The Russian eCommerce market is about to explode, so any savvy marketer should prepare to invest in this sector now. Russia currently has a 46% eCommerce penetration, with an average spend of $337 per user (source: We Are Social). Despite being considerably lower than the UK with over $2,000 per person, Russia’s considerable population makes this every bit as much a desirable market.

Read on for the current market situation and essential tips for those looking to launch their eCommerce presence in Russia.

BACKGROUND

Retail eCommerce sales in Russia were worth $15.7 billion in 2015, and are expected to top $17 billion in 2017 (source: RBTH).

A large portion of that spend is towards overseas brands – good news for international brands. Foreign retailers made up $5.2 billion of Russia’s total eCommerce spend in 2016, and a 37% cross-border eCommerce growth massively outstripped an internal growth of 6%. Global brands have more experience and stronger infrastructure than their Russian counterparts to better serve the Russian community. As a result, Russian consumers are flocking to them.

ecommerce wrapping box for shippingRussia’s import tariff system also currently favors international eCommerce companies. Small parcels coming into the country for private individuals are not eligible for tax, whereas company imports are subject to heavy fees, which drive up prices. Therefore, Chinese marketplace AliExpress (owned by Amazon competitor AliBaba) is the most visited online store in Russia, with more than double the users of Russia’s leading site, Ozon. Russian shoppers can take advantage of the wide range of tax-free products.

What’s more, Russian consumers are unlikely to use price aggregators to discover products. If a product is unavailable in one store, they’ll look at other known stores rather than a search engine, so developing a strong reputation means you’re more likely to pick up secondary business (source: Deloitte).

All of this means that the Russian eCommerce market is full of opportunity for international brands. Here’s how to do it right.

FOUR TIPS FOR RUSSIAN ECOMMERCE SUCCESS

1. Be Personal

As discussed in our blog on Russian consumer behavior, Russians like to feel that they are getting a personalized service from a brand. It’s important to be able to interact with customers over the phone or via web chat, and most importantly, to be able to do that in Russian. Brick-and-mortar stores are still more popular than online shops in Russia due to the perception of getting better customer service in person. You should address this expectation by making sure you have a strong, Russian consumer communications program in place. See our Localizing Post Sales-Support blog for some useful ideas.

It’s also crucial to offer Russian-language websites. This has not been a strength for international brands up until now – a recent survey found that only 19 luxury fashion brands had a Russian website, while the rest of the market relied on global sites (source: Contactlab). The vast majority of Russians do not speak English, so a Russian site is essential.

2. Get Payment and Delivery Right

80-95% of eCommerce payments in Russia are made in cash on delivery. This has opened the door for some retailers to offer try-before-you-buy options on the doorstep (source: eCommerce worldwide), which increases return rates, as customers are free to put the item back on the truck if they don’t want to pay. You’ll need the infrastructure in place to work with this system if you don’t already operate it in your home market. Russians are suspicious of online payments and would rather use hard cash, particularly the over-35 demographic. Trust in both cyber-security and the legal system is very low.

Despite low trust, online payments are on the rise. Services such as Yandex.Money, Visa QiWi Wallet and WebMoney are growing in popularity. And they offer physical terminals as well as online systems to help improve security. The trend is most prominent among younger consumers. But as acceptance grows, the convenience of online payments will likely become the dominant force in the next five years. International brands prepare for and learn locally preferred online payment platforms to make the most of this trend.

credit card paymentRussian expectations for delivery times are relatively lenient – international shipments are expected to take between seven and ten days to arrive, and customers in more remote locations expect delivery to take longer (source: WebCertain). When shipping into Russia, though, it’s important to understand of local restrictions and customs processes. Check before you begin to see if any regions will refuse certain goods.

Postal-based solutions into Russia, such as Registered Mail or Express Mail Services (EMS), are surprisingly simple commercial entry solutions. Both Registered Mail and EMS options are available into Russia, providing delivery times of between seven and nine days end-to-end.

3. Don’t Forget Other Regions

Russia is the largest country in the world, and it’s a very long way from Moscow to Vladivostock. But that doesn’t mean there aren’t worthwhile markets to target further afield. Russia’s provincial markets make up between 25% and 30% of the total eCommerce market. And the regional fashion market alone has been valued at several billion dollars.

There are multiple cities with populations of over half a million people outside cosmopolitan western Russia. If you prepare the infrastructure to reach those regions, you’ll benefit from a much wider customer base. This is especially true as eCommerce growth reaches areas with restricted access to high-end, brick-and-mortar stores.

4. Prepare for Mobile

MCommerce is just starting in Russia, although usage rates grew by 45% in 2017 (source: We Are Social). Mobile internet usage in the country is high (80% in 2016 – source: eMarketer), but mCommerce accounts for only 22% of the eCommerce market.

However, Russia is next-in-line to join the rest of the developed world in shifting toward mCommerce. You should make sure your sites are optimized for mobile and tablet browsing as a key part of your strategy.

FINAL THOUGHTS

We’re currently witnessing the beginning of Russia’s eCommerce age. Imagine being able to witness the start of the Amazon-led eCommerce boom in the West. That’s the situation that international brands now find themselves in Russia. With the right site and tools in place, there’s a real opportunity to build a successful campaign as more and more consumers turn to online marketplaces and cross-border shipping. Get in touch with us, and learn how we can help you get set up for all things Russian eCommerce.