Junk mail drives most westerners mad. But if a Russian gets a personally addressed letter on his birthday offering a tempting gift at half price he might be so pleased he will include a thank-you note with his order.
Pascal Clement, a 33-year-old Frenchman, set up PPE in his bedroom in 1996 and nurtured it into the $120 million a year powerhouse that today dominates Russia’s $300 million a year direct-marketing sector.
In 70 years of communism the only personalized letters people received carried bad news, so the appeal is understandable. “We have calls from people complaining, saying their neighbour got a letter and a free gift, but they hadn’t received one,” says Clement. In the west the reply rate to a direct mail shot is a few fractions of a per cent, but in Russia the reply rate can reach 20% to 30%.
PPE has several divisions. Core company Pokupki Na Dom (Buy at Home), started out with hard-to-find western pharmaceuticals, but has expanded into clothes, books and consumer electronics.
“It is a myth that the Russian post doesn’t work,” says Clement. “In a country as big as this it was one of the few things that worked really well. And it is cheap.” Even the remotest customer gets his goods within two weeks, says Clement, “and we have yet to lose one parcel. The post office is a huge monster but it works.”
The company got a big fillip in 2000 with $3 million funding from Baring Vostok. Since then it has expanded rapidly. The product range has grown and even includes sex toys. The call centre went from 10 operators to more than 120 and does more work for other clients than for the parent – several European embassies use it to field visa application calls.
Clement’s latest venture is unsecured loans. “It is a very risky business, but our database is an enormous advantage as we already know our customers well,” he says.
