Russia is Europe's largest online market and the 12th e-commerce market in the World. With over 100 million internet users, the volume of its e-commerce amounted to US$ 22 billion in 2019. It makes this country the fifth largest global e-commerce growth market.
2020's spring lockdown pushed millions of Russians towards online shopping. Still being young and fractured, the local e-commerce market is lacking a clear leader. At least four large retailers may compete for this title. For instance, the largest national online retailer Wildberries doubled its sales in January-September but still has only 13% of the Russian market. In comparison, Amazon is controlling about half of the US market.
Although Russia has more internet users than (Amazon's second-largest market) Germany, its e-commerce has always lagged due to entrenched consumer habits and logistical challenges, which are quite understandable for a country of this size. For this reason, ChannelEngine is in touch with the biggest logistic partners. We have a network of 26,000 pickup points around Russia, allowing customers to try on goods before taking them home.
Last year, internet sales accounted for 6% of Russia's total volume, compared to 16% in the US and 37% in China. According to the recent prognosis, internet sales will grow by 44% in 2021 to 2,5 trillion rubles (US$32 billion). Nonetheless, online purchases will only make up just about 10% of Russian retail sales.
The Russian e-commerce market will be one of the fastest-growing markets with many opportunities for European brands. Recent research paints a promising 4-year-perspective for Russian e-commerce:
Figure 1. Russian e-commerce market, sales volume, in trillion of rubles [source]
Marketplaces like Ozon and Wildberries will get an even stronger market position, maintaining their growth and development. They provide everything the consumer might need while building a more significant customer base, attracting new sellers, and expanding their product range.
On the one hand, more opportunities and ever-growing demand will expectedly lead to a more competitive Russian e-commerce market. On the other hand, Russian consumers will be more demanding regarding the seller’s provided information, customer support, and delivery SLA - making them more loyal to high-quality sellers and brands.
The Russian e-commerce market provides a tremendous opportunity not only for Russian but especially cross-border sellers.
1. Moscow is the heart of Russian e-commerce development.
The metro area population of Moscow in 2020 was 12,538,000 inhabitants making it the most populated city in Russia. Besides free and fast WiFi available in numerous public places, Muscovites are more likely to speak English and, therefore, order on English webshops. Moreover, contactless payment is huge: Russia has become the world’s leader in the number of contactless transactions via mobile phones and Europe’s largest market for digital wallets, with Muscovites leading the statistics. No wonder the e-commerce market benefits significantly from the mobile industry, helping it grow steadily year by year.
2. A growing share of cross-border purchases
The Russian consumer is increasingly finding their way across borders. According to the study, the share of cross-border e-commerce continuously increased. It started from 8% of the market size in 2010 and reaching 36% in 2017.
Figure 2. Breakdown of the cross-border and domestic online shopping market in Russia from 2010 to 2019 [source]
To boost e-commerce, the Russian government has put new legislation in place since January 1st, 2020. The most significant change is a new duty-free import threshold that has made cross-border online purchases more profitable. Now, taxes have to be paid if one parcel's value exceeds the value of €200 or 31 kilos per parcel - and the tax rate has lowered to 15%. It means more cross-border purchases without taxes can be made [source].
3. High consumer activity
Big-city residents appreciate the comfort of shopping anywhere and anytime they want, with that being the reason for 49% of Muscovites to shop online. The limited variety of goods in rural offline stores is another crucial reason for smaller towns' inhabitants to purchase things online. Additionally, e-commerce gives them the possibility to buy alternative goods and – sometimes rurally unavailable – brands. According to the Global Consumer Survey conducted in Russia in 2020, about 43 % of respondents defined clothing as the product category #1 they have bought online in the past 12 months.
Figure 3. Which of these items have you bought online in the past 12 months?
To further explore the Russian market and build partnerships with its leaders, ChannelEngine participated in the Russian Export Conference "Perezagroozka: innovations for export," supported by eBay, AliExpress, and the Russian Government. We have discussed possible partnerships and evaluated innovative services for entrepreneurs to bring their products abroad.
In 2021 Channel Engine will provide full access to the Russian market in all verticals. Currently, we are building integrations with Yandex Market, Wildberries, Ozon, and Lamoda. Also, we have a solid ecosystem, including fulfillment-centers, logistics, and marketing agencies.