Why expand your e-commerce in Russia?
Statista reports that e-commerce user penetration in Russia is at 56.4% in 2019, and is projected to hit almost 60% by 2023, bringing in an estimated revenue of US $24,789 million from online transactions.
In 2018, Russia’s online consumers spent USD 5,372 million on fashion items making it a very lucrative market for businesses in that industry. Toy, hobby and DIY sectors are also big sellers. Combined, these categories will be worth more than USD 13 billion by 2022.
With a growing population of more than 144.52 million, and spanning across two continents, Russia presents a wealth of opportunities for investors and e-commerce businesses. GDP in 2018 was estimated at USD 4.180 trillion.
89.84 million Russians are currently using the internet and figures look set to grow. Statista estimates current digital buyer figures stand at 50 million and will increase to 61.6 million by 2022, resulting in an expected spend of USD 403.91 million.
In 2015, Russia’s most prominent online e-commerce platform, Ulmart.ru, had an estimated turnover of EUR 510 billion. The company has been expanding since 2008 and now has two suburban fulfilment warehouses and many other facilities across 240 Russian cities.
In 2017 e-commerce in Russia was reportedly worth EUR 14 billion – an increase of 13%. In 2018 we are expecting to see it grow to EUR 15.9 billion – very positive indicators for favourable trade conditions.
Online payment methods are becoming an increasingly accepted method of completing transactions. 42% of shoppers prefer to pay by debit card, and others make use of digital wallets, payment gateways and bank transfers.
Russia is no stranger to cross-border purchases as it imports billions of dollars worth of goods from its European neighbours as well as the US, but it’s biggest import partner is China (USD 37.3 billion).
How can you enter the Russian e-commerce market?
90% of Russians do their online shopping from a desktop, this means that businesses looking to enter the market will need to have a fully optimised website. Mobile devices, however, are increasingly being used to browse and make price comparisons, so having a fully functional mobile site is vital.
The most commonly used media channels for advertising are TV and the Internet; this means that as a seller, you will need to study your market within the country and choose the best way to target them, keeping in mind that you will have to produce adverts in the Russian language that are relevant and appropriate to the consumer.
72.32 million Russians interact through social networks, using platforms like Facebook, YouTube, Instagram and Viber. When looking to enter the market, you can use these tools to target consumers more specifically.
At present, the younger Russian demographic (25-34-year-olds) make up the greater portion of online shoppers, and they are mostly concentrated in urban areas such as Moscow and St.Petersburg. With 51% of online shoppers being identified as female, it’s clear that businesses need to carefully tailor their marketing to address this young, female consumer force.
The greatest challenge for online retailers is to establish trust and credibility with their buyers. Russians seek value for money and, above all, quality, often willing to pay more for goods that deliver on performance promises.
Up until recently, the majority of Russian online shoppers preferred to pay upon receipt of goods, this is primarily due to the mistrust and poor user experience of websites. Security of personal information is a priority, and unfortunately, a poorly functioning website will discourage users from completing their purchases.
At present, Russian Post delivers 95% of all parcels within the country. Due to Russia’s size and relief, distribution to remote locations can be challenging and expensive. When delivering items to Russia, your business will have to carefully select and employ a reliable courier service and be mindful of import regulations. Customs duties apply to all imports, and as of 2017, Russian citizens have to pay 30% tax on items valued over EUR 1000 and an extra fee for items weighing more than 31kg.
Russians are keen to buy from foreign online retailers in a quest for variety and value for money. To be successful in this market, your product needs to offer something unique. As access to the internet and connection improves and becomes more and more affordable, the Russian e-commerce market will only continue to grow.