Cross-Border eCommerce
The cross-border segment is the fastest growing, up 26% by value and 80% by number of parcels and small packages, and exceeded $4 billion for physical goods alone, according to Russian Post and industry association NAMO.
The growth of this segment has been driven in large part by Chinese companies – most notably Alibaba’s B2C marketplace Aliexpress.ru – but key western players including Amazon, Asos, Next and Yoox are also in the game.
According to eMarketer, in 2015, 39% of Russia’s online shoppers made a cross-border digital purchase at least once that year. Clothing, accessories, and footwear are the most common products Russian shopper by abroad, making up over 51% of Russian cross-border digital purchases. The second most purchased category of goods are cosmetics, beauty and health products. The leading categories come as no surprise, as many Russians hold a high value on appearance and name brands. Some other popular categories Russians look to shop abroad for include toys, electronics, and household goods.
Customer Experience
Unquestionably, when expanding into Russia an e-Retailer should examine and provide for the payment method most commonly used by consumers for the purchase of goods in the location. Ultimately, the payments market in Russia is still developing and great change in the area is inevitable. Providing popular options will allow you to meet the payment expectations of any Russian consumer. The more payment methods you allow for, the more success you will have in this location. Indeed, according to Yandex.Money, the use of popular online payment methods helps e-Shops to increase successful orders by 10-15%.
The use of electronic payments systems will continue to increase in Russia, particularly with government encouragement favouring the development of ecommerce in the country. Online payments systems are integrated by State institutions, such as the Tax Service – , public transport providers and law enforcement (enable users to pay taxes, travel cards and nes), with increased frequency, and these projects help to increase the number of Russians who are aware of online payment methods and enhancing their overall con dence in these systems. New payment methods (such as recurring, one-click and mobile acquiring) – now just emerging – will likely develop and improve exponentially as a result of increased demand and knowledge.
B2B eCommerce
According to Moscow Times research, in 2015, 68 % of Russian corporations used electronic trading platforms for procurement purposes. According to data from B2B-Center, online corporate and government purchases ballooned by 40% in the first nine months of 2014 compared with the same period of time in 2013.
The majority of this business sprouted from construction goods and services, with more than one-fifth of all purchases made in 2014 falling into this category. Trailing close behind was the procurement of machinery and specialized products for the mining and oil-field industries, making up 18.6% of all online B2B purchases seen on
B2B-Center.
As B2B online shopping increases in Russia, the industry has become tightly regulated. Transactions made through B2B ecommerce platforms are legally binding due to the large financial value of these purchases. Procurement procedures, especially for state-run entities, face strict legal requirements.
Payment Regulation
Research should be done well in advance of launching a digital shop – the facilitation of payment is an area which can make or break success in a region and as an online merchant, one cannot just enter the Russian market with a ‘basic’ web counter and a Russian bank. It is important to offer a tailor-made solution. Should it be required, varying degrees of third-party assistance, for example through the services of a specialised payments service provider, are available.
Local Entities
The foundations of the Russian banking system are provided by the territory’s federal laws, and the banking sector is subject to stringent regulation, though this has been relaxed somewhat in recent years. Financial institutions in Russia have to meet mandatory legislation requirements, as well as comply with numerous CBR instructions and regulations.
Butt the Russian banking sector is dominated by State-owned financial giants such as:
- Sberbank;
- Vnesheconombank (VEB);
- VTB Bank;
- Rosselkhozbank;
- Gazprombank;
Russian non-residents have the ability to open and operate ruble and foreign currency bank accounts in the Russian Federation, so long as this is done with an authorised bank. Payments in foreign currencies are generally permitted without restriction between non-residents, though payments in rubles between such parties are only permitted through accounts opened in Russian banks. Transactions between residents and non-residents involving payments in rubles and foreign currency can currently be conducted without limitation, though there are procedural requirements for such operations. Foreign currency can be imported freely into the Russian Federation by residents and non-residents alike. In the case of individuals, both categories must le a written customs declaration when importing currency in cash, travellers’ checks or securities if the value is more than USD 10,000.
The situation when it comes to exporting foreign currency in this location is a bit more restrictive. Both resident and non-resident individuals can export foreign currency up to a value of USD 3,000 without a customs declaration, and up to USD 10,000 with a declaration. Exports of currency over this amount are additionally permitted, though further procedural and documentary requirements must be adhered to. It should be noted that the CBR closely monitors currency transactions involving the import and export of goods between residents and non-residents using transaction passports. Thus, certain documents relating to such transactions must be filed with the bank. This is quite a complex area and is subject to frequent change, particularly in light of the 2014/2015 economic crisis which has made stricter currency controls a definitive possibility. It is thus recommended that professional advice is sought in this area.
Popular ecommerce site
The top most popular B2C sites are WILDBERRIES.RU, ULMART.RU, CITILINK.RU, MVIDEO.RU, ELDORADO.RU, LAMODA.RU, OZON.RU, EXIST.RU, SVYAZNOY.RU, KUPIVIP.RU, AVITO.RU, ALIEXPRESS.RU
Mobile Payments
Overall, mobile device traffic only constitutes around 7% of all traffic to Russian websites, and so far only 21% of surveyed smartphone users living in Russian cities with a population of 100,000+ have made purchases via their phones, although the proportion increases in Russia’s largest cities, Moscow and St Petersburg, to 23.6% and 23.9% of smartphone users respectively. Interestingly, at present Russian consumers spend a comparatively small proportion of their mobile browsing time shopping online. TNS in their 2013 research discovered that most people in Russia use their smartphones for social networking, messaging and search, whereas only around 10-15% of surveyed respondents used their smartphones for buying or ordering products online.
It is important to note, however, that almost 40% of Russian respondents surveyed by TNS stated that they researched information about products using a smartphone before buying the products offline or via another device, and so –even without the promise of dramatic future m-Commerce growth – this is a channel that shouldn’t be ignored by a prospective e-Retailer into Russia. A report entitled ‘The Russian m-Commerce Market in 2014’, presented by the marketing agency, has additionally indicated that those Russian consumers who have purchased tablet devices are much more likely to complete the online order process using those devices than those shopping on smartphones. The report stated that around 48% of tablet users made purchases of goods and services via these devices in 2014. Sales of tablet devices are increasing dramatically in Russia, so m-Commerce sales in the territory will certainly increase as a result. Of course, as is the trend across the globe, a main driver of m-Commerce in Russia will be an increase in smartphone and tablet penetration amongst Russian citizens, and we can only expect order numbers to increase as a result.
Online Payment
Cash-on-delivery (COD) is the existing trend for physical goods and will remain so for some time, although the use of electronic payments is slowly increasing. Despite being used by a minority, many forms of electronic payments are on the rise. EWDN’s report states that according to the opinion of industry experts and ecommerce executives, the use of electronic payments will continue to rise. There are differing opinions on the specifics of using bank cards online.
Various forms of electronic payment are on the rise, even though they are used only by a minority of consumers. In addition to bank cards, the use of which is growing slowly, several new solutions and offers appear each year, and some of them are intended to create a universal means of payment. Large segments of the electronic payment market are led by domestic players, from payment terminal operators to mobile carriers to electronic currency companies.
Mobile e-Commerce
The number of mobile shoppers has exceeded 8.5 million. These numbers are expected to increase dramatically as mobile internet and smartphone devices grow in popularity across Russia.
Digital Marketing
The amount and frequency of searches for your product or service should be analyzed prior to launching a campaign in Russia. As well as using Google Trends, there is the useful Yandex service to help you select the right words to use on your website to attract consumers: wordstat.yandex.ru.
Major Buying holidays
Foreign retailers must prepare their advertisement campaigns, promotions, and products for Russian New Year, Men’s Day, and International Women’s Day. These three holidays drive a significant portion of Russian online shopping and vary from Western holidays.
Over the past few years, Russia started participating in Black Friday weekend sales to kick off the winter holiday shopping season. For the most part, shoppers make their purchases throughout December for the ever-popular Russian gift-giving day on January 1. The majority of shoppers don’t start shopping in November and many last-minute shoppers are still making purchases in late December when Westerners have already returned their gifts. A third of Russian holiday shoppers turn to the Internet for gift ideas and to make these purchases – 14% of shoppers search online, but then purchase in stores.
Russia recognizes men on February 23, which is Men’s Day or otherwise known as “Day of Fatherland Defenders”, and celebrates International Women’s Day on March 8. During the weeks leading up to these holidays, Russians search for a number of gifts in the cosmetic and electronics categories to recognize their friends and family members. Combined, these three holidays make the winter a very important shopping period unique to Russia.
Beyond these holidays, Russians also search online for Valentine’s Day gifts, wedding gifts, and birthdays.
Social media
More than 90% of Russian Internet users access social networks. The most popular social network in Russia is VKontakte, which has over 380 million registered users, 65% of them live in Russia. VKontakte has 80 million visitors per day, 60% aged 25 or older.