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An overview of online shopping behaviours in Russia

E-Retail in Russia

Number of online shoppers 2014: Roughly 31 million, representing around 21.5% of the population and 39.2% of active internet users.
The figure is expected to reach 40 million in 2015.

Number of mobile shoppers 2014: Approximately 8.5 million, representing around 0.6% of the population. These numbers are expected to increase dramatically as mobile internet and smartphone devices grow in popularity across Russia.

Total ecommerce value 2014: Approximately USD 17 billion (RUB 660 billion), up 5% in USD and 27% in RUB on the previous year. This figure includes domestic purchases of physical and digital goods, including tickets, but not hotel bookings, B2B sales and coupons. Of this figure, approximately USD 11.5 billion (RUB 440 billion) was spent on physical goods and cross-border sales made up around USD 5 billion. 36% of Russian online shoppers have reported that they have made purchases from foreign internet shops, and one of the fastest growing segments in Russian ecommerce is cross-border online retail.

Total m-Commerce value in 2014: Roughly USD 3.4 billion (or RUB 222 billion).

As an emerging market, Russia has a lower share of mobile transactions than many Western markets; mobile transactions only account for a 20% share of total ecommerce transactions (split by 7% smartphones and 13% tablets).

Although each year the actual growth of sales via mobile devices turns out a little less strong then experts have predicted, volumes still grow considerably and each year m-Commerce takes up an increasing proportion of the total ecommerce sales.

Average annual online spend per capita 2014: Approximately USD 828. This figure is increasing substantially every year.

Average consumer online order value 2014: Around USD 75, and Russian consumers typically make around 10 purchases a year.

Average purchase value in foreign internet shops 2014: Approximately USD 95 (RUB 6250)

Online’s percentage of total retail sales in 2014: Online sales in Russia account for just 2 -2.5% of overall retail sales, but this is estimated to rise to 5% in 2015, according to Morgan Stanley.

How they buy: PC v Mobile

As previously indicated, although mobile internet activity has recently grown dramatically in the Russian Federation, there is still a long way to go before Russia’s m-Commerce sphere will compete with other, more developed digital markets, or indeed sales concluded via desktops, laptops and notebooks within Russian borders.

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, as indicated in the chart below.

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.

Mobile commerce

Though mobile commerce is relatively undeveloped in the Russian Federation when compared to more advanced web-commerce economies, it’s undeniable that the popularity of the practice –as well as smartphone and tablet penetration, generally –is growing exponentially. Considering optimising your e-Shop for mobile browsing is thus an important consideration now, and will only become increasingly vital as time goes on. A survey by ExactTarget recorded that 85% of smartphone users consider it a central part of their everyday life (reaching 90% amongst 18-24 year olds), and many research information about products using their smartphones before buying these same products offline.

Concerns relating to mobile shopping are underpinned by the fact that Russian mobile users have reported dissatisfaction with the mobile versions of websites they frequent: 54% noted a lack of information provided in this regard. A study conducted by Retail Systems Research additionally found that 49% of mobile device users leave an e-Shop without making a purchase. The report suggested that one reason for this might be that e-Shoppers are unable to locate the tools that they are used to, or find the button navigation inconvenient.

Yandex has reported that searches on mobile devices are also on the rise: In 2013 they made up 14% of all searches, up from 10% in 2012 and 6% in 2011. Impressively, mobile advertising additionally contributed to over 10% of Yandex’s profits in this same year, and Sberbank has reported that this search engine’s revenue from sales of mobile advertising doubled in 2013.

It is thus clear that mobile is not a channel that should be overlooked by an e-Retailer into Russia, and mechanisms should be put in place to optimise a customer’s mobile experience.

Peak online shopping times

Peak online shopping days within the Russian Federation include the New Year on December 31st, the days leading up to Christmas on January the 7th, and International Women’s Day on March 8th.

The device preference of Russian consumers also fluctuates throughout the working day, as demonstrated by the chart below.

 

Retail categories and growth rates

Russian consumers display a clear preference for certain categories of goods when shopping online, and three in particular take up a significant proportion of this online marketplace: consumer electronics and white goods (42%), clothing and footwear (13%), and car parts (10%). Digital sales of clothing and footwear have seen dramatic growth over the past few years, partially due to the fact that consumers are getting used to using the free returns option offered by many e-Retailers in this location.

The table below then shows the growth rate of different sectors of the Russian ecommerce marketplace between 2012 and 2013. When comparing the growth rate of specific segments to proportionate ecommerce sector market shares, the category of ‘computer, notebooks and computer parts’ below is subsumed into ‘electronics and white goods’, above.

Ecommerce growth

It has been well-publicised that the Russian Federation has recently been affected by both international and domestic turmoil; upheaval which has led to the current quasi-stagnation of the Russian economy. Despite these difficulties, however, the Russian ecommerce market continues to show resilience and grow at significant doubledigit rates, though this growth rate will slow in coming years. Long-term expectations for this digital market remain high, with the full potential of Russian ecommerce far from realised.

Within the Russian Federation, impressive ecommerce growth figures are and will continue to be driven by a variety of factors. Aside from continually increasing broadband and internet-connected mobile device penetration throughout the regions, growth is fuelled by the wider use of online payments and the further development of fulfilment infrastructure in the remote areas of Russia, amongst other things. Indeed, online sales more than doubled in December 2014 when compared year-on-year with December 2013, with some Russian e-Retailers such as Wikimart experiencing even more impressive December year-on-year growth figures. Wikimart reported a fourfold increase in one-day online sales revenues for goods purchased on December 17 2014 when compared with the same day the previous year. Impressively, the Russian ecommerce market has been predicted to reach or exceed the USD 100 billion mark within 10 to 15 years.

Russia's leading online retailers

The following table was compiled using information extracted from Data Insight, Enter Vision and East-West Digital News’ research into Russia’s 2013 sales data. It solely takes a companies’ online revenue into account.

What motivates Russian consumers to shop online, whether domestically or internationally?

When surveyed by Yandex and GFK in 2013 about their motivations for shopping online, Russian consumers reported that it was the cheaper overall prices that played the most important role in encouraging online shopping purchases. An aversion to shopping in bricks and mortar establishments and the entertaining nature of online shopping played lesser roles in inspiring digital purchases.

Yandex and GFK also surveyed Russian consumers on their main motivations for making online purchases from foreign internet shops, as shown by the chart on the following page:

The Russian consumer

Russian internet users, particularly in recent years, have been reported to be highly educated and technologically savvy – appealing qualities in any potential customer. However, in comparison to some of their Western counterparts– at least in many regions of the country - Russians spend a proportionately small amount of their time online actually purchasing products. Regardless, as we have seen, online shopping in Russia is growing exponentially, with 26 million Russians participating in the practice on a monthly basis. Ultimately, in the longer term, Russia is expected to catch up with more advanced countries like the UK in terms of the popularity of online shopping and internet user ecommerce penetration rates.

Demographic considerations are of the upmost importance when it comes to targeting these diverse shoppers. Amongst these, socio-geographic variations can play an important role. Certainly historically, e-Retailers – both international and domestic – have found great success selling to those of upper-middle and high incomes living in Moscow, St. Petersburg and other large Russian cities. These locations can certainly boast more impressive historical levels of infrastructural development – particularly in back-end logistics operations - and investment focus. However, as indicated elsewhere in this Passport, these locations should not form the extent of an e-Retailer’s locational offering, as at present other regions account for over 50% of the total ecommerce market volume, and this is forecasted to increase in coming years with increased investment and development. Indeed, these regions are already recording higher ecommerce growth rates.

Regional variation aside, significant disparities also exist in online purchasing behaviour across different subsections of the population. Men, for example, on average spend more online than women, and tend to purchase different categories of goods, though women spend more time shopping online. Car parts and electronic devices - such as mobile phones and computers – are more frequently purchased by men, whilst women gravitate towards clothing and products for children.

As with many other territories, age also plays a role in online purchasing behaviours. Those from younger age groups -particularly when youth is combined with middle-to-high income brackets and the completion of higher education - tend to be well-versed in this comparatively recent technology, and they are also inclined to place more trust in online commerce and payment mechanisms when compared with their older counterparts. This inevitably leads to higher rates of online spending and consumption. Certainly, ecommerce in Russia has additionally not been fully democratised yet, and online purchases are much more widespread in households with higher disposable incomes.

By a significant margin, it was price considerations when compared with domestic online shops that played the most important role in Russian consumers making international e-Retail purchases.

Shopping for goods not available in Russia was additionally an important consideration, with 15% reporting this as a motivating factor. Indeed, brands – particularly international luxury fashion brands - are in such high demand in the Russian Federation that in 2013 the top 25 brands searched for on Yandex were overseas fashion brands.

There are, of course, some consumer characteristics that shoppers across Russia are largely reported to share. Russians are notoriously very sensitive to the price of goods, for example, and on the whole will be active in making price comparisons across multiple online shops. As a result, Russian e-Shoppers are reputed to be quite disloyal. These consumers will also be vigilant in checking product information on a website, as well as pricing and delivery conditions, so being up-front about this information is vital if you want a respectable customer conversion rate. Trust is additionally reported as a key concern, so e-Retailers should consider publishing their privacy and security policies in an obvious and easily accessible location on their websites. Importantly, around 30% of Russian internet users have declared that they never shop online, which is quite a significant figure when compared with the 10 to 20% reported in most Western countries. Trust and transparency of information – particularly related to costs, delivery and privacy - play an important role in this.

As has been reported elsewhere in this Passport, social networking websites are immensely popular amongst Russian citizens of all classes and creeds, and social media engagement rates in this location exceed global averages. This proclivity for social networking should not be ignored by a potential online retailer into Russia as a means of accessing consumers; indeed, in 2013, 51% of Russian internet users followed their favourite brands or retailers on social media and these platforms constitute excellent marketing and exposure channels.

 

 

 

Demographics

Political, social and economic environment

Online and mobile usage

Marketing

Payment methods

Taxation

Legal framework

Logistics and communications

Customs clearence procedures

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