Understanding Russia’s e-Commerce Market

Posted by

1The e-commerce market in Russia is constantly growing. The volume of cross-border trade in Q1, 2016, grew more than twice compared with the same period in 2015. In 2017, Russian buyers will spend 37 percent more via foreign online stores than in the past.

According to AKIT, the association of e-commerce companies, online sales volume in Russia grew by 15 percent by the end of 2016 – up to RUR 850 billion compared to the previous year. Among the main market drivers behind the growth of internet commerce is the increase in internet users and their competence, and the reduction of mobile internet costs. The key factors limiting growth are Russia’s negative economic situation and the decline of purchasing power. According to experts, the potential for the Russian e-commerce market is enormous. The online segment currently makes up a modest 4 percent of all domestic retail, which can be compared to 12 percent in the UK. The Russian online market is therefore not yet saturated, and the biggest players have not entered.

All the same, the demand for foreign online stores is high. According to the results of Q1, 2017, Russian buyers spent about RUR 100 billion in foreign online stores, which is 106 percent more than for the same period in 2016. According to AKIT, cross-border trade volumes may grow by 37 percent in 2017, reaching RUR 450 billion. The number of inbound international shipments of goods in Q1 reached 48 million items, which is 182 percent higher than a year earlier. By comparison, the volume of orders in Russian online shops during the same period grew by only 3 percent. About 95 percent of all shipments received in Russia from foreign online shops are delivered by ‘Russian Post’, the country’s national postal service. It is expected that the total number of parcels and small packages of goods will reach about 320 million items in 2017.

The low volume of cross-border e-commerce in Q1 2015 is connected to the weakening of the ruble at the end of 2014, which caused instant price increases, while the product prices of Russian retailers grew smoothly due to the stocks formed based on the “old rates”.

Goods shopped online from abroad

2The majority of money spent by Russian buyers in foreign online shops is on small appliances and electronics, clothes, and shoes. Despite the fact that there are local producers in these segments, customers mostly prefer foreign online-stores focusing on quality products. The average cost of a parcel of goods in Q1 2017 was RUR 2,400 (about €30). For the year this figure dropped by 32 percent. This fall has less to do with the economic crisis, and more to do with the growing popularity of cross border trade and the increase in the proportion of small and cheap products in the total volume of international shipments. Furthermore, more than half of Russian online shop buyers live in Moscow (46 percent) and St. Petersburg (11 percent). The other regions account for 43 percent of parcels.

Biggest players on the Russian market

3The three leaders among the most popular internet retailers in Russia are AliExpress, Ozon, and eBay. The Chinese site AliExpress has become the most popular, attracting on average 23.8 million unique visitors per month and approximately 3.6 million per day. The Russian site Ozon showed more modest results in this regard, with average monthly unique visitors amounting to 9.2 million people, and 800 thousand daily. eBay has fewer per month at 7.4 million, but more per day on average at one million people. Speaking about the prospects of e-commerce, analysts note that the market in 2017 will continue to grow, and that serious competition in this sphere is already starting to appear regionally. Companies that actively develop and establish a presence regionally while adopting new technologies and services can expect a growth of between 15-18 percent per year.



RELATED: Russian E-Commerce Market “Has Potential Like China”


Russia Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, the Silk Road & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Eurasian region. We maintain offices in Moscow and St.Petersburg through our Russian partner firm, as well as our own offices in China, South-East Asia and India. For assistance with Russian issues or investments into Russia and Asia, please contact us at russia@dezshira.com or visit us at www.dezshira.com


Related Reading:

Assisting Foreign Investors into Russia

Dezan Shira & Associates´ Russian investment brochure offers an overview of the services provided by the firm – both foreign investment into Russia and Russian investment into Asia. It is Dezan Shira´s mission to guide investors through Russia´s complex regulatory environment and assist with all aspects of establishing, maintaining and growing business operations in the region.