The growth of Russian e-commerce market
Russia’s e-commerce market accounted for 5% of its total retail sales. Major online retailers expect sales volumes to grow annually between 50% and 150%. The share of online orders in the top three online stores increased by 90% in 2019. Wildberries is the largest online retailer in Russia. Other significant Russian e-commerce leaders are Citilink, Mvideo, Ozon, DNS, Lamoda, Eldorado, Svyaznoy and Technopoint.
E-commerce activity is more developed in Moscow and St. Petersburg, as well as Russian cities with over one million people. The share of orders made in the Central Federal District and the Volga Federal District combined is more than 50%.
30% of purchases are made via a smartphone or a tablet. Sales made through social networks and mobile applications are growing.
Key drivers for Russia’s adoption of e-commerce:
- A rational way of managing money and time.
- The ability to compare prices, review products and buy goods cheaper than in physical stores.
- Purchases made anywhere and anytime.
Two product categories have the highest demand in Russian e-commerce:
- Electronic goods and home appliances (31% of total domestic sales value).
- Clothing and footwear (23% of total domestic sales value).
Other significant domestic categories are homeware, groceries, car parts as well as health and beauty.
Foreign online stores are becoming increasingly popular. Russian Post processed 345 million international mail packages in 2018 (22% higher than in 2017). More than two thirds of Russian e-shoppers made purchases on Chinese sites. Russian Post noted that more than 90% of shipments containing purchases came from China. But, Western online stores attracted 8% of Russian e-shoppers for luxury items, leather goods, cosmetics, perfume, and personal care products.
Motives for buying in foreign online stores:
- Competitive prices
- More choice
- Unique products
- Higher quality
- New items appearing earlier
- Entertainment value
- Fast and convenient delivery
- Possibility to use the services of aggregators
- The majority of cross-border purchases are tax-free
There are no major obstacles for international e-commerce players to succeed e.g. logistics, payments, or customs. Market entry is made easier by the variety of local service providers. Although, foreign e-commerce and e-payment companies should pay attention to Russia’s personal data laws, which are distinct from the EU’s GDPR and may require substantial adjustments in data collection, processing and storage.
The growth of e-commerce in Russia is an opportunity for Finnish companies involved in e-commerce and who have an interest in entering the Russian market:
- Online marketing
- Optimization solutions for logistics, warehouses, delivery
- E-commerce technologies for social networks
- Mobile applications
- Artificial Intelligence
If you are interested in this opportunity, contact us to get more information and don’t forget the following training: