The challenges of e-commerce in Russia

Russia is stepping into the game and presenting itself as the next big thing in global e-commerce. After many years of challenges with electronic payments and delivery, this ever-developing market is overcoming issues, presenting new solutions and getting more attention from e-retailer giants like Amazon and Ebay, as well as the Chinese holding Alibaba and the U.K. based fashion retailer ASOS.

The Russian e-commerce market is an exciting target for any marketing campaign, with a yearly growth of between 20 and 30 percent. Stats like this turn the online shopping sector into one of the fastest growing in Europe. For now, while online sales in Russia make up for only 2% of retail sales, this market is expected to rise and grow, reaching US$ 36 billion by 2015, according to research published by Morgan Stanley.

The Russian population is becoming more and more connected to the web. By the end of 2014, the country is expected to have 80m internet users, a number that will continue to rise. The best way to make sure you are ahead of the curve in Russia is to know beforehand the online consumer habits in the country, as well as the challenges and potentials of doing e-commerce there.

Too big to fail

With over 170 million inhabitants, there are about 20 million people who shop online in Russia. These sales are mainly concentrated in major cities such as Moscow and Saint Petersburg. That’s not only due to internet penetration – web access tends to be more widespread in bigger cities – but also to the fact that logistics is a real challenge in this market.

ecommerce in russia

(source: Morgan Stanley Research)

In 2012, Russians spent more than US$ 700 million, importing products from e-commerce companies not yet established in Russia. They have more web users than any other European country and 6% of internet users have already bought online from a foreign retailer. These figures, published by Borderfree, a global e-commerce provider, show an audience eager to buy online when the right opportunity is presented to them.

While the Russian Postal service is believed to be behind world standards on service, quality and delivery times, e-commerce companies are obliged to use their services. Another obstacle to expansion in Russia is an increased complication in shipping since new import laws were implemented last December. Many operators who used to import to Russia, such as FedEx and DHL, have exited the country due to changes to import laws. Yandex recently announced an agreement with MultiShip, a start-up that negotiates offers from different delivery companies in order to help e-retailers deliver their products across the country.

Cash in hand

Russian consumers still prefer the old-fashioned way of paying ’cash in hand‘ to e-payment options. Even though online payments have been gaining some ground, about three-quarters of all sales by Ozon Group, Russia’s equivalent to Amazon, are paid for with cash, according to Bloomberg. These payments are made through cash on delivery, or through offline pre-payment.

payment solutions in russia

The most widely used payment system in Russia is Yandex.Money, with more than 12 million existing accounts and over U$S 4 billion e-wallets in 2013. This e-money option is accepted by various e-commerce websites and represents a safe transaction for both seller and costumer.

Market Expansion

Russian e-commerce has been consistently rising and improving while presenting new solutions to its existing issues, helping it to reach its potential. Although delivery and e-payment could be obstacles to expanding your e-commerce to Russia, Yandex has a complete set of tools of expertise for you to make the most of this expansion.

Online sales in Russia are increasing faster than in any other European country. That’s an opportunity you can’t miss!