when one logo equals another for a split second, Domoratsky thinks into the void: " And if they go one way, who will win? VGS - a partner of Russian Railways or ZhelDorEx - a protege of Alfa Group? .. Nonsense ... Still, it's good that I left ... "

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Now these are exactly different photos. Or not?

The hour of realism. Perhaps these goods are already on the same path towards now. Or maybe in parallel in one direction, and soon at the roundabout, someone will have to give in. But one thing is for sure: it’s good that Domoratsky left. This is true as well: it’s bad that Domoratsky, the man who built one of the largest Internet companies in Russia from scratch, left his own company like this.

Random development


It all started with "hoods on the hump." Twelve employees, a warehouse - part-time office of 50 squares, packed bags with spare parts that need to be delivered daily to the conductor of the passenger train. The end of the 90s. Domoratsky came into the auto business from scrap metal. The dark case, after which I even had to leave for the cordon for a while - the exact motives and reasons are unknown. Having returned after and having learned from friends about the high margin for spare parts caused by the willingness of foreign car owners to pay at times for the sake of the well-being of their “swallows”, Domoratsky decides to delve into this business. Not because of the long ruble - it is better to follow it into the oil and gas or other industrial sectors - but I didn’t want to go there - I wanted something interesting, new and “so that there was enough for bread”. Well, a matter of chance, of course - there were no acquaintances from oil and gas, а вот знакомые в автобизнесе попросили помочь.

Some believe that the ship will sail as you call it. Others monitor the quality of mast sails, steering, general condition, as well as the team. Domoratsky decided that the boat can still be called as he wants, most importantly, to issue a legal entity. And to fill with content and hit the road is possible with any name. So he became the owner of the first accidentally bought Exist LLC (according to other sources of ZAO - the oldest of all "Exists" found under the control of Domoratsky - 1997). Which gave the name of the chain of stores. However, the philosophical name is beneficial for any enterprise - whether it is the online store of underwear "Stoicism" or the beer shop around the corner "Sophistry" - even everything that is base is acquires a deeper meaning (if you think for a long time). Existential philosophy approached auto parts, maybe even a little more.

At first, the existentials did everything on their own, even customs clearance. But after we received 25 stamps in one piece of paper due to the lost part, we decided to delegate at least customs clearance to the broker.

A turnover of $ 300k was not easily achieved ("hoods on the humps!"), But quickly. The question arose of the first expansion, which was resolved shortly after the fall in a cramped bumper office on a client. The client was not affected, and the company prudently moved.

Site Exist.ru appeared in 1999. Prior to its implementation, Exist was distinguished by very sophisticated requirements for personnel. Workers had to understand English or German at the level of the auto parts catalog, know by heart the device of any car, and also be able to transfer this knowledge and understanding in a digestible form to a client who came to the office and explained the order on his fingers or (much worse) called on the phone.

Most of the employees who completed the first existential school worked there until 2016. There were also programmers who automated the internal sales process. It was they who took the initiative - made a website. Domoratsky took it as a tribute to fashion, despite the fact that it was possible to take orders through the site - and this is an additional sales channel. The first six months I did not notice that the site exists. But the fact (the main fact that predetermined the split in the business) that the site and the trademark were designed, besides Domoratsky, into a trio of programmers, hardly speaks of the blindness of the owner. Rather, his gratitude to the team for the work. Otherwise, he would not share the already existing business of several hundred thousand with his managers - Maxim Martynov and Alexei Belov. Therefore, the most successful programmers of the company are Yuri Bukovnikov, Валерий Чикин и Юрий Поляков — тоже стали совладельцами Экзиста, точнее его информационно-технологической стороны ( LLC "A + a Exist-Info" ).

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Source: rusprofile.ru
Two years later, the site became more than just an additional sales channel. Digitized catalogs were uploaded there, the buyer got the opportunity to place an order online, as well as track up to 97 operations occurring with his order in his personal account. And everything happened again on time - when the flow of customers stopped growing, because it was impossible to deal with existing ones. The process of actively pulling customers online has begun. By 2016, the site processed 2 million requests daily and issued more than 100 million offers for details. In 2001, the Exist company already had an annual turnover of $ 6 million.

In the same 2001, regional expansion began. There are two reasons why Exist did not need outside investment. The first is the highest margin on the part. The second is the franchise. The lack of desire to certainly open their own representative office in each region allowed, as they say, to live within their means. There is money - they opened it, no - they gave it to a franchise. The task was facilitated by the presence, even in the smallest town, of many points of sale of auto parts. You just had to choose the largest. At the same time, Domoratsky and the team acted wisely - if the city already has their franchised partner, then they opened their representative office in another city. As a result, sales through partners at the end of happy times occupied a solid 40% of Exist's turnover.

And one more step that allowed Exist to become the first among online stores in 2015. These are negotiations with official and unofficial distributors of foreign parts about placing their catalogs on the site. It took Domoratsky two years to negotiate with the first of them. Then all the suppliers themselves already requested the catalogs for existential. And the developed system for the percentage of details (automatic search in catalogs, the formation of analogs and current prices) freed managers from the gigantic amount of work. And eased the task for customers.

As a result, for 2016, existential had the following figures:

  • 6066824 registered on the client's website;
  • 30 million unique visitors (for 2015);
  • 7363955 cars in the "Garage" section (social network for motorists from Exist);
  • 1670 suppliers working with the company;
  • 3816 electronic catalogs of auto parts.
  • the aforementioned first place in terms of turnover in the top of online stores.

And all this, again, without outside investment.

Conflict


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The existential smoker. Behind him are the Exists of a healthy person.

In March 2016, the first and only large interview with Vladislav Domoratsky and his closest partners was published in the Russian-language edition of Forbes . A few months after him, all of the existential problems of existential surfaced. Burst through. But even from this interview you can indirectly guess that it all started much earlier.

  1. In addition to Domoratsky, 7 more top managers took part in the interview, but among them there were no representatives of the company's IT department — those of Bukovnikov, Chikin and Polyakov. In an interview about them it is said in passing, in the photo and in the text appear, except for Domoratsky, only the names of Martynov and Belov. That is, tension or misunderstanding has already been observed or even general.
  2. In the interview there are words of Domoratsky about the ongoing consolidation of the company's assets. Given the previous paragraph, it is unlikely that the share of IT professionals in these assets was supposed to be in the future, which could also testify to the conflict. And now directly to the reasons.

Perhaps the conflict in existential stems from those ancient times when the first manager on Earth gave the task to the first programmer. And an incomprehensible and overwhelming task spun from one to the other with refinements and perplexities, and the early deadlines were replaced by the late ones until our days arrived. The eternal conflict of managers and IT specialists, in other words. But it may not be so simple. Domoratsky says that insurmountable disagreements began from the moment when the deadline for the delivery of the self-written ERP system, which was supervised by Bukovnikov and which was supposed to connect the new logistics center and site, approached. The deadline was set by May 15, 2015. But a month before the project was completed, Bukovnikov said that he would not write this system. As a result, in a hurry, I had to switch to the popular SAP (which the logistics center was already equipped with), the torment lasted 8 months, which was very keenly felt by buyers - the quality and timeliness of auto parts delivery fell.

After this incident, Domoratsky decided to part with Bukovnikov, offering to buy his share and the shares of Chikin and Polyakov, as well as offering the last two to remain in the company on a salary.

The trio of owners-it-schnicks (mainly Chikin), without going into the reasons for the surrender-failure of the ERP system, said that Domoratsky forced them to sell their shares at a lower price (a total of $ 25 million against $ 10 million), and also imposed strange conditions for further work. It is unlikely that the software itself was the cause of the conflict. Most likely, personal grievances, misunderstanding or just tired of each other. Here's how to live with a person of a different worldview for 20 years? And the manager and programmer are people of at least different vectors, as a maximum, and outlooks on life. But the true reasons were given to know only from the primary sources, which are still silent.

When the owners were unable to part compromise, on the initiative of Bukovnikov, regulars of joint conflicts, representatives of the alpha banking group A1 intervened. They themselves like to call these conflicts “special situations” and are drawn into them solely for the “special reward”, namely, a profitable share or “their own person” in the leadership.

And at this moment Domoratsky, seeing the injection and, possibly, watching Yulmart, who was already mired in the courts then and who the Alpha Group had also come to, makes a very elegant and seemingly noble move. Offers to buy his stake in A + and Exist-Info for the same amount that he asked for a share of Bukovnikov, Chikin and Polyakov - $ 10 million.

The result of the round - the business is split in two. Domoratsky forever parted with a team of leading developers, as well as a trademark, website, license fees with a franchisee and a percentage of the company's turnover.

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Harder than destroy

IsNext


It was necessary to urgently do something with Exist-M - the main company that remained with Domoratsky. She and her daughters included warehouses, shops, equipment, as well as relations with suppliers. There were two options - either to sell the "remnants" at a bargain price, or to solve something with IT. It was unprofitable to remain in a contractual relationship with A + a Exist-Info, mutually inflated due to a split in prices for services did not suit anyone. Domoratsky chose the second path. And at the beginning of 2017, Exist-M had a new site - IsNext.ru. By this time, the main share of A + a Exist-Info was transferred to the head of ZhelDorExpedition, the largest transport company, Evgenia Nazarova. And the customer base from Exist.ru suddenly appeared on IsNext.ru, which was a lot of controversy, including litigation, which, however, did not end, since the contract for the sale of Domoratsky’s stake did not say anything about customers. In addition, part of the franchised partners began to renegotiate agreements with Iznext. In this connection, the existentialist had to look for new representatives in almost every city.

Iznekst managed to hold out only until October 2017. Domoratsky noted both the positive dynamics of development and the fact that in the allotted time the company will not be able to break even, which means it cannot pay off debts with suppliers. For the first time, he began to look for an investor, but nothing happened right away. In October 2017, it turned out that the Exist-M company and a number of those associated with it were liquidated.

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Source: rusprofile.ru
What is typical:
Over the past three years, Exist-M has consistently increased both scheduled and unscheduled inspections by state agencies, as well as an increase in the number of administrative violations, especially at the time of the breakdown in 2016.
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Source: rusprofile.ru
At the same moment, Exist + Info has not a single check.

Administrative Resource Involved by Alfa Group? Or is it just the fact that Exist-M is closer to the earth and reality than the virtual Exist + Info? Unanswered questions.

And the crown of the whole history of the split (at the moment). In December 2017, Domoratsky found a buyer. Ironically or by calculation, it turned out to be also the railway "Management Company VGS Group " (as usual in Russia, with offshore owners). The company, which already has warehouses and transport, acquired a brand, customer base, 103 stores, a supplier base with contracts and the largest logistics center from Domoratsky for an undisclosed amount (by the way, find the difference between this and this video). 02/01/2018 all documents are reissued from Exist-M to Iznext-Auto LLC .

And here the most important mystery in this story - Iznext-Auto LLC appeared in the arena only in 2018. From 02/01/2018, all relations with suppliers and customers and the processing of personal data hung on this company . But it was registered on November 01, 2016 (!). This is the moment when the split was already obvious , but it was not even known that Domoratsky wanted to sell his stake. Leave no comment. Too many different guesses.

Effects


1. Of course, the conflict caused a rollback from the existential positions of Exist.
For example, the existential visitors in 2015 were 30 million, in 2017-18 the number fell by half.

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According to SimilarWeb,
Information from Exist.ru
could haven’t had such a number, but since the start of the liquidation of Exist-M in October, the figure has also sagged significantly - from 3 million to 1.5 million.
According to SimilarWeb
2. It seems to be competition has appeared - but whether it will be healthy, that’s another question. It all depends on the administrative resource, which theoretically can be applied, as is the case with the same Yulmart.

3. Due to the conflict was completely lost Exist Belarus branch (10 million Euro annual turnover and 16 offices) and their website has been closed. At Exist + Info they didn’t even delve into the problems, they simply set a percentage, which was extremely unprofitable due to a different tax system in Belarus.

4. The quality of service during this period of timelessness has clearly fallen.

5. There is a plus - Exist appeared on the railroad, and Iznext followed him - how it will be organized - and is this a plus - we will see, but the prospect is great. In any case, it will be interesting to follow the competition of "railroad" in online sales of auto parts.

6. It is noteworthy that none of the existential closest competitors did not take advantage of this conflict and did not break ahead. Neither for Emex.ru, nor for Autodoc.ru outstanding development for a year and a half has been noticed. This can be explained by a different business model and segment.

In general, the auto parts market is growing , despite the crisis (and thanks to it too), the growth rate and, accordingly, the prices of foreign spare parts. Increases in the global scale, as well as in Russian . Therefore, Exist and Iznekst may well coexist peacefully with each other, rolling along the railway in all directions. But so far it is hard to believe.

And two more points in the end.

  1. The divide and conquer principle works only outside. If you apply it within the company - to rule and manage alone will not work out in any way - you need to reckon with the opinion of other managers. Of course, there is hope that the emergence of new types of decentralized organizations will help to look at this old and hardly good principle from the other side or change it to something like “divide, delegate and co-manage”. But in Russia at the global level, everything is dreary. And on the local, everything is local.
  2. In Russia, it is still difficult to develop a business independently. It hurts a lot of people who want to come to the ready, have plenty to feast on and throw out leftovers. This is an indicator of our development, the culture of our business. And the rate is consistently low compared to the West, where a hundred years for the company in the same hands is the norm. It is necessary to change. But from the head, from the tail or from the inside - that’s the question.