It's December 2020, ten days before Christmas. In the new logistics center of Bulgarian online retailer Ozone.bg near Sofia, organized chaos is reigning.
Although every one of the dozens of employees knows exactly what their responsibilities entail, tweaks for optimization happen all the time because, as the company's founder Ivo Djokov puts it, "what we think in theory does not always happen in practice".
Ozone.bg is serving 6,000 orders per day - both because of the holiday shopping spree and the pandemic. However, according to Djokov, the workload has eased since the end of the Black Friday campaign at the end of November and the company can take a breath.
The physical growth of Ozone
The logistics center in the town of Elin Pelin east of Sofia, which has been operating since the beginning of November, shows the transformation of Ozone.bg in the last few years - from a niche electronic video game retailer to one of the largest online stores in the country.
So far, 4 million euro has been invested in the warehouse, and this amount is likely to grow as the company already has plans for a second warehouse building right next door. The old warehouse in Sofia's Studentski Grad district is becoming a distribution hub for Ozone.bg.
According to the company, the new logistics center, comprising an area of 8,000 square meters and partially automated, has already improved productivity by 60%. This percentage will grow in the future because of additional investments in automation and constant optimization of processes.
Ozone.bg was founded in 2008 by Ivo Djokov - co-founder of one of the largest Internet providers in Bulgaria - Megalan. In 2010, Megalan was purchased by A1 Bulgaria (then Mobiltel). In its first years, Ozone.bg mainly sold video games. Subsequently, the company expanded and began to position itself as an 'entertainment retailer'.
Nowadays, its portfolio includes video games, books, puzzles, audio, gaming gear, toys, electronics, and more. In 2019, the company bought the video game chain of stores Pulsar and doubled its revenue stream to 32 million levs (16.4 million euro). For comparison, in 2015 the company's revenues were a little below 4 million levs.
The coronavirus pandemic and consequent lockdowns may be pushing many businesses to the brink of bankruptcy but the situation is quite different for online retailers. Especially if the store is the go-to shop for home entertainment. In March, when Bulgaria went into its first lockdown, Ozone.bg registered a 55% increase in orders, making it one of the very few to report wins amid the crisis. Bulgaria's second (milder) lockdown coincided with the Black Friday shopping spree, which lasts several days for Ozone.bg. During the campaign, the e-retailer reported an increase in sales of 50% compared to the previous year. The rise in the number of orders exceeded 110%.
AquisitionsIn 2019, Ozone Entertainment - the company operating the website, bought the largest physical chain of video game stores in Bulgaria - Pulsar. However, Pulsar's business has been completely blocked for the second time since the pandemic began in March 2020 because all of its stores are located in malls that are closed due to the lockdown. At the beginning of 2020, Ozone.bg also took over the activity of the online store for computer products PCStore.bg, without acquiring the company behind it, which later went bankrupt.
Babies and computersWhile trying to juggle the increase in orders and the new logistics center, Ozone Entertainment is also expanding to new business niches. Since October 2020, the company has been the owner of the baby goods online store Baby.bg, with total revenues of 1.9 million levs in 2019.
"Baby.bg is an online store strong in the vertical in which we want to develop. It also has a stable website and a strong customer base. We accept Baby.bg as a good addition to our portfolio because they sell goods for children up to 3 years of age, and our product portfolio starts right from that age," says Emil Wagenstein, marketing director at Ozone.bg.
Integration is happening on the go, as the acquisition finished right before the Black Friday campaign. The integration of the teams turns out to be much easier than the integration of the product lines in the logistics center. The fact that the baby products are very different from anything else on Ozone's shelves, to say the least, doesn't help. There is a significant difference between the size of entertainment goods like consoles, puzzles, video games, and a stroller, for example.
Young mothers also turned out to be a very different type of customer compared to gamers. Djokov and his team came across problems they've never faced before, like having baby bibs in different colors but with the same barcode, leading to a mashup of orders while the system says everything's in order. The solution, at least for now, is to check each order several times.
However, Black Friday numbers are positive - the campaign for Baby.bg brought an increase in orders of 120% year-on-year whereas revenues grew by 80%.
Given the new acquisitions, and despite the blockage of Pulsar stores due to the pandemic, the company's total revenues for 2020 will probably top the goal of 50 million levs.