Russia: B2C commerce to increase by 13% in 2017. A market worth exploring?
Projections for the e-commerce market in BRIC (Brazil, Russia, India and China) are extremely optimistic for 2017 and beyond. All four countries are expected to experience a small surge in e-commerce activity until 2021, with Russia expected to see a 13% increase within the next year alone. By 2021, it is estimated that Russia could see as much as £19.5 billion in online B2C sales.
Internet penetration in Russia is currently at is expected to rise steadily to 66.3% by mid-2017 according to eMarketer. Compared to the UK’s 92% this may seem poor, but it’s important to remember that Russia’s population is more than twice the size of that of the UK at 143.5 million.
How Russians access the internet is perhaps surprising. In a survey carried out in 2015, respondents were asked how they regularly shopped online. Only 8% said they exclusively used a smartphone or tablet. At the other end of the spectrum, 90% of respondents said they used computers and laptops almost exclusively to buy online.
Where a mobile first approach is essential for some markets, the focus for Russia is still firmly on the desktop and ensuring that websites are designed specifically to meet the demands of the Russian user.
VK is the dominant social media platform in Russia. Hailed by locals as the ‘Russian Facebook’, it allows users to stream and share media files and is extremely popular with young users. Advertising isn’t prominent on VK, but users still choose to frequently connect with brands they like. Paid campaigns are easy to set up with targeting options offering audience segmentation by categories and keywords as well as demographics. Although Facebook has less market share, it should not be ruled out as it is can be appropriate for some audiences and is less expensive than VK.
UK Brands are in fashion and are perceived well
Yandex is the dominant search engine with 60% of the Russian market, while Google currently has a 30% share. The latest Yandex data shows that Next is among popular UK clothing brands being sought out with 409,000 average monthly searches by Russian consumers. ASOS also features prominently as does shoe brand Clarks. It’s worth noting that these brands have mastered online selling in order to overcome Russia’s comparatively poor physical infrastructure. Traditional advertising is also still popular in Russia; they have the 5th largest TV advertising market in the world (something which UK retailer, Next took advantage of to great effect).
Non-native brands that have adapted to the Russian market
There’s no question among experts that Russia is a controversial market at the moment, and that any brands looking to move into the market should be cautious. However, brands like New Look and Adidas have seen a great deal of success as Russian interest in fashion continues to grow. Next, River Island and ASOS together ship 15,000 parcels to Russia per month, proving that appetite for foreign goods is stronger than ever.
However, UK businesses should be aware of recent changes to customs regulations for B2C imports – the duty threshold has shifted from €1,000 (£780) across all parcels per month to €150 (£117) per parcel, which means UK businesses should think carefully about how they organise their product and delivery logistics.
“I think nowadays the most preferable method in Russia is using credit cards. But there are also three major e-payment systems: Yandex.Money, WebMoney, and QIWI. The latter one allows you to pay with cash by putting them into a very large network of telling machines (they are everywhere).” Anton, Local In-Market Expert (LIME), Russia
Key takeaways before going to market:
- Imports are on the rise – Local competition in Russia is struggling to keep up.
- Think desktop shopping – Only 8 % of consumers use a smartphone or tablet exclusively.
- Russian import duty thresholds – customs regulations and duty will affect product choices, profitability and delivery logistics.
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