Building a Cross-Border e-Commerce Success Selling to Russia: Bay.Ru CEO Aaron Block (Part 5)

Sramana: How did the Bay.ru business get off the ground? Did the founders bootstrap or take financing?

Aaron Block: They took some loans from friends and family as well as some personal loans. They really bootstrapped the business, and that culture persists today. We consider ourselves a frugal organization. We just reached profitability in March, which is exciting. We watch every single penny, and that is part of the culture that attracted me to this company. Any startup needs to mind its pennies and dollars to be successful.

Sramana: What was the ramp rate of the business?

Aaron Block: The company ran pretty close to breakeven from the beginning. They had a slight loss the first couple of years. They brought on the first round of outside investments in 2009. They had two subsequent rounds, so there are now $2.3 million invested in the business. We reached our first $100,000 revenue months in 2010. We had our first $500,000 and million dollar revenue months in 2011. We reached our first $2 million revenue month this year. We will be at a $40 million run rate by the end of this year.

Sramana: How are you growing the business? What are the levers you are pushing?

Aaron Block: The most important thing is talent. We need to have very smart people and focus on improving the operations. We have somewhat complex operations relative to other startups that do not handle the movement of goods across multiple countries. Finding ways to bring in the right technologies and people to minimize headcount growth is one important labor.

Another key is for us to take advantage of the Russian marketing opportunity. We were just scratching the surface of pay-per-click marketing when I joined. We have been building out a robust marketing platform with the help of our team in Russia. Our biggest growth problem so far is lack of awareness. The cross-border shopping market is estimated to be $700 million this year. Getting the word out has been a big piece of what we are doing.

Sramana: What else is interesting about your business that is worth covering in this story?

Aaron Block: The founders, Anton and Gene, created a proprietary shipping algorithm. This does not get a lot of press, but it is a reason why we compete so well in our space. We estimate the fully loaded and fully landed shipping cost before the checkout is finished. The customer knows exactly what he or she is going to pay before they make the transaction. If people try other forms of cross-border e-commerce, they often have to buy the goods separately and have them shipped to a middleman service, have the goods weighed and priced, and then pay a second round of shipping costs. We integrate everything into one cost based on our five years of experience shipping to all time zones of Russia.

This segment is part 5 in the series : Building a Cross-Border e-Commerce Success Selling to Russia: Bay.Ru CEO Aaron Block
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