Russian e-commerce store Ulmart has filed for bankruptcy after legal problems for the company’s owner led to his arrest, East-West Digital News reports.
Founded in St Petersburg, Ulmart was Russia’s largest online retailer 5-6 years ago, specializing in consumer electronics and estimated sales worth $1.3 billion in 2014.
Ulmart was an early success story in Russia’s burgeoning online business. In its best days, the company had nearly 50 urban and suburban fulfillment centers deployed across Russia. Selling virtually everything from electronic devices to home appliances, to books and music, Ulmart topped e-commerce rankings in 2013-2016, generating up to $820 million in total sales revenues.
The company said that the 2014 crisis was a boon as bargain-hunting shoppers turned to the online store for deals after income growth stopped.
In 2016 the current online leader Wildberries posted a turnover of 45.6 billion ($620 million), overtaking Ulmart with 38.8 billion in turnover to claim the title of Russia’s largest online retailer. In 2016 Ulmart was the country’s 40th largest retailer overall.
Things turned sour in 2017 when the firm’s co-owner Dmitri Kostygin was detained in St Petersburg on accusations of credit fraud by Russia’s largest bank, Sberbank. The charges came on the back of reports of a shareholder conflict within the company between Kostygin and U.S. citizen Avgust Meyer, and their partner Mikhail Vasinkevich, a wealthy St. Petersburg businessman who invested in the company in 2010.
Kostygin was placed under house arrest as the two sides went to court. Kostygin hit back in November 2017, accusing Sberbank of corporate raiding with the intent of taking Ulmart over. In the meantime, the business deteriorated. In January 2018 Kostygin filed a bankruptcy lawsuit against his business partner Vasinkevich.
