Daria Burkova met with the founder of the Citynature website, who spoke about working with Arab and Asian countries and price preferences for cosmetics in the regions of the country.

In 2012, Mikhail Pesterev founded a website for the wholesale sale of cosmetics and began to collect orders, without having a single contract with manufacturers. Its markup was several times lower than that of its competitors, and within a couple of months Citynature represented Weleda, Living Nature and EcoLab. Today he has more than 250 brands from Russia, Korea, Japan, Thailand, Morocco and Bulgaria as partners.

To begin with, please tell us how your business works, what kind of partners do you have, where do you buy cosmetics and where do you sell them?

Our clients are retail chains, online stores and individual entrepreneurs across the country. The cosmetics market is designed in such a way that it is almost impossible for a new brand to enter a large retail chain, online stores, and small shops without the support of a large company. It is for such brands that our online platform exists, which presents new products and talks about them to a wide audience.

Citynature.ru passes through itself up to 50 new brands per month, of which 15 pieces eventually fall into the assortment of the site, and then we begin to promote them. The most interesting thing is that we were the first in the market who began to cooperate with small entrepreneurs, giving them the opportunity to choose from 250 brands and 40,000 items of cosmetics and household chemicals. We select new brands and sell them at producer or importer prices to both small entrepreneurs and large chains and Internet projects. Over the past year, everyone, including large retailers, began to look at niche brands due to the growth of the dollar.

I've heard stories about how you were introduced from Asia with suitcases of cosmetics. How do you select brands?

We are interested in brands that have not yet been promoted, but which have good potential. These are new selectives, including those from Russia, brands with production in Korea, Russia, Japan, companies with a large product line and a retail price of 200 to 900 rubles.

We also highlight incomprehensible brands, the so-called dark horses. Something is wrong with them: either the quality of the packaging does not match the price, or the quality of the product itself is embarrassing, or the manufacturer is alarming. Sometimes, among such novelties, a brand suddenly pops up that explodes sales. We carefully study each new brand, then we invite representatives to our place. Well, if they are in Moscow. If we cooperate with Asian companies, then people really come with suitcases - this is typical of Indians and Koreans.

Do you work with fakes?

Of course not. This is not our story.

Why not?

When you are building a serious business, contacting fakes means putting an end to all investments and efforts. They undermine reputation. You can chase for easy ways to make money, or you can build a normal business, survive ups and downs, but do everything right. So that there is no shame. We are building a normal business, the turnover of which in 2016 amounted to 100 million rubles.

And if you take not direct fakes? I know you have a Korean brand called KeraSys. This is an obvious zakos under Kerastase.

Fake is fake. And KeraSys is a quite successful Korean brand that is produced by the Aekyung holding. In fact, this brand has proven itself very well in Russia. Yes, in our assortment there are a couple of brands with names similar to other well-known brands, but you need to understand that these are not fakes. KeraSys is released for a different target and price niche. These are different stories, and visually they are not similar.

Do you think KeraSys is successful in the market because it is really good quality or because girls buy it thinking they are just choosing cheaper Kerastase?

Interest in this brand is not caused by the name, but by the general trend in Korean cosmetics and product properties.

And what other brands are there that look like something more expensive?

You know, many brands are similar to each other. Often there are some implicit hints, for example, in the brand name. It’s a completely different thing when people from the Emirates come to us, they take out some junk from their suitcases and say that it looks like such and such a famous brand. I have not yet forgotten the consequences of the allergy after the visit of one of these representatives, who, without my will, “poked” at me. This story only convinced me that we are not on the same path with such people.

Tell us about the financial side of your business, the first investment and the choice of your niche.

Initially, we had an idea to create a retail online store. We conducted a study, and it turned out that the demand for cosmetics is really growing. There was such a situation on the market that no one sold wholesale different brands so that there was a large assortment and different directions. So I realized that small shops probably have the same problem as we do. And we decided: "Let's do it ourselves." On the knee, they really made a website in three days and launched advertising. We must understand that by that time we had already spent several million rubles from our own savings on the launch of a retail store. By that time, I had already quit my job.

As soon as we created a wholesale site, we immediately filled it with brands that we had not even worked with at that time. We immediately received a bunch of calls: “Could you post our catalog?” As a result, they made a new sales channel in a week. Very quickly, all these brands that we published on our website came to us by themselves.

After two or three years, there was an understanding that I wanted something more. So we started distribution. An Internet project or a network wants to take goods for sale or with a long delay in payment, wants to return unsold goods, wants delivery to its outlets, wants promotions, promotional support and rebate bonuses, and so on, but small importers or manufacturers cannot afford it. Therefore, we ourselves choose those brands that can shoot in the market, take risks and sell. This is how we earn our margin. Yes, it is higher than that of resellers, but lower than that of a retail store.

Do you think it makes sense now for someone to do the same business as yours? Or is the niche already taken?

In fact, some former employees also started doing something like that, but it didn’t work out. There is a good saying: "Not every good violinist can become a good conductor." I think we are growing because we are constantly looking for some creative ideas. If I looked at such an idea, I would not repeat it, to be honest. This is a difficult market for beginners.

What else can be done about cosmetics? What do you think is not occupied in Russia yet?

It seems to me that now is a good time to create new cosmetic brands. In this direction, you can think of something for budding entrepreneurs. Now Russian-made cosmetics are relevant, this is proved by a number of cool brands. Ideally, if the components occur only in one place. This makes the product unique.

Has it ever happened that you bet on some brand, but it doesn’t sell at all? What does it depend on?

We still have not been able to identify the formula for success, so when we launch brands, we warn: “Colleagues, only 30% of dark horse brands can survive and shoot.” Those brands that are really engaged in development and implement something, achieve success. And those who try to quickly, I apologize for the expression, sell their products, rarely achieve what they want.

If some new brand comes to you, do you check if they have all the certifications and such? Is this a prerequisite for work?

Of course it's mandatory. We always require all certificates and the right to use the trademark. In the first deliveries, it already becomes clear whether the brand can work with us or not.

Do you have chemists on staff? How do you check the goods for compliance with all pieces of paper?

There was a precedent when a brand came to us, and somehow we all doubted about it, it took a long time with certificates and photos. A month passes and they send pictures of completely different products. That is, the guys redid everything in a month and brought another product, which we, of course, refused.

Do you have any people who try everything for themselves?

Yes. This is done by beauty bloggers, but they are out of state. Try and write reviews. We are interested in their opinion. Sometimes it happens that the opinion of bloggers differs from the opinion of the majority. When you look at reviews on the Internet, there are 80% good ones. And bloggers sometimes say that they are “average” in response to the general “wow”.

Tell us about your work with different countries. A lot of unflattering things are said about China, for example.

China began to buy products from us relatively recently, literally a year ago. They are especially interested in brands that are widely represented in Russian chains. The emphasis is on everything cheap, but they constantly call us and want to buy some expensive transnational brands that are actively advertised.

The Vietnamese are constantly buying goods from us, but they have their own specifics. If comrades from China send us orders from Blagoveshchensk and Irkutsk, then we ship all orders from Hanoi to representatives who are in Moscow, and they already send them by air delivery to their homes. The assortment is similar to what the Chinese buy. In Libya, it would seem, there is a war, everything is bombed - but no, they come, they buy, we cooperate.

What are the relations with other Arab countries?

Jordan supplied us with brands two years ago, but when at the end of 2014 all brands purchased for dollars sank in sales, Jordan, like the Emirates and Israel, lost their sales shares to Korea and Japan.

By the way, how do you work with them?

Korea and Japan are on the rise right now. Korean cosmetics are distinguished by a wide range and a huge number of ingredients: from fruit extracts to snail mucin, while Japan stands out for its quality and technology.

Usually, representatives of brands find us themselves, invite us to some conferences and forums where several manufacturers from a certain country are present. We will not invest our time and money in a brand unknown even in our own country, it is easier for us to buy and import into Russia brands that are already known and promoted in the region of their origin, which have proven their sales and effectiveness.

Don't you have the feeling that interest in Korean cosmetics is falling now?

Many brands have gone out of business. That is, the demand for one brand has fallen and it has become uninteresting, the demand for another brand has grown, and the demand for the third has remained unchanged.

Do you know why this happened?

I think it has to do with the distribution system. If a brand enters the market correctly, makes the pricing system understandable and interesting for everyone, enters retail chains and large Internet projects, constantly updates the assortment, then it lives. If someone just brought in a product, sold it to everyone at a bargain price, then tomorrow this brand will be lost. Globally, Japan and Korea are selling very well.

Now it's nice to look at some Russian brands that have a production base. They reach a new level and their sales are growing, and there are manufacturers who simply copy some other people's ideas and eventually produce junk.

What sells better in different regions of Russia?

For the regions, inexpensive brands of normal quality, not replicated, are needed. Now everyone is looking for just such brands. What is sold in Moscow is not successful in the regions. If in the capital networks now the best-selling cosmetics with a price on the shelf in the range of 200-700 rubles, then in the regions it is 70-250 rubles. Now there are a lot of small Russian brands that produce and sell their products at exactly this price. Some use healing clay, others use mineral mud, etc. They produce products that are truly natural and in demand. It seems to me that the future of the Russian cosmetics market belongs to such manufacturers.