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Google Russian eCommerce & Digital Marketing 2013

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  • 1. Google Confidential and Proprietary AmCham Event; December 3, 2013 Tommi Pelkonen & Ivan Kuznetsov Google Finland & Google Russia tommipelkonen@google.com, ivanku@google.com +358-40-5050821 Business case for Russian E-Commerce & Digital Marketing
  • 2. Google Confidential and Proprietary
  • 3. Google Confidential and Proprietary BUSINESS CASE FOR RUSSIAN E-COMMERCE & DIGITAL MARKETING RUS & FI – long time business partners: How about in the digital era? Russian Internet & E-Commerce in brief: Key opportunities & figures Targeting Russia: Recommendations, opportunities and considerations
  • 4. Google Confidential and Proprietary Finland and Russian have long common history and have also for long had business relationships • 1340 km of shared land border • Centuries of close common history with various turns • Since WWII close economic ties and co-operation via clearing & bilateral arrangements • Since 1991 normal economic relationships • Exports to Russia 2012: 5,3 b€ (+11%) • Imports to Finland: 11 b€ (+29%) • #2 Trading partner for Finland, right after SWE MORE IN COMMON WITH N-E RUSSIAN CULTURE THAN WE ACTUALLY UNDERSTAND AND CONSIDER
  • 5. Google Confidential and Proprietary Digital era is opening new opportunities, but also challenging the known and existing patterns for Russian commerce • Russian consumers are swarming to the internet, 20 M new internet users by 2017, • Strong mobile growth • Strong video growth & preference - “web is for entertainment, not only utility!” • If 1990s system change brought market economy, current web growth will bring the digital economy to the mainstream of Russian business DIGITAL REVOLUTION IS THE NEXT RUSSIAN REVOLUTION - AND IT IS ALREADY GOING STRONG!
  • 6. Google Confidential and Proprietary Finns are known to some extent and liked, but are a small actor in a big world FINLAND = CLEAN, COLD, HIGH-QUALITY, SOLID • Finland and Finnish goods have good reputation in Russia and some known brands FinnCrisp, Fazer, Valio and commerce brands Stockmann, K-Rauta, K-Ruoka & Prisma • Stronger St.Petersburg-presence for companies and brand • Plenty of northwest-originated Russians have visited Finland as tourists and regular visitors WE HAVE NICHE MARKETS TO SERVICE - BUT WE NEED TO BE FAST
  • 7. Google Confidential and Proprietary Finns have potential to expand and seize the opportunity. Yet, the window of opportunity is narrowing rapidly • 1000€/mo tax / customs -free shopping to Russia, but this may change in the near future • Delivery times can be up to 6 weeks due to tax declaration and logistics challenges (capacity issues) • Brand marketing online is growing rapidly, but is still affordable and has a lot of potential • Major eCom global actors have entered the game! IF WANTING TO SUCCEED IN RUSSIA, YOU BETTER BE FAST BUT PATIENT!
  • 8. Google Confidential and Proprietary There are markets far beyond St.Petersburg & Moscow http://en.wikipedia.org/wiki/List_of_cities_and_towns_in_Russia_by_population HOW MANY HAVE YOU VISITED, HAVE AN IDEA OF AND/OR CAN PLACE ON A MAP?
  • 9. Google Confidential and Proprietary BUSINESS CASE FOR RUSSIAN E-COMMERCE & DIGITAL MARKETING RUS & FI – long time business partners: How about in the digital era? Russian internet & E-Commerce in brief: Key opportunities & figures Targeting Russia: Recommendations, opportunities and considerations
  • 10. Google Confidential and Proprietary 67.9M Online Consumer Profile Sources: eMarketer, 2012, "The Global Media Intelligence Report: Eastern Europe" eMarketer, 2012, "Monthly Time Spent Online per Internet Users in Europe" eMarketer 2013, "Russia Online: Gaining an Understanding of 'The Runet" Largest online population of Europe Major Online Demographic Profile The majority of users are from big cities. 10.7h Time spent on social media sites ranked #1 worldwide 51.3% 48.7% female male 98% Internet usage is heavier among those with higher education. Graduate degree 79% Bachelor's degree 51% High school equiv. 11% Penetration among the users of 18-24 years old 45-54 63% 55+ 31% Moscow & S.-Pt. 42% Countryside 19% Cities <100K population 16% Cities >100K people 23%
  • 11. Google Confidential and Proprietary Search 65.8% Google.ru is #4 among top 10 websites in Russia 1. yandex.ru 2. mail.ru 3. vk.com The most popular websites are homegrown. They are focused on reaching all parts of the ethnically, culturally and economically diverse Russian territories. Sources: eMarketer 2013, "Russia Online: Gaining an Understanding of 'The Runet" eMarketer 2013, "Russia's Digital Ecosystem shaped by Market Nuances" reach
  • 12. Google Confidential and Proprietary Display (Banners & Video) $559M Display Ad Spending in 2012 53.1% #6 among top 10 websites ranked by unique visitors Sources: eMarketer 2013, "Comparative Estimates: Display Ad Spending Growth" Google Global Business Map, 2012 reach 31.7M unique visitors
  • 13. Google Confidential and Proprietary Online Video in Russia - YouTube #1 Video site by users & usage 55.5M viewers watch 10М online videos per month 22 hours of video per every user Source: Comscore, Dec 2012
  • 14. Google Confidential and Proprietary Mobile 43.9M mobile internet users Mobile Internet Users penetration rate is higher 15-24 C2D Sources: eMarketer, 2012, "The Global Media Intelligence Report: Western Europe" eMarketer, 2012, "Monthly Time Spent Online per Internet Users in Europe" EIAA, European Mobile Internet Use, 2011 Economic Status* Avg. Age Male Gender Mobile internet user penetration rate in Russia is the second largest of the BRIC countries, except China. It's forecasted to pass that of China in 2014. Mobile networks are mostly popular and have a greater effect in rural areas outside the largest cities, due to broadband connection limitations. 74% of population are mobile phone users 25% of mobile users have a smartphone, compared to 15% in 2011 23.6H monthly time spent on mobile devices
  • 15. Google Confidential and Proprietary Russian e-Commerce Strong E-commerce growth forecast
  • 16. Google Confidential and Proprietary CASE: KUOMA THERE IS DEMAND FOR HIGH-QUALITY FINNISH CONSUMER GOODS - HOW TO DIGITISE THIS?
  • 17. Google Confidential and Proprietary BUSINESS CASE FOR RUSSIAN E-COMMERCE & DIGITAL MARKETING RUS & FI – long time business partners: How about in the digital era? Russian internet & E-Commerce in brief: Key opportunities & figures Targeting Russia: Recommendations, opportunities and considerations
  • 18. Google Confidential and Proprietary SO WHAT – what should Finnish companies do and work on? Source: 1 Russian online shoppers study (Yandex), 2 RosBusinessConsulting • Pages should be translated into Russian language - even if using automated Google Translate first • Payment options - in Russia local payment systems (Qiwi, Yandex.Money) are more popular than credit cards for online shopping1 • Tell about safety of purchases - use Finland’s brand • Russian e-commerce market is estimated to be $12b (2012) with 35% YoY growth2 BE LOCAL: TAKE INTO ACCOUNT LANGUAGE AND PAYMENT SYSTEMS
  • 19. Google Confidential and Proprietary HINTS, PITFALLS & CHALLENGES: To-do’s and not-to-do’s • Visit Russia yourself to see what kind of country it is nowadays • Visit Stockmann, Prisma, K-Rauta, K-Ruoka to see how are they different in Russia • Russia is not only St.Petersburg & Moscow. There are more opportunities in smaller cities, where market is not yet full • Loyalty cards are a big deal in Russia • Treat this as any other business opportunity: risks & benefits, not prejudices • Russian market is competitive, there are home grown e- commerce leaders (Ozon.ru) as well as international: eBay, Aliexpress, Alibaba, Amazon, Taobao. DON’T RELY ON RUMOURS - SEE WHAT RUSSIA IS LIKE TODAY WITH YOUR OWN EYES
  • 20. Google Confidential and Proprietary CONSIDERATIONS – What to think and prepare for in Russia? • Russians are more spontaneous consumers - in travel reservations as well as in purchases • 54% made spontaneous purchases online1 • 12% of money spent online was spent spontaneously • Language barrier exists, but is not insurmountable • 36% of online shoppers in RU have made at least one purchase abroad in the past 12 months • 25% in Chinese shops, 21% in English-language shops • Russians shop abroad mostly for clothes/shoes, cosmetics/fragrances, children clothes/toys • Expected delivery time for orders from abroad - 1-4 weeks, and everyone will ask for a tracking code Source: 1 Russian online shoppers study (Yandex) CONSUMERS IN RUSSIA ARE SPOILT - THINK ABOUT COMPETITIVE ADVANTAGES
  • 21. Google Confidential and Proprietary HOW – How to get started and how to proceed? • avito.ru (Russian huuto.net/tori.fi) - cheap way to test the waters, SMEs • Get comfortable with Russian language - #1 reason for not shopping abroad is the language barrier (39% of online shoppers) • ebay is #1 non-Russian site where Russians purchase online - if you’re already there, add Russian translations and tell about delivery to Russia DO YOU SPEAK RUSSIAN?
  • 22. Google Confidential and Proprietary GOOGLE IN RUSSIA – Helping you to succeed • Google is visibly present in Russia: 2 offices (St.Pete & Moscow), 200 employees, best employer in Russia • Google products are known and loved in Russia: YouTube, Maps, Google Play • Outreach program “Forward with Google” takes Google to the regions • Google has local experts in Finland that work together with colleagues in Russia • Same tools for ad campaigns that you use for Finland, including YouTube ads and remarketing
  • 23. Google Confidential and Proprietary Getting hand dirty - start operation now! b) If wanting to establish presence -Consider digital channels for sales, marketing and distributions -Utilise a palette of digital tool and analytics to support export plans -Take digital Russia into strategic plans, the change is happening now! a) If already operating in Russia -Take digital revolution seriously, play with it, test it out, make the internet to service your growth and expansion plans -YouTube and video marketing has big potential for brand, search marketing for sales creation LET’S SUCCEED TOGETHER!
  • 24. Google Confidential and Proprietary RISKS RESULTS EXPERIENCES PEOPLE
  • 25. Google Confidential and Proprietary Спасибо!